Union Finance Minister Nirmala Sitharaman recently addressed Rural Banking Challenges during a lively exchange with AAP MP Raghav Chadha in the Rajya Sabha. Their discussion centered on the condition of rural banks as part of the ongoing deliberations on the Banking Laws (Amendment) Bill. Sitharaman’s remarks aimed to highlight the importance of understanding rural banking issues, which continue to affect citizens across the country.
Sitharaman humorously noted Chadha’s observations about rural banks, emphasizing the need for more MPs to visit these areas. “I was amused… if Raghav Chadha does not take offence, he observed the number of fans in the bank, the condition of the bank, how many were whitewashed and not painted,” she stated. Her comments underscored the Rural Banking Challenges that have persisted, particularly the lack of basic amenities in these financial institutions.
Importance of Addressing Rural Banking Issues
The Finance Minister encouraged Chadha to continue his visits to rural banks. “He has found time to visit rural banks and look at them, noticing there are no fans here, no doors, no chairs,” Sitharaman said. With his international exposure, especially to the Western world, Chadha could offer valuable insights into improving conditions in these banks.
Chadha, a Chartered Accountant with an MBA from the London School of Economics, has worked with global firms like Deloitte and Grant Thornton. During his Rajya Sabha address, he raised alarming concerns regarding the state of the banking system. He claimed public trust is dwindling due to rising fraud and issues with loan recovery.
Rising Costs and Fraud in Banking
Chadha pointed out that home loan rates have surged to 8.5-9%, while education loans have reached nearly 13%. “Owning a home has become unaffordable for young individuals, and education is becoming excessively expensive, pushing students into debt before they even start earning,” he remarked. He also highlighted that savings are losing value, as fixed deposit (FD) rates hover around 6.5% while inflation sits at 7%.
Moreover, the AAP MP expressed alarm over increasing fraud cases in digital banking. Cyber fraud resulted in losses of Rs 2,054.6 crore in FY 2024, with UPI fraud rising by 85% that year. These figures reinforce the Rural Banking Challenges and the urgent need for reforms.
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