Union Finance Minister Nirmala Sitharaman urged public sector banks to update their HR policies to make sure that their employees are well-versed in the local language of their respective branches.
While at SBI’s Banking and Economic Conclave, Sitharaman claimed that having bank employees interact with customers in their local language will help restore “human touch” in banking and improve customer service. The minister pointed out that while digital private infrastructure can bring advantages and efficiencies, including productivity and profit, banks have lost the “human touch” they once had.
“You knew your customers earlier because the person posted there would tell you about the local scenario, who is creditworthy, who is reliable, who is authentic. That’s completely gone. Wouldn’t you want to restore that?” asked Sitharaman.
“The only flak which I am unable to defend on behalf of public sector banks, and I am not talking about private banks, is when, because of our HR policy, we post people of different mother tongues in different areas,” Sitharaman elaborated. “I am not blaming the policy, but not a word of the local language is spoken. That little element of touch which is required with your local customers — without them, you are not there — you need to have that element come in.”
Sitharaman appealed to banks to ensure that their HR policies don’t make recruiting just about numbers. She emphasised that at every branch, each staff member should be able to understand their customer and speak the local language.
“At least if the top management does not speak, the branch-level officials should speak. And I would strongly push towards performance appraisal (of an employee) based on his/her efficiency in the local language,” the finance minister added.
The comments follow a rise in stories where bank staff have been found to be either unable or unwilling to communicate in the local language. This includes the May 2025 incident in Bangalore when an SBI staff member’s refusal to speak in Kannada sparked outrage. Canara Bank has also found itself in hot water due to employees being unable to serve customers, primarily in Karnataka, because of language barriers.
Sitharaman also talked about the need to simplify the KYC process for bank customers. “Our paperwork has to be simplified. Of course, there is some work going on towards KYC in FSDC. All banks have to sit and talk about it, and all regulators have to come on one page. We have to make the process simple. You can’t be putting the onus on the borrower to go on proving and providing documents till death comes,” Sitharaman said.
“If these small things are corrected, you will be one of the most appreciated institutions in the country,” she added.
SBI chairman C.S. Setty, who was also at the events, stated that banks are indeed in the process of simplifying KYC. “We are working on Project Saral (in SBI), and many of the things that you have been talking about over the years, we are undertaking in this project,” he revealed.
