Depositors as Silent Stakeholders: Time to Restore Balance in Indian Banking

In the architecture of modern banking, one truth remains fundamental yet under-acknowledged: banks are sustained by depositors’ money. Every rupee lent, invested, or deployed by a bank originates from the trust reposed by millions of ordinary citizens. Yet, paradoxically, depositors remain the least protected and least rewarded stakeholders in the banking system.

This structural imbalance requires urgent attention if India is to build a truly resilient and equitable financial system on its path toward a “Viksit Bharat” by 2047.

The Unequal Burden on Depositors

Depositors today bear a silent but substantial burden:

• They receive interest rates that often fail to match inflation, eroding real savings. Even interest attracts Income tax is a very sad part.

• They indirectly absorb the consequences of non-performing assets, frauds, and weak credit appraisal.

• They face penalties and charges, including for not maintaining minimum balances.

• Their protection is limited to a modest insurance cover of ₹5 lakh per depositor through the Deposit Insurance and Credit Guarantee Corporation.

Despite providing the primary resource base of banks, depositors lack representation, voice, and adequate safeguards.

A Unique Sector Demands Unique Governance

Banks are not ordinary commercial enterprises. They deal with the most sensitive public resource—money—and the most dynamic asset—human trust. Equating banks with other businesses in governance philosophy is a conceptual error.

The regulatory framework led by the Reserve Bank of India has evolved considerably over time, but systemic issues persist:

• Risk is socialised, while decision-making is concentrated

• Returns to depositors are controlled, while inefficiencies in lending are tolerated though bad and recalcitrant  borrowers deserve a different treatment in depositors'  and all stakeholders of Banks' interest. 

• Transparency in charges remains uneven

In such a structure, depositors effectively subsidise inefficiency.

The Question of Charges and Penalties

The imposition of penalties for non-maintenance of minimum balances raises a fundamental ethical and economic question.

In an era of core banking, digital transactions, and negligible marginal cost of servicing accounts, such penalties—especially on small depositors—appear regressive and disproportionate. They resemble revenue extraction rather than genuine cost recovery.

Financial inclusion cannot coexist with punitive fee structures.

The Interest Rate Paradox

Savings bank deposit rates around 3–4 percent and term deposit rates in the range of 6–7.5 percent often fail to compensate for:

• Consumer inflation

• Food inflation

• Healthcare and education costs

• Increasing cost of living in urban India

Thus, depositors face financial repression in real terms, even while bearing systemic risk.

Governance Failures and Moral Hazard

Repeated cycles of large non-performing assets, frauds, and recapitalisation—particularly in public sector banks—point to deeper governance issues:

• Weak accountability in credit sanction

• Political or institutional interference

• Delayed recognition of stress

• Evergreening of loans

When losses occur, they are ultimately absorbed by taxpayers and depositors, creating moral hazard and eroding trust.

Rebalancing the System: A Policy Agenda

To restore equity and confidence in the banking system, a series of structural reforms are necessary:

1. Strengthening Depositor Protection

• Enhance deposit insurance coverage to ₹10–15 lakh

• Introduce risk-based insurance premiums linked to bank risk profiles

2. Ensuring Fair Returns

• Introduce inflation-linked deposit instruments

• Create a benchmark-linked floor rate for small depositors

3. Reforming Governance

• Professionalise bank boards with independent oversight

• Enforce accountability for large credit decisions

• Strengthen early warning and resolution systems

• Introduce  Incentive / penalty based on the rating of borrowers  and ensure that the cost of NPAs to banks are borne by banks and borrowers themselves. Heath of the banks is dependent on the health of borrowers and the health of the economy is dependent on the health of the banking and entire Financial system. 

4. Rationalising Charges

• Cap and standardise penalty charges

• Mandate zero-penalty basic banking accounts

• Ensure full transparency in all fees and commissions

5. Institutionalising Depositor Voice

• Establish Depositor Protection Councils

• Include depositor representation in policy consultations

6. Strengthening Supervision

• Real-time monitoring of large exposures

• Time-bound resolution of stressed assets

• Strict enforcement against fraud and wilful default

• Scope for AI based checks and balances to detect erratic and fraudulent entries. 

The Larger Economic Imperative

India’s aspiration to become a developed economy by 2047 rests critically on a stable, trusted, and efficient financial system.

