In yet another post on the micro-blogging site X today, Finance Minister Nirmala Sitharaman took a dig at the Congress-led UPA for mishandling the country’s banking ecosystem, which witnessed a meteoric rise in non-performing assets during 2004 and 2014. In her post, Sitharaman said the UPA, dominated by dynastic parties, used banks for their ‘Parivar Kalyan’ (family welfare), while the Modi government leveraged banks for the purpose of ‘Jan Kalyan’ (public welfare). Sitharaman said during UPA, bank loans were given to undeserving businesses under pressure from UPA leaders and party functionaries, which led to the NPA crisis in the Indian economy.   

“The UPA Alliance, dominated by dynastic parties, used banks for their own 'Parivar Kalyan' (family welfare). In contrast, our government has leveraged banks for 'Jan Kalyan' (public welfare). Efforts to expand banking in India faltered for decades due to Congress's limited actions beyond bank nationalisation, which benefitted mainly the educated and elite. Before 2014, banking access was largely restricted to cities. Despite 68 years of independence, less than 68% of the population had bank accounts, forcing the poor and middle class to rely on loan sharks, who charge high rates. It was PM Narendra Modi who launched inclusive schemes like Jan Dhan and MUDRA to ensure widespread access to banking services. We have considered banks as partners in ensuring financial inclusion,” Sitharaman said in the post. 

“The Banking sector is considered the backbone of a nation’s economy. Recently, India’s banking sector achieved a significant milestone by recording its highest-ever net profit, crossing ₹3 lakh crore. 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,” Sitharaman added in the post. 

“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. Under the UPA, obtaining loans from banks often depended on powerful connections rather than a solid business proposition. Banks were forced to neglect proper due diligence and risk assessment before sanctioning these loans. This led to a massive increase in Non-Performing Assets (NPAs) and institutionalised grafts. Banks also suffered huge losses and erosion of capital due to higher provisioning. After banks began transparently disclosing their NPAs for loans lent before 2014, the gross NPAs of PSBs rose to a high of 14.6% in FY 2017-18,” she added.  

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.