The All India Bank Employees’ Association (AIBEA) has submitted a comprehensive set of proposals to Finance Minister Nirmala Sitharaman ahead of the Union Budget 2025, calling for measures to strengthen public sector banks, prevent privatization, and enhance financial inclusion.
In its letter, AIBEA emphasized that banking services and credit should be a fundamental right, ensuring broader access to financial resources. The association also urged the government to exempt commercial banks from the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, arguing that public sector banks face no risk of closure and that the annual premium burden of over ₹22,500 crore could be redirected for developmental purposes.
AIBEA reiterated its opposition to the privatization of public sector banks, particularly calling for the government to retain a minimum 51% stake in IDBI Bank. The letter also urged Bank of Baroda to merge its subsidiary, Nainital Bank, rather than selling it. Additionally, the association raised concerns about aggressive cross-selling of insurance products by banks, calling for a renewed focus on core banking services.
The association also highlighted the need to reopen branches in rural areas that were closed following bank mergers, citing the rapid expansion of private banks in comparison to public sector banks. It further demanded the appointment of employee representatives on bank boards, an increase in savings bank interest rates to 6%, and additional tax benefits for senior citizens on fixed deposits.
On the issue of bad loans, AIBEA recommended criminalizing willful default and prohibiting defaulters from contesting elections or holding ministerial positions. It also called for the establishment of more Debt Recovery Tribunals and stricter regulations to curb loan write-offs through haircuts under the Insolvency and Bankruptcy Code (IBC).
The letter further proposed concessional interest rates on loans for MSMEs, farmers, and students, including 2% simple interest for agricultural loans and 5% for education loans. Additionally, AIBEA called for the revival of Development Finance Institutions (DFIs) for infrastructure lending, increased funding for cooperative banks, and regularization of banking correspondents with a minimum monthly wage of ₹18,000.
The association also raised concerns about high penalties for non-maintenance of minimum balance, urging banks to stop imposing such charges on customers. It called for a cap on interest rates charged by microfinance institutions and demanded higher tax exemptions for bank employees’ retirement benefits and medical insurance premiums.
With the Union Budget set to be announced soon, AIBEA’s recommendations put pressure on the government to prioritize financial inclusivity, strengthen public sector banking, and address the issue of rising bad loans. Whether these demands will be reflected in the upcoming budget remains to be seen.