Trust in banks is not built merely on capital adequacy or regulation—it is built on fairness to the smallest depositor.

If depositors begin to feel:

• under-rewarded,

• over-charged,

• and under-protected,

then the very foundation of financial intermediation is weakened.

Conclusion: Recognising the Silent Pillar

Depositors are not passive providers of funds. They are the silent pillars of the banking system.

A fair banking system must ensure that those who provide the foundation are:

• protected,

• respected,

• and reasonably rewarded.

Rebalancing the system in favour of depositors is not a concession—it is a necessity for long-term financial stability, ethical governance, and inclusive economic progress.

Only then can India’s banking system truly align with the ideals of equity, trust, and shared prosperity that underpin the vision of a developed nation.

T V G Krishnan

( personal Views)

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What really needs to Change to realise the Dream of Viksit Bharat.

The recent observations of the Supreme Court of India on the functioning of Real Estate Regulatory Authority are indeed significant. When the highest court openly acknowledges gaps and failures in implementation, it signals that the system is not entirely insensitive. That is where hope lies.

That corruption, influence, and misuse of legal processes distort justice. When power and money override fairness, institutions lose credibility. Yet, it is equally true that systems do not collapse overnight—they weaken slowly when citizens disengage, when officials compromise, and when accountability becomes selective.

 Ethics and Sanatan values cannot  only be confined to books.Principles mean nothing unless they are lived in public life—by  Legislators, Administrators, Judiciary, Professionals, Academicians,  Businesses, and Citizens alike. A society cannot run on laws alone; it needs character. At the same time, one cannot  underestimate the resilience of people. The fact that citizens continue to live, hope, work, and raise families despite injustice is not just a mystery—it is strength. It is also a reminder that reform is always possible because society has not given up.

What really needs to change

For the wonderful vision of  “Viksit Bharat” to become real, three things must happen together:

1. Institutional accountability
   Every authority created by law must function for the purpose it was created—not as a procedural formality. Performance must be measurable and transparent.

2. Speed and accessibility of justice
   Laws like RERA were meant to give quick relief. If implementation becomes slow or biased, the very objective is defeated.

3. Ethical leadership and civic pressure
   Reform does not come only from within institutions—it also comes from citizens who question, document, vote, and persist

4. Will authorities introspect and act? Some will. Some won’t. Change will be uneven.

But history shows that when public awareness, judicial scrutiny, and civic insistence come together, reform does happen—sometimes slower than we want, but real nonetheless. Let noble thought translate into noble action.

This  is not just a prayer—it is also a call to conscience for every institution and every citizen.

TVG Krishnan

(Personal Views)

 (  Modified version of this Comment appeared in Money Life dated 12/2/26 against the article "Better to abolish RERA,It only helps Builders.)

Being Noticed is very Important .

 

                                             Being noticed is very important.

This refers to the article “Being Unelected Is Not Unimportant” (ET, 28 January 2026). Being noticed is, in fact, crucial in all forms of democracy—whether constitutional or popular.

Constitutional democracy rests on patriotism, respect for the Constitution, and the principle of equality irrespective of gender, religion, caste, race, or social status. Popular democracy, however, often thrives on familiarity, visibility, social engagement, and the ability to connect with people—sometimes even at the cost of overlooking ethical distinctions between what is right, wrong, or outright unacceptable. This partly explains why our elected bodies increasingly include individuals with criminal backgrounds.

In this context, strong and genuinely independent institutions—such as the Judiciary, Defence and Security forces, the Monetary Authority, and the education and health systems—can make a decisive difference. Their effectiveness depends on realistic autonomy, insulation from political interference, and accountability to the people through Parliament, ideally comprising individuals with proven constitutional integrity and democratic values.

Ultimately, governance must be robust, ethical, and free from corruption driven by selfish motives, divisive ideologies, and the manipulation of social biases. Only then can national progress and welfare measures truly serve the people.

Loka Samastha Sukhino Bhavanthu can be the only objective behind all Public  Policies, and Laws of the Country..

T V Gopalakrishnan 

Bengaluru 

Corruption: The Silent enemy of Governance , Justice and Civilisation.

 Corruption: The silent enemy of Governance , Justice and Civilisation. 

