'I am amused': Sitharaman on Raghav Chadha’s banking remarks, urges him to use ‘Western exposure’ for India

In a sharp yet humorous response, Sitharaman said she hoped Chadha would use his ‘exposure to the western world’ to help people within the country.

"I was amused, sir, if Member Raghav Chadha does not take offense, he observed the number of fans in the bank, the condition of the bank, how many were whitewashed and not painted. I am really so, so satisfied. There are members of Parliament who are otherwise very busy with many things internationally," the finance minister said in the Rajya Sabha, reported ANI.

"He has found time to visit rural banks and look at them, noticing there are no fans here, no doors, no chairs. Raghav Chadha, please do more of this. It will help people within the country because, with your exposure, particularly to the Western world, you can do a lot more here. Please do," she added.

Chadha was seen smiling at the finance minister’s response to his speech.

Earlier, the Aam Aadmi Party (AAP) MP said the country's banking system has been facing severe crises.

During the discussion on the Banking Laws (Amendment) Bill, 2024 in the Rajya Sabha, he criticised the bill, stating that it only focused on procedural reforms and failed to meet public expectations.

Raghav Chadha stressed that banks are the foundation of democracy, deeply intertwined with citizens’ financial lives.

However, increasing fraud, loan recovery issues, and employee pressure have led to declining public trust. “People are hesitant to trust banks with their money,” he said.

He highlighted soaring loan rates—home loans at 8.5-9%, education loans at 8.5-13%, and MSME loans at 11%—which have made housing unaffordable, education expensive, and business growth challenging.

Chadha urged the government to cap interest rates and subsidise loans for first-time homebuyers.

He also called for the RBI to promote small and digital banks to lower rates.

Addressing senior citizens' concerns, he noted that fixed deposit (FD) rates at 6.5% lag behind 7% inflation, eroding savings.

“Retirees and small depositors must receive a minimum 8% interest rate to protect their savings,” he recommended.

During discussions on the Banking Laws (Amendment) Bill, 2024, he warned that a weak banking system would disrupt savings and credit, excluding millions from financial security and government schemes.

“If banks didn’t exist, where would a farmer save for his children’s education?” he questioned.

Raising alarms over digital fraud, Chadha revealed that FY 2024 saw 36,075 fraud cases, with losses of ₹2,054.6 crore. UPI fraud rose by 85%.

He urged banks to allocate 10% of IT budgets to cybersecurity and enforce biometric authentication for high-value transactions.

He criticised the rise in fraud through KYC updates, where scammers trick customers into sharing details.

“People get a call, and their accounts are emptied in seconds,” he said, demanding stronger safeguards.

Chadha also flagged NBFC troubles, increasing NPAs, and slow loan recovery. Citing past financial crises, he urged the government to strengthen debt recovery tribunals, implement AI-based credit scoring, and cap ATM and banking fees.

He highlighted rural banking struggles, noting that 3,000 bank branches were shut in 2022-23, mostly in villages.

“Millions still lack banking access, forcing them to travel long distances and pay ₹20-₹23 per ATM transaction,” he said.

He warned of middle-class debt burdens due to rising credit card dependency.

“Credit cards offer relief, but high-interest rates crush the middle class,” he remarked, urging the government to promote financial literacy and responsible lending.