Finance Minister Urges Banks to Prioritize Local Language Service and Human Connect

Finance Minister Nirmala Sitharaman has strongly advised banks to prioritize customer service in local languages across all branches. She stressed that technology should supplement, not replace, personal interactions, aiming to rebuild the "human connect" that was a traditional strength of Indian banks. This directive follows recent public outcries and incidents, especially in Maharashtra and southern India, where bank staff reportedly refused to communicate in local languages like Kannada, causing customer resentment.

The Finance Minister urged banks to review their Human Resources (HR) policies to give weightage to local language proficiency during employee appraisals and postings. This aims to ensure staff can effectively communicate with customers in their native tongue, enhancing customer experience and trust. Sitharaman cautioned against an over-reliance on digital platforms, reminding banks of the value of person-to-person contact, especially for building relationships and understanding customer needs.

Additionally, she called for restoring accountability in credit assessment, particularly for Micro, Small, and Medium Enterprises (MSMEs), advising banks against outsourcing this critical function. Simplifying paperwork for borrowers was also highlighted as a key step towards improving customer satisfaction and making institutions more appreciated. The underlying cause of language friction is often attributed to recruitment drives not attracting sufficient local talent in certain regions, leading to communication gaps when staff are transferred.

Impact This news has a significant impact on the banking sector in India. Public sector banks will need to revise HR policies, invest in language training, and potentially adjust recruitment strategies. This could lead to increased operational costs, changes in staff deployment, and a potential improvement in customer satisfaction and loyalty. Investor sentiment towards public sector banks might be influenced by their ability to adapt to these directives. The focus on human connect and credit assessment also touches upon core banking functions and risk management. Rating: 7/10

Difficult terms: * PSU bank: Public Sector Undertaking bank. These are banks where the majority stake is held by the government. * Appraisals: Formal assessment of an employee's job performance over a specific period, often influencing pay raises, promotions, and training. * Customer engagement: The process of interacting with customers to build relationships, understand their needs, and provide support and value. * Digitisation: The process of converting information into a digital format and increasingly relying on digital technologies for operations and services. * MSMEs: Micro, Small, and Medium Enterprises. These are small and medium-sized businesses that play a crucial role in economic development. * Credit assessment: The process of evaluating the creditworthiness of a borrower to determine their ability to repay a loan. * Borrowers: Individuals or entities who receive loans or credit from a bank or financial institution. * Nationalised: When a private industry or bank is taken over and brought under government ownership and control.