March 26, 2025
Rajya Sabha MP Saket Gokhale’s speech on The Banking Laws (Amendment) Bill, 2024
Sir, because this Bill pertains to the banking laws, I want to start by talking about the flagship banking scheme of this Government. A few years ago, the Government came up with this idea of providing Jan Dhan Bank Accounts to everybody. The Government’s data claims that they opened a total of 54 crore Jan Dhan Accounts. It is fantastic. The idea is great. What the Government does not conveniently say is that out of these 54 crore Jan Dhan Accounts, 11 crore accounts are dormant, which means that they are not being used. These accounts are completely dormant. And, how much money do these dormant Jan Dhan Accounts have? These accounts have about Rs.14,000 crore. It is Rs.14,000 crore of poor people’s money because that is what the Jan Dhan Accounts were created for, and this money is lying unused in these accounts. People are not able to access their own money. This number, Rs.14,000 crore, is a very important number I want your ruling on something, Sir. The speaker before me was talking about the yojanas of the Modi Government. It is my only question. Before I completed my sentence, you stopped me. My time may be paused. I am speaking on the subject. Let us talk about banking in detail, that is, the deposits and the loans. Today, bank deposits have gone down and the bank loans have gone up. The number of deposits in the banks have grown at 11 per cent. On the other hand, the amount of oans taken by Indians has grown by a shocking 18 per cent. When asked a question in the Parliament in February last year, the Government told that the total amount of unsecured outstanding loans in India was Rs.62 lakh crore. Unsecured loans means credit card and personal loans. So, the amount owed by average Indians on only credit cards and personal loans is Rs.62 lakh crore, that is, 25 per cent of India’s GDP. People are forced to take loans because of economic distress. Let us come to gold. In the first nine months of this fiscal year, the number of gold loans went up by 68 per cent. Distress in the economy is forcing people to pledge their gold and take loans on that. Sure, the value of gold is going up and it has benefited people by getting a higher amount on that. I remember during the Lok Sabha elections, the Prime Minister Modi had said that the opposition would take away your mangalsutra. Today, under the Narendra Modi Government, women are having to pledge their mangalsutra to take loans to pay their monthly expenses. Who has taken away the mangalsutra of women? It is not the opposition; it is under this Finance Minister that the Modi Government has done that. There is a report by Perfios-PwC, which was published in February. These are the statistics of people in the urban areas. I am not talking about poor people. Thirty-three per cent of the monthly salary goes towards paying EMIs on loans. People spend the highest amount on their obligatory loan expenses, which is 39 per cent of their total spending, followed by 32 per cent for basic necessities. Sir, 70 per cent of income EMI I am talking about the urban areas. Imagine what the condition in rural areas is! People with an income of above one lakh are paying approximately 46 per cent of their after-tax salary only on servicing the existing debts. There is a loan crisis. The Government itself had admitted that consumption is down in our economy. Therefore, people are not taking loans to buy new products or to consume something new. They are taking loans to service their existing loans. The other side of this problem is that Indian banks are being crushed under the burden of Non-Performing Assets. In just last five years, Indian banks have a staggering 10 lakh crores as Non-Performing Assets (NPAs). How does this Government solve the NPA crisis? NPAs are not created by ordinary people, it is created by a bunch of 10-15 people who defraud the system and then leave the country. Banks have now been told to write off NPAs. What is a write-off, Sir? A write-off is a beautiful accounting technique where these NPAs are taken off the balance sheets of banks. It does not mean that they are repaid. It just means that they are taken off to make the balance sheet look healthy. So, NPA K7D, write-off … but this money is still not being recovered. So, as I said earlier, deposits are going down and loans are going up. When we look closely, we find an interesting trend that the corporates are borrowing less. Corporates are, in fact, sitting on a lot of money since 2019 after corporate tax rate was slashed. They are not investing this money in the market, that is a different thing, but corporates are not borrowing. Sir, it is average people, MSMEs, who are required to borrow money every month. The loan burden of average Indians, farmers, small businesses is going up. That is the reason that our GDP growth has come crashing down to mere 5.4 per cent, which is the lowest in six quarters. Last year, our Government was celebrating the big growth in the stock market. Fantastic! Before the Exit polls were conducted, Prime Minister Modi and the hon. Home Minister Amit Shah, came on TV and said, buy stocks, the market is going to shoot up. Great! People borrowed money, people used their savings and put all that money into the stock market. Now, what has happened? The people