“Centre Reports Over ₹10 Lakh Crore Recovered from Bad Loans in Past 9 Years”
In a significant development, Finance Minister Nirmala Sitharaman announced that banks have recovered over ₹10 lakh crore from bad loans between 2014 and 2023. This achievement is part of the broader reforms process implemented by the Modi government to revitalize India’s banking sector.
In a significant development, Finance Minister Nirmala Sitharaman announced that banks have recovered over ₹10 lakh crore from bad loans between 2014 and 2023. This achievement is part of the broader reforms process implemented by the Modi government to revitalize India’s banking sector.
“This is in stark contrast to the situation before 2014 when the Congress-led UPA government turned the banking sector into a cesspool of bad loans, vested interests, corruption, and mismanagement,” Finance Minister Sitharaman stated.
Highlighting the efforts made by the Directorate of Enforcement (ED), Sitharaman revealed that around 1,105 bank fraud cases were investigated, leading to the attachment of proceeds of crime amounting to ₹64,920 crores. As of December 2023, assets worth ₹15,183 crores have been restituted to public sector banks.
Addressing criticisms from the opposition, Sitharaman emphasized, “The Opposition, habituated to spreading lies, wrongly claims that there has been a ‘waiver’ of loans given to industrialists. Despite claiming to be ‘experts’ in finance and economy, it’s a pity that opposition leaders are still unable to distinguish between write-offs and waivers. After the ‘write-offs’ as per RBI’s guidelines, banks actively pursue the recovery of bad loans. And, there has been no ‘waiver’ of loans for any industrialist.”
She underscored that there has been no leniency in recovering bad loans, especially from large defaulters, and the process is ongoing. The Finance Minister also pointed out that India’s banking sector achieved a significant milestone by recording its highest-ever net profit, crossing ₹3 lakh crores in the fiscal year 2023-24.
Sitharaman further criticized the previous Congress-led UPA government, stating that the ‘seeds’ of the NPA crisis were sown during their tenure through ‘Phone Banking’ practices. Loans were given to undeserving businesses under pressure from UPA leaders, leading to a massive increase in Non-Performing Assets (NPAs) and institutionalized corruption.
“Many banks hid and avoided reporting their bad loans by ‘evergreening’ or restructuring them. Various measures by our government and the RBI, such as the Asset Quality Review, disclosed hidden mountains of NPAs and ended the accounting tricks used to hide them,” Sitharaman explained.
She also cited comments from former RBI governors, Raghuram Rajan and Urjit Patel, to bolster her argument. Rajan described the NPA crisis during the UPA era as a “historic phenomenon of irrational exuberance,” while Patel noted that the functioning of Public Sector Banks (PSBs) under the UPA suffered from “a perennial shortcoming on account of bureaucratic inertia and political meddling.”
Sitharaman concluded by highlighting the adverse legacy inherited from the Congress era, including the ‘Twin Balance Sheet’ problem, which led to slowed credit growth, huge losses, and capital erosion for banks due to higher provisioning.
Sources By Agencies
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