Finance Minister Nirmala Sitharaman said today that banks have recovered more than Rs 10 lakh crores from bad loans between 2014 and 2023, as part of the reforms process implemented by the Modi government.
"The Directorate of Enforcement (ED) has investigated around 1,105 bank fraud cases, which resulted in the attachment of proceeds of crime amounting to 64,920 crores. As of December 2023, assets amounting to 15,183 crores have been restituted to public sector banks," the Finance Minister posted in a detailed statement on X.
"The Opposition, habituated to spreading lies, wrongly claims that there has been a "waiver" of loans given to industrialists," the Finance Minister said.
Stepping up the attack on her political rivals she said: "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 added that there has been no leniency in recovering bad loans, especially from large defaulters, and the process is ongoing.
She bolstered her argument by pointing out that India's banking sector achieved a significant milestone by recording its highest-ever net profit, crossing 3 lakh crores in 2023-24.
"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," Ms Sitharaman remarked.
She said that the 'seeds' of the NPA crisis were sown during the Congress-led UPA era through 'Phone Banking' when loans were given to undeserving businesses under pressure from UPA leaders and party functionaries. This led to a massive increase in Non-Performing Assets (NPAs) and institutionalised grafts.
"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," the Finance Minister said.
She pointed out that two former RBI governors have openly exposed the level of decay in the system left by the UPA regime. Raghuram Rajan described the NPA crisis during the UPA era as a "historic phenomenon of irrational exuberance. Similarly, former Governor Urjit Patel noted that the functioning of PSBs under the UPA suffered from "a perennial shortcoming on account of bureaucratic inertia and political meddling," she said.
She said that the Congress-era reckless and imprudent lending created the disgraceful legacy of the 'Twin Balance Sheet' problem, which we inherited in 2014.
"Credit growth slowed to a decade-low level. Banks also suffered huge losses and erosion of capital due to higher provisioning," the Finance Minister said.
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