Finance Minister Nirmala Sitharaman announced today that banks have successfully recovered over Rs 10 lakh crores from bad loans between 2014 and 2023, attributing this achievement to the reforms initiated by the Modi government. She detailed this progress in a statement on X, noting that the Directorate of Enforcement (ED) has investigated approximately 1,105 bank fraud cases, leading to the attachment of proceeds of crime worth Rs 64,920 crores. By December 2023, assets totalling Rs 15,183 crores had been restituted to public sector banks.
Sitharaman criticised the opposition for allegedly spreading false information about loan waivers for industrialists. She clarified that opposition leaders fail to differentiate between write-offs and waivers. According to her, banks pursue the recovery of bad loans after write-offs as per RBI guidelines, and no loans have been waived for industrialists.
She emphasised the government's rigorous efforts in recovering bad loans, particularly from significant defaulters, noting that the process is ongoing. She highlighted the banking sector's record net profit of over Rs 3 lakh crores in 2023-24, contrasting it with the situation before 2014 under the Congress-led UPA government, which she described as plagued by bad loans, corruption and mismanagement.
Sitharaman accused the UPA era of creating the NPA crisis through 'Phone Banking,' where loans were allegedly granted to undeserving businesses due to pressure from UPA leaders. This practice, she claimed, led to a surge in Non-Performing Assets (NPAs) and institutionalized corruption. She stated that banks during the UPA period often concealed bad loans through 'evergreening' or restructuring.
The current government, along with the RBI, implemented measures such as the Asset Quality Review to expose these hidden NPAs and end deceptive accounting practices. She cited former RBI governors Raghuram Rajan and Urjit Patel, who have publicly criticised the previous administration. Rajan described the NPA crisis during the UPA era as a result of "historic irrational exuberance," while Patel criticised the functioning of public sector banks under the UPA for bureaucratic inertia and political interference.
Sitharaman concluded by attributing the current administration's challenges to the reckless and imprudent lending practices of the Congress era, which left a problematic legacy known as the 'Twin Balance Sheet' issue, inherited in 2014.