AAP Rajya Sabha MP Raghav Chadha has expressed concerns over the erosion of public trust in India’s banking system, citing rising fraud, high loan interest rates, and inadequate financial security for depositors. Speaking in the Rajya Sabha on Wednesday during a discussion on the Banking Laws (Amendment) Bill, 2024, Chadha criticised the legislation as a procedural reform that fails to address key public concerns.
Chadha also shared a video on the social media platform X (formerly Twitter), where he can be seen speaking about the banking system. In the caption he wrote, “On account of Hidden Charges, the hard-earned money of people is being quietly drained by Banks. This legalized pickpocketing happens through Minimum Balance penalties, ATM fees, SMS alert charges, cheque book fees, inactivity penalties, and more. I raised this issue in Parliament.”
On the same day, Parliament passed the Banking Laws (Amendment) Bill, 2024, allowing bank account holders to nominate up to four individuals, with the Rajya Sabha approving it by voice vote. The Lok Sabha had cleared the bill in December 2024.
On account of Hidden Charges, the hard-earned money of people is being quietly drained by Banks. This legalized pickpocketing happens through Minimum Balance penalties, ATM fees, SMS alert charges, cheque book fees, inactivity penalties, and more.
I raised this issue in… pic.twitter.com/Hq1Bfps4DE
— Raghav Chadha (@raghav_chadha) March 27, 2025
According to an AAP statement, Chadha stressed that banks are not just financial entities but the foundation of democracy, playing a vital role in people’s lives. However, he argued that increasing banking fraud, high lending rates, and falling savings interest rates are driving people away from the formal banking system.
Interest Rates On Home Loans
Chadha highlighted that home loan interest rates have climbed to 8.5-9 per cent, while education loan rates now range between 8.5 per cent and 13 per cent. These interest rates have made housing unaffordable for young people and have driven the cost of higher education to unsustainable levels, forcing students into debt before they even start working, he said.
The MP called on the government to impose a cap on interest rates and offer subsidised loans to first-time homebuyers. He also pointed out that fixed deposit (FD) returns, at 6.5 per cent, are falling short of the 7 per cent inflation rate, which means people’s savings are losing value.
“Retired individuals and small depositors should receive a minimum 8 per cent interest rate to safeguard their savings,” he stated.
Digital Payment Frauds
Chadha highlighted that over 36,000 cases of banking fraud were reported in 2024, with digital payments and loan fraud being the most prevalent. He revealed that cyber fraud resulted in financial losses of Rs 2,054.6 crore and that UPI-related frauds had surged by 85 per cent.
Public sector banks (PSBs) reported the highest number of fraud cases, further undermining public confidence in the banking system, he claimed. He recommended that banks allocate at least 10 per cent of their IT budgets to enhance cybersecurity and adopt biometric authentication for high-value transactions.
Chadha also raised concerns about fraudulent activities linked to Know Your Customer (KYC) updates. “People receive a phone call and in the blink of an eye, their accounts are emptied,” he said.
The statement also noted that Chadha’s criticism of the closure of over 3,000 bank branches in 2022-23, particularly in rural areas, which has forced villagers to travel long distances for basic banking services.
He accused Indian consumers of paying nearly Rs 7,500 crore annually in hidden banking fees, including ATM charges, account maintenance fees, and penalties for failing to maintain minimum balances. He urged the Reserve Bank of India (RBI) to regulate these charges and ensure quicker complaint resolution for customers.
Chadha also warned that mounting credit card debt is placing the middle class under severe financial strain and that aggressive loan recovery practices are putting pressure on bank employees. He called on the government to promote financial literacy, regulate loan recovery practices, and improve the working conditions of banking staff.
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