May 31st 2024.
In a recent statement, Finance Minister Nirmala Sitharaman proudly announced that over Rs 10 lakh crores has been recovered from bad loans by banks between 2014 and 2023. This impressive achievement is a result of the reforms implemented by the Modi government.
The Finance Minister also highlighted the efforts of the Directorate of Enforcement, who have investigated around 1,105 bank fraud cases and successfully attached proceeds of crime amounting to 64,920 crores. In addition, assets worth 15,183 crores have been returned to public sector banks as of December 2023.
However, the Finance Minister expressed disappointment in the opposition's false claims of loan waivers for industrialists. She clarified that there have only been write-offs, as per RBI guidelines, and banks continue to actively pursue the recovery of bad loans. She also emphasized that there has been no leniency for large defaulters and the process of recovery is ongoing.
In fact, the banking sector has achieved a significant milestone by recording its highest-ever net profit of over 3 lakh crores in 2023-24. This is a stark contrast to the state of the sector before 2014, when it was plagued with bad loans, corruption, and mismanagement under the Congress-led UPA government.
The Finance Minister attributed the root cause of the NPA crisis to the 'Phone Banking' practices of the UPA era, where loans were given to undeserving businesses under pressure from UPA leaders and party functionaries. This led to a sharp rise in non-performing assets and institutionalized corruption.
She also pointed out that various measures, such as the Asset Quality Review, have exposed the hidden NPAs and put an end to the accounting tricks used to conceal them. The severity of the situation has been acknowledged by two former RBI governors, Raghuram Rajan and Urjit Patel, who have spoken about the decay in the banking system during the UPA regime.
The reckless and imprudent lending practices of the Congress-led UPA government have left a disgraceful legacy known as the 'Twin Balance Sheet' problem, which the current government inherited in 2014. This has resulted in a decade-low credit growth, huge losses, and erosion of capital for banks due to higher provisioning.
In conclusion, the Finance Minister reiterated that the Modi government has taken necessary steps to clean up the banking sector and bring it back to a healthy state. The recovery of over Rs 10 lakh crores from bad loans is a testament to the success of these efforts and the banking sector's highest-ever net profit is a reflection of the positive impact it has had.
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