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A Parliamentary panel has urged public sector banks to stop using a rigid, bureaucratic approach when giving loans to common people. The Public Accounts Committee (PAC), led by senior Congress MP KC Venugopal, raised this issue during a meeting held on Tuesday, where top officials from the Ministry of Finance, Reserve Bank of India (RBI), and four major banks appeared to answer questions on banking reforms.
RBI Studying Impact of US Tariffs, Bill to Ban Fake Lending Apps Underway
During the session, officials informed the committee that the RBI is closely monitoring the potential effects of the new US tariff policy. According to them, this change might benefit India in the long run, as many global companies could prefer India over China for setting up businesses.
They also shared that the government is working on a new bill to ban illegal and unregulated lending apps, which have been causing trouble for consumers.
Senior Bank Officials Face Questions on Key Issues
Senior representatives from State Bank of India (SBI), Punjab National Bank, Canara Bank, and Indian Bank, along with RBI Governor Sanjay Malhotra and Deputy Governor M Rajeshwar Rao, attended the meeting. The panel questioned them on several important topics, including:
- Cybersecurity and digital frauds
- Student loans
- Financial inclusion in rural areas
- Non-Performing Assets (NPAs)
- UPI regulation and reforms
Concerns Over Access to Loans for Marginalized Communities
The panel raised strong concerns over how students from marginalized groups, especially those from fishing communities, are struggling to get loans. MPs asked the banks to avoid unnecessary paperwork and red tape. Instead, they suggested an entrepreneurial and inclusive approach that encourages more people to apply for loans without fear of rejection or delays.
Financial Inclusion and Rural Banking Still a Challenge
MPs also questioned why banks are not meeting the target of opening branches every 5 kilometers in rural areas, a key goal under the financial inclusion drive. They also discussed the need for a better system to catch digital fraud early, to protect innocent customers.
When the discussion turned to schemes like Jan Dhan Yojana and Mudra loans, officials said that these schemes are being implemented successfully. They revealed that 52 crore Mudra loan accounts have been opened. However, MPs were not satisfied with just the account numbers. They asked for exact details on how many people benefited and how many jobs were created. Since this data wasn’t immediately available, officials were told to send it in writing.
Language Barrier Issues and Employee Transfers Also Discussed
MPs also brought up the issue of bank staff being transferred from Hindi-speaking states to non-Hindi-speaking areas, which is causing problems in customer service due to language barriers. Bank officials replied that recruitment processes have now been changed to ensure staff posted in regional areas are familiar with the local language.
Concerns were also raised about the recent merger of regional rural banks and how this has led to unnecessary staff transfers and operational difficulties.
Capital Infusion and Loan Write-Offs Questioned
The committee also questioned the government’s decision to invest around ₹8,800 crore as capital in SBI. MP Venugopal asked about support for people affected by natural disasters. Officials said that for those who lost their lives, their loans are written off. Others are given some relief in repayment terms.
During the financial year 2017-18 (FY18), SBI raised ₹15,000 crore of equity through QIP, which was the largest ever in India and the third largest in Asia-Pacific at the time. The Government, in turn, had infused ₹8,800 crore.
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