In today’s world, the stench of corruption and decay is everywhere—especially in the systems that are supposed to serve us. Whether it’s the government, political leaders, or bureaucrats, everyone seems busy with their own affairs while the nation grapples with the consequences of their actions. The real powers in India—the capitalists and the elites in Lutyens' Delhi—are increasingly putting our banking system at risk. Slowly but surely, our banks are becoming weaker, and a crisis looms on the horizon.
But this isn't just an abstract financial issue. The impact of this banking crisis is felt most acutely by the country's poorest citizens, who are struggling to hold the system together. Today, We’ll take a deep dive into how the banking system has become sick—largely due to the actions of the powerful, wealthy few—and explore the far-reaching consequences that threaten all of us, especially the poor and middle class.
The Small Fee That Signals A Bigger Crisis
Let’s start with a seemingly small piece of news that could have devastating consequences for millions of people. Recently, Indian banks started increasing daily service fees. For example, after five ATM transactions, you’ll now be charged ₹23 for each withdrawal. Banks like ICICI, SBI, and HDFC have already implemented these charges.
Here’s the kicker: ICICI has also introduced a ₹8.5 fee for simply checking your balance. If you make an IMPS transfer, expect to pay anywhere from ₹2.5 to ₹15 per transaction. These fees don’t just hit the wealthy or the middle class. They disproportionately affect the poor—those who can least afford it.
Consider the example of a person receiving a ₹1000 pension through the Jan Dhan account. They now have to pay ₹23 to withdraw that ₹1000. This is money they depend on to survive, yet they’re forced to give a portion of it away just to access it. These charges don’t just apply to pensioners, but also to wage earners on government schemes like MNREGA.
Imagine the hardship faced by the elderly, widows, or single mothers who rely on such minimal amounts for survival. It’s an economic burden that’s piling on top of an already precarious existence.
The Hidden Cost: How Fees Are Eroding the Poor’s Savings
To put this in perspective, let’s take a closer look at the numbers. India’s Jan Dhan accounts, as reported by the government, number around 47 crore. If even 25% of these accounts are active, we’re talking about millions of people who are paying a monthly fee ranging from ₹50 to ₹100. This could translate into ₹500 to ₹1000 crore being drained out of the pockets of the poorest people in India—money that could have been used for food, health, or education.
What’s worse, these fees aren't just a one-time issue. They are recurring. A poor person receiving their ₹1000 pension, for instance, may have to make several withdrawals or check balances, each time incurring charges. Imagine the effect of ₹23 being deducted multiple times over the course of a month. This is a direct hit to their financial stability.
Middle Class, Don’t Think You’re Safe
It’s not just the poor who are feeling the heat. The middle class, too, is being squeezed. Many middle-class families receive their salaries through direct deposit and conduct transactions via UPI. Checking balances, making payments, and transferring funds have all become more expensive. Fees for credit card transactions, wallet top-ups, and other basic banking services are on the rise. For a middle-class person, this could translate into an additional ₹300 to ₹1000 in monthly charges just to manage their finances.
It’s a double whammy for the middle class: higher fees and lower returns. When people are asked about investing in fixed deposits (FDs), the returns are low. Even with interest rates at 7-8%, the growth is sluggish. And this low return is pushing people away from traditional saving methods, making the banking system weaker by the day.
The Larger Economic Picture: Weakening Banks and Increasing Debt
According to the Reserve Bank of India’s (RBI) 2024 bulletin, the growth rate of bank deposits has slowed to just 11%, while credit growth has surged by 16%. In simpler terms, more and more people are taking out loans, but fewer are depositing money into banks. This imbalance is a troubling sign of the weakening state of our financial system.
This growing gap between deposits and loans means banks are increasingly turning to the wealthy to keep their business afloat. Large corporations are taking out loans under dubious conditions, often using collateral like brands or shares. This situation is not sustainable. If the loans go bad—like we saw in the case of Vijay Mallya and his Kingfisher brand—banks are left with non-performing assets (NPAs), further weakening the system.
Meanwhile, the government continues to push ordinary people to invest in equities, mutual funds, and insurance products. We’re told to “put our money to work” in the stock market through SIPs (Systematic Investment Plans), but the reality is that much of this money ends up in the pockets of corporate giants. The funds that used to flow into banks are now being diverted into shares, and the wealthy capitalists benefit while the rest of us bear the brunt of the consequences.
The Exploitation of Savings and the Rise of Corporate Wealth
The role of the common man in this system is being eroded. The money we deposit in banks is no longer being used to strengthen our financial system. Instead, it’s being funneled into the pockets of large corporations, which use it to expand their empire. Meanwhile, the government is pushing us to invest in the stock market, where the risks are high, and the returns are uncertain.
What’s more, our own savings are being used to fund the very companies that are part of the capitalist system we’re supposed to support. For example, ₹3 crore new demat accounts were opened in 2024 alone, which means that millions of Indians are now investing directly in corporate stocks instead of keeping their savings in banks.
The Future Outlook: A System of Loot
So, what does this mean for the future of the Indian economy? As the banking system weakens, more and more people will be squeezed by rising fees. Ordinary citizens will find it harder and harder to access their own money, and as banks continue to hike charges, fewer people will bother to use them. We could see a situation where people, especially the poor and middle class, begin to withdraw their money from banks altogether, preferring to stash it in their homes or invest it elsewhere.
The rich, meanwhile, will continue to benefit from cheap loans, while the poor will be left paying higher fees just to survive. Over time, this will only exacerbate the wealth gap between the rich and the poor. With fewer job opportunities, the poor will resort to crime to survive. In the end, they will demand their rights, and that could lead to larger social unrest.
A System in Crisis
This is the sad reality of our current system. The poor are becoming poorer, and the rich are getting richer. The systems that were once designed to help the poor, such as government pensions or welfare schemes, are now being hijacked by fees and charges. This is a system of exploitation, where the poor and the middle class are increasingly squeezed by rising costs and fees, while the wealthy benefit from a system that works in their favor.
The situation is bleak, but it’s important to understand what’s happening so that we can take action. If we don’t, we’ll continue to see the economic divide grow until it’s too late.
Conclusion:
This is more than just an issue of bank charges. It’s part of a larger systemic problem in India’s economy, where the rich get richer, and the poor are left behind. The banking system is weakening, and unless there’s a fundamental shift, the future looks grim for the common man.
If you found this post insightful, share it with others and raise awareness about the growing economic divide in our country. We must understand the consequences of these policies before they go too far.
Disclaimer
The views expressed in this blog post are solely those of the author and do not necessarily reflect the positions of any organization, institution, or individual. This post aims to provoke thought and spark a conversation about the systemic issues affecting India’s economy, particularly the banking sector. While every effort has been made to present accurate information, the author is not responsible for any inaccuracies or errors.
This content is not intended as professional advice—financial, legal, or otherwise. Given the gravity of the issues discussed, readers are strongly encouraged to do their own research, seek expert guidance, and actively engage with the ongoing discourse on these critical matters. The purpose of this post is to raise awareness, and it is up to each individual to take informed action for the future of the nation.
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