Surprise visit by DFS secretary M Nagaraju shows behavioural lapses at PSBs

Department of Financial Services (DFS) Secretary M Nagaraju, who had conducted surprise visits to branches of public sector banks (PSBs) in New Delhi last week, was in for a rude shock.

 

He was made to wait for an hour to meet the manager in one bank, and in some other PSB branches, he found the behaviour of officials "unsatisfactory."

 

The surprise checks were meant to observe how the employees of PSBs interact with customers and where they lag compared to private banks.

 

“The DFS secretary, along with other senior officials, conducted visits to three major PSB branches in New Delhi last week. In one of the major branches, the DFS secretary had to wait for around an hour to talk to the branch manager, until he disclosed his identity. The manager was busy on a phone call,” said a source. 

 

The source added that, during the inspection, the DFS secretary found some serious behavioural issues.

 

“The DFS secretary has advised banks to be more courteous towards customers. Senior finance ministry officials also checked how the banks are implementing financial inclusion schemes at the ground level. Such inspections may continue across the country,” said the official. 

 

A query sent to Nagaraju remained unanswered till the time of going to press.

 

PSBs have been lagging behind private banks in many parameters.

 

During the December quarter of FY25, PSBs recorded a retail deposit growth rate of 8.8 per cent, while private banks achieved a stronger double-digit growth of 13.5 per cent. This robust show by private banks was primarily driven by a surge in term deposits.

 

In FY24, complaints received by the Office of the Reserve Bank of India (RBI) Ombudsman against PSBs were also among the highest at 38.32 per cent. This compares to 34.39 per cent by private banks (34.39 per cent).

 

To change the traditional narrative of PSBs as laggards, Finance Minister Nirmala Sitharaman had last year asked PSBs to launch special drives to mobilise deposits, telling them to “connect” with customers. The minister specifically asked bank chiefs to ensure that employees reach out to people, especially in rural and semi-urban areas. 

 

Experts believe that after extensive digitalisation, bank employees have lost touch with customers. However,

 

digitalisation has given them more time to connect with clients.

 

“Digitlisation has definitely reduced the work of bank employees. This has given them the opportunity to make one-to one-contact with new customers. Soft skill training programmes to the employees will also make them on a par with private bank staff,” said S Krishnan, former managing director and chief executive officer of Punjab & Sind Bank.