said, पीएम मोदी जी नेकहा है, तो उोंनेकु छ सोच कर ही कहा होगा। PM Modi said, stock market will rocket; Amit Shah ji said, stock market will rocket. In the last three months, after the US elections, stock market has crashed. Who has lost the money? The average people have lost the money, Sir. Because loans are easily available; people went and took loans. Because PM Modi ;L Kह8, they put that money in the stock market. Savings of average Indians have been wiped off because the hon. Prime Minister decided to be a stock market expert on live television. Sir, why are people not depositing their savings in bank accounts? Today morning, there was a report in the Mint, which said, that with an expected rate cut, banks are now going to cut their deposit rates. Now, when people are not consuming, the Government wants to stimulate consumption through. So, cutting the interest rates is a strategy. Bank’s deposit rate will go down. With the food inflation, which is about 10 per cent, what is happening to deposits in banks? If the rate of interest that I am getting on my deposit is less than the rate of inflation, it means that if I am keeping money in the bank, I am actually losing money. That is why, people are not keeping money in banks; they are putting it in places like the stock market, where they feel there will be appreciations, but these are also very risky areas, and, naturally, as the bubble has burst, people have ended up losing their money. So, what is the Government doing to make deposits attractive? It is forcing banks to market deposits. Saying that your ratio is really bad, your credit deposit ratio is bad, the Government is forcing banks to do marketing. Banks are marketing these deposits aggressively to people. But what is happening is that there is a major liquidity crisis in the country. Banks can only offer money when there is liquidity in the system. Today, banks are being encouraged to bring in deposits. Deposits are liabilities for banks while loans are assets. These deposits are coming in with attractive interest rates on it. When there is no liquidity in the market, this is affecting the profit margins of banks. Let us say, if the price of gold, which they are holding right now on behalf of people, comes crashing down tomorrow, then, with respect to the gold loans for which gold is used as collateral, banks will not be going to have the margin that is required to service that money. Sir, in the last five years, our Public Sector Banks (PSBs) have made revenue of Rs. 8,500 crores through a very unique mechanism. What is that mechanism, Sir? Penalties on not maintaining minimum balance! You are a poor person but if you have no money in your account and you do not maintain a minimum balance, bank is going to charge you a penalty. Sir, an amount of Rs. 8,500 crores has been earned by banks by taking money from poor people, who do not have money to even keep a minimum balance in their accounts. This happens with the poor. The other harassment is done to the middle class. Every three months, do your KYC, do a re-KYC, do a re-re-KYC. Sir, when PAN cards are linked to bank accounts, Aadhaar is linked to bank accounts, what is the need for this constant KYC? But they make people keep doing that. People have to do the KYC because otherwise, the bank accounts are frozen. And, once these accounts get frozen, it becomes a major nightmare as people have to go to the branches, while people do not have the time to do that. But every time, ‘do your KYC or we will freeze your account’. No questions asked. When the data is there with the Government, the Government is very good at using data for other things. Before elections, we get a WhatsApp message about Viksit Bharat during the Code of Conduct. So, they have the data to send WhatsApp messages during elections; they don’t have the data to find out where a person is staying using the AadhaAr and PAN. Why do I need to keep doing KYC every two months? Sir, all I wish to say in conclusion is that piecemeal legislation like this Banking Laws (Amendment) Bill is useless until we address the structural problems faced by our banks. These problems will continue to exist unless we implement drastic economic reforms. Sir, the Finance Minister thinks that the gaping wounds in our economy can be fixed with a band-aid. The first step towards any problem is to first accept it. When you accept is, when you start making amendments and changing. This Government, for eleven years, is not willing to accept that there is a problem. We very clearly saw this in a visionless Union Budget where there was absolutely no sort of reform done. Sir, the Modi Government has dangerously started believing its own jumlas. It started this propaganda to mislead the people, but now in a shocking turn of events, the Modi Government itself is actually believing ‘sab changa si’. They have deluded themselves into thinking that everything is fantastic under our Government, everything is great, and things have never been better before. Sir, our economy and our banking system cannot be fixed until the Government removes its blindfolds. I strongly urge the hon. Finance Minister to come back to this House with some real, actual banking reforms instead of bringing pointless Bills like the Banking Laws (Amendment) Bill, which does absolutely nothing to fix our banking system. Thank you, Sir.