A recent national television debate on whether people are truly benefiting from an economic growth rate of 7.3% for FY 2025–26 is itself revealing. While growth figures appear impressive, the continued absence of basic amenities, minimum infrastructure, and humane living conditions for large sections of the population exposes a deep disconnect between economic progress and people’s lived realities. That such fundamental issues still demand national attention reflects long-standing governance failures and lack of accountability.

Corruption remains the principal reason for this contradiction. Though universally acknowledged as a major impediment to development, corruption continues to thrive due to systemic callousness and absence of responsibility. Across legislation, administration, and execution, human suffering is often dismissed as destiny rather than recognised as the outcome of man-made systems and deliberate neglect—contrary to the ethical foundations of our civilisation.

Corruption in administration is more destructive than disease. While science can cure physical ailments, corruption has become deeply entrenched—adaptive, inherited, and normalised across social, political, and economic boundaries. It manifests in multiple forms and is increasingly accepted as an unavoidable part of life.

Ironically, many so-called anti-corruption reforms are cosmetic and short-lived. Instead of eliminating corruption, systems and procedures have evolved to accommodate and institutionalise it, making malpractice an informal prerequisite for smooth functioning. Intelligence and authority across institutions have often been used to redesign corruption rather than dismantle it.

This reality calls for urgent collective introspection. Intellectuals, policymakers, administrators, professionals, corporate leaders, educators, technocrtas, social reformers, religious heads, and above all ordinary citizens must come together to confront corruption honestly and pragmatically. True progress lies not merely in higher economic growth, but in improved quality of life rooted in integrity, justice, and compassion—the essence of Sanatan Dharma.

Truth can triumph only when corruption is consciously rejected—culturally, ethically, and emotionally. Capability and success must advance together, while need must never be replaced by greed. Though corruption may appear convenient for administration, it is a destructive and avoidable bane for society.

The time has come for collective moral courage. A society free from man-made distortions is possible—if there is willingness to act.

Truth Alone Triumphs. Corruption which acts as the Greatest Obstacle to People-Centric Progress needs to be eradicated at the earliest systematically and with all Seriousness to derive full benefits of our capabilities and economic achievements.

Loka Samastha Sukhino Bhavanthu.

TVG Krishnan

(Personal Views)

Make Governance accountable to the Society .

 The analysis powerfully captures what Mother India still misses despite her aspirations and achievements. Aspirations can be realised only through a stable and effective political system that ensures sustained economic growth, inclusive development, and social justice that benefits all equitably. This must be supported by robust technology and accountable, trustworthy institutions that deliver goods and services with quality, sensitivity, and integrity.

The need of the hour is meaningful and effective governance—one that is accountable to the public and guided by self-introspection and timely correction of lapses, to satisfy the conscience of administrators themselves. Greater professionalism in the bureaucracy can significantly contribute to this transformation.

Viksit Bharat is well within reach, provided there is a transformative approach in administration and budgeting—one that incentivises positive outcomes, recognises genuine performers, and firmly penalises and publicly exposes wrongdoers. Corruption and black money continue to wreak havoc and must be addressed decisively through social audits and specially designed regulatory mechanisms.  

( This comment is in reply to the Video presentation on Aspirations and Acheivements , Money Life 8/1/26 )

Exploitation in Real Estate Despite RERA.

Exploitation in Real Estate Despite RERA

Despite RERA, exploitation by builders and lapses by authorities continue due to the absence of strong  Governance standards including ethical and moral accountability.The impact is not limited to infrastructure delays; it affects everyday living and the emotional, social, and financial well-being of homebuyers. Even reputed builders and large corporates often fail to meet expectations, leaving buyers feeling misled. While the economy may be progressing, the promised improvement in quality of life and peace of mind for citizens remains unfulfilled.

A clear example is seen in projects developed by large corporate builders, including L&T’s housing ventures. Several buyers who took possession of flats more than a decade ago allege that commitments made in the sale deeds—such as UDS, refund or proper handling of corpus funds—have not been honoured. Instead, technical and legal provisions are cited to deny rightful claims, despite buyers having invested their life savings and retirement funds in good faith.

