Prime Minister Narendra Modi on Wednesday targeted the Congress, saying that the problem of public sector banks’ (PSBs) large non-performing assets (NPAs) and over-leveraged corporate balance sheets that stagnated private investments was the “biggest liability” transferred to his government by the previous UPA regime. Modi said the earlier government had forced banks to give loans to only a few industrialists, which was the biggest scam of the UPA, bigger than 2G, CWG and coal scam. “This is how they (UPA) crippled the banking system,” he said while speaking at the annual general meeting of the Federation of Indian Chambers of Commerce and Industry (Ficci).
The prime minister also said that no study was done by organisations like Ficci to assess how the plight of the banking sector worsened due to policies of the earlier government. “Those in the government, banks, industry and markets knew that a wrong was being committed,” he said. “This was the UPA government’s biggest scam, bigger than Commonwealth Games, 2G and coal block allocation scams. This was kind of loot of public money by those sitting in the government by using industrialists,” he said.
Quite in contrast, policies being implemented by his government has helped 3 crore people to be entrepreneurs, while the poor have now enhanced access to pension, scholarships and other social benefits, Modi said. The government has been taking steps to strengthen the banking system and secure the interest of customers, he added.
Gross NPAs to advances in PSBs rose from 5.43% (Rs 2,78,466 crore) in March 2015 to 13.69% (Rs 7,33,137 crore) as of June 2017. Policy paralysis in the last leg of the previous government also stalled many projects, leading to a twin-balance-sheet problem (high bank NPAs and stressed corporates).
Pointing to builders’ arbitrariness that resulted in buyers not getting homes in time despite making full payments during the previous government’s tenure, Modi said his government has brought in the Real Estate (Regulation and Development) Act to address the problems faced by the middle class and curb the arbitrariness of builders. He also urged big corporates to clear the dues of small and medium enterprises on time to give a fillip to the economy.
Trashing rumours over the FRDI (Financial Resolution and Deposit Insurance Bill), the PM said the government is working to safeguard the interest of the customers. The government had earlier clarified that the Bill does not propose in any way to limit the scope of powers for the government to extend financing and resolution support to banks, including PSBs.
On the goods and services tax, Modi said the objective of the new tax regime is not to collect more revenues. “The system needs to be made more formal so that it benefits the poor and the small traders, who can then approach banks for easy credit; logistics costs also come down,” Modi said.
Under the Mudra scheme, over Rs 4 lakh crore in loans given without guarantees, he added.