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Reforms keep middle class in mind, says FM Sitharaman

Finance minister Nirmala Sitharaman on Sunday said the government’s approach to reforms is sensitive to the needs of the middle class, which have been kept in mind while implementing various reforms in the banking sector.

“As a result, today, public sector banks’ health has improved so they are able to raise money on their own in the markets. It indicates that depositors and their monies are safe in all our banks,” she said.

Addressing beneficiaries of the deposit insurance scheme, Sitharaman said there had been a lot of distress calls since 2019 from depositors whose money was stuck because there was a regulatory control on banks.

“They (depositors) waited for five years or even more because either the bank had to be liquidated, or some kind of amalgamation, and the wait for the depositor was eternal,” Sitharaman said.

The government brought changes in the deposit insurance scheme with retrospective effect, keeping depositor interests in mind, according to the FM. “And this is a major step… a sensitive step which understands the difficulties of the middle class,” she said.

Sitharaman said a similar initiative was the Special Window for Affordable & Mid-Income Housing (SWAMIH), through which over 1.4 lakh home buyers in 33 cities and 243 projects are getting their homes back.

High Returns, High Risk: Das

At the event, Reserve Bank of India (RBI) governor Shaktikanta Das cautioned depositors to be careful while chasing high returns.

“Just because a bank is offering higher interest, depositors themselves should be very careful before putting in money while chasing such high returns because usually, our experience is that high returns or high interest rates are associated with higher risks,” the RBI governor said.

He added that there were some institutions that offered interest on the higher side and were still viable.

Das stressed that payment of the deposit insurance amount should be seen as a last resort. “RBI has been adopting a proactive strategy to strengthen regulatory guidelines and supervisory methods, and to look at things which will ensure that going forward, banks function in a very resilient manner,” he said.

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