True progress will come only when governance becomes more responsive and sensitive, and when ethical conduct is enforced alongside legal compliance. Economic growth must translate into fairness, trust, and dignity in everyday living. Peaceful life is what is aspired by average citizens which cannot and should not be ignored by those who matter and run the system and administration. There can definitely be a mechanism to assess the performance of Corporates engaged in real estate deals in particular as to what extent they do justice to the community, their own customers and the society in terms of well defined parameters and performance, Apart from own self assessment by the corporates themselves, there can be a separate evaluation of their performance by the related  Authorities, and independent Social Audit teams. A sort of markets' own assessment with transparency is the need of the hour to penalise or reward the corporates . Corporates' annual reports should incorporate a certificate from a befiiting and responsible authority to the effect that there are no customers' grievances and court cases pending against the corporates what soever.  

( This is a modified version of the comment given in response to an Article appearing in Money Life on Housing Societies Problems and Solutions on 1st Jan 2026 Issue)

T V G Krishnan

A Senior Citizen 

(personal Views)

 

Simplify Tax , Simplify Life.

 

Simplify Tax, Simplify Life

“Taxes like water ,have a tendency to find the lowest level. In the last analysis, almost all taxes ultimately hit the common man.” 

                                 Nani A palkhivala.

India’s tax system needs urgent simplification. Compliance today is cumbersome, confusing, and often distressing for ordinary citizens. The most effective reform would be a comprehensive transaction tax at source, using digital systems, AI,  and Information  technology to make tax payment automatic, transparent, and hassle‑free. Governments Revenue gets augmented, Tax collection is harassment free , tax paying public can have the satisfaction of contributors for nation building, misuse and abuse of tax collections can be monitored, controlled and ensured for its channelising for the desired needs and developments of the economy. 

At present, citizens face a maze of levies—GST, CGST, income tax (direct and indirect), fuel taxes, property tax, stamp duty, registration charges, and multiple cesses and surcharges. From cradle to grave, life is lived under constant fiscal pressure and administrative irritants. Ease of living, despite digitalisation, remains elusive. Similarly Citizens also are made to carry several cards like Personal Identity Card, Aadhar Card, Pan Card, Insurance Card, credit cards,  debit cards, medical card, driving licence card, so goes the list unending and all these cards and their updation itself keep the peace of mind disturbed apart from physical hazards. Is it not time to think of some Card to capture all information in one card and do away with that for carrying on life.    

While transactions are increasingly paperless, compliance is not. Tax assessment involves complex rules, detailed calculations, and repetitive paperwork. This creates scope for errors, evasion, data manipulation, and corruption, distorting both revenue figures and policy decisions. Expecting 140 crore citizens to comply individually with such a system is unrealistic.

A tax‑at‑source model offers a practical solution. By levying small, transparent taxes at the point of transaction and monitoring them digitally, revenue can be augmented without harassment. Most citizens would be relieved of filing returns altogether. Income‑tax returns should be required only for individuals with genuinely high incomes—say above ₹50 lakh or ₹1 crore—from multiple ways. As it is,  out of about 140 crore people , a miniscule percentage only is required and able to file the  income return itself is something strange and unique requiring the authorities to think seriously and find ways and means to make every citizen feel proud and become part and parcel of the developmental activities of the nation.    

The salaried class and pensioners, whose incomes are largely standardised, can easily be covered through taxation at source and exempted from filing returns. For others, Artificial Intelligence can help monitor transactions at a macro level and flag only exceptional cases for scrutiny. This would reduce the need for a vast supervisory machinery and improve trust in the system.

Despite visible improvements in living standards, the number of income‑tax assessees remains disproportionately low. This reflects not widespread poverty, but poor data capture. Accurate, real‑time data on wealth generation, distribution, accumulation, and utilisation is essential for equitable growth and sound policymaking.

India has abundant human talent, technological capability, and cultural strength. Persistent inequality, inflation, unemployment, and dissatisfaction cannot be justified. A holistic review of taxation, cleaner administration, ethical governance, and intelligent use of technology is urgently required.

Revenue is necessary, but relentless monetisation—by individuals or the State—has social costs. True welfare cannot be measured by money alone. Academicians, administrators, professionals, policymakers, and moral leaders must collectively rethink, priorities to make life happier, fairer, and more humane.

“Loka Samastha Sukhino Bhavanthu will be realised not merely through higher revenue collections, but through wisdom, balance, and compassion in governance. True progress lies in assessing social outcomes and advancing social justice in a manner that satisfies both the governors and the governed, and that can withstand public scrutiny. Let the principles of justice and good conscience prevail at every level of legislation, the judiciary, and administration.”

T V G Krishnan
Senior Citizen

(Personal Views)