New Delhi, March 26, 2025: Aam Aadmi Party MP Raghav Chadha voiced strong concerns over the declining trust in the country’s banking system during the discussion on the Banking Laws (Amendment) Bill, 2024 in the Rajya Sabha and criticized the bill, calling it a mere procedural reform that overlooks public concerns.
“People are losing faith in banks. Their hard-earned money is at risk due to rising fraud and poor regulations,” Chadha stated.
He mentioned that scams related to KYC (Know Your Customer) updates have become rampant, with accounts being emptied in seconds through fraudulent calls.
Chadha noted that home loan interest rates have surged to 8.5%–9%, while education loans range from 8.5% to 13%, making housing and education unaffordable and urged the government to cap loan rates and provide subsidized interest rates for first-time homebuyers.
“Young people are starting their lives with debt they can barely afford,” he remarked, advocating for RBI-backed measures to promote small and digital banks, which could reduce lending rates.
Chadha raised concerns over falling interest rates on savings and fixed deposits.
He also pointed out that FD rates are at 6.5%, while inflation is at 7%, effectively diminishing savings’ real value.
“Senior citizens are seeing their life savings shrink. The government must guarantee a minimum 8% interest rate on savings for retired individuals and small depositors,” he noted.
Chadha revealed that 36,075 banking fraud cases were reported in FY 2024, with cybercrimes causing losses of ₹2,054.6 crore. UPI-related fraud alone rose by 85% during the year.
He questioned why public sector banks reported the highest number of fraud cases and demanded stricter security measures.
“How do marketing companies get our phone numbers and emails? Are banks leaking data?” he asked, suggesting a probe into possible data breaches. He recommended that banks allocate 10% of their IT budgets to cybersecurity and implement mandatory biometric authentication for high-value transactions.
Chadha stressed the lack of banking infrastructure in rural areas, stating that over 3,000 bank branches, mostly in villages, were shut down in 2022-23. “This has forced rural residents to travel long distances for basic services, often paying ₹20-₹23 per ATM transaction.”
“Despite 77 years of independence, millions still lack access to banking services,” he noted, urging the government to expand rural banking infrastructure.
Chadha warned about the growing reliance on credit cards, which is pushing middle-class families into debt.
“Credit cards offer temporary relief but trap people in high-interest debt,” he said, calling for financial literacy programs and stricter regulations on predatory lending practices.
Chadha exposed how Indian consumers pay nearly ₹7,500 crore annually in hidden banking charges, including ATM fees, maintenance charges, and penalties.
“These deductions happen silently, without proper notification,” he noted, demanding the RBI impose strict caps on such charges and mandate banks to resolve customer complaints within seven days.
Chadha also raised the struggles of public sector bank employees, mentioning that they face immense pressure to meet targets, often at the cost of their mental health.
“To meet targets, executives are forced to mis-sell insurance and investment products,” he mentioned, urging the government to provide better training and support to bank employees.
“We Buy Golgappas With UPI, but Banks Are Stuck in the 90s”
Chadha concluded with a sharp remark on the outdated practices of public sector banks, despite the rise in digital payments.
“We buy golgappas with UPI, but our government banks are still stuck in the 90s,” he said, calling for modernization and stronger regulations to restore public trust in the banking system.
