Finance Minister Arun Jaitley on Monday said that the Narendra Modi government does not believe in the blame-game and is committed to solving the issues relating to the banking crisis. Addressing top bankers through live video streaming, Arun Jaitley said that one of the key domestic challenges before the government was the challenges to banking institutions, which was there for over a decade.
Asserting that he did not believe in the blame-game and that lessons from the banking crisis were needed to be learnt, Arun Jaitley said that the desire to achieve the high growth must be backed with strong macroeconomic fundamentals. When there is 31% or 28% credit off-take, history will record it as indiscriminate lending