Finance Minister Nirmala Sitharaman underscored that "phone banking" during the 10 years of UPA rule was the method through which political interference adversely impacted most Indian banks, leading them into a loss-making situation.
"Phone banking was at that time when people would call the banks and say so and so will come to seek a loan from your bank, please grant it, meaning that there's no need to look at their eligibility, etc & that the loan must be granted,” Sitharaman says in a post on X.
“The heart of the problem was during the 10 years of UPA rule between 2004 and 2014 when calls were made to grant loans to people who weren't worthy of getting a loan. The burden fell on us to sort the Indian banks out with reforms,” as per the post.
Sitharaman noted that calls were made during this period to approve loans for individuals who did not meet the creditworthiness criteria. She also stressed that the responsibility to address the ensuing challenges and implement reforms to rectify the situation ultimately rested on their shoulders to overhaul the Indian banking sector.
“'Phone Banking' was the method through which political interference spoiled all our banks & drove them to a loss-making situation. First, it must be looked at what contributed to the NPAs & made Indian banks actually have a twin balance-sheet problem which brought down the Indian economy to the 'Fragile Five',” the post states.
"Hon'ble Prime Minister Shri Narendra Modi sat with all of us, including my predecessor Shri Arun Jaitley ji. We spent a lot of time understanding where the problem was and worked together with the RBI," said the Finance Minister.
“Today, the Indian economy is the world's fastest-growing economy, registering a 7.6% GDP growth rate in the last quarter,” the post adds.
Sitharaman also shed light on the debt recovery, she said that the legal suits filed for recovery were against 13,978 loan accounts as of 31st March, 2023. She continued to address the action under the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act). “Action under the SARFAESI Act has been initiated in 11,483 cases. FIRs have been filed in 5,674 cases,” as per Sitharaman’s post via X.
She highlighted that the aggregate amount recovered was ₹33,801 crores as of 31st March, 2023.
As per her post on X, “As of December 1, 2023, assets amounting to ₹15,186.64 crores under the PMLA have been confiscated by the ED out of which ₹15,183.77 crores have been restituted to the Public Sector Banks. PMC Bank has recovered ₹104.02 crores with active cooperation and support from agencies.”
“Assets amounting to ₹692.89 crores have been confiscated under the provisions of the Fugitive Economic Offenders Act, 2018,” the post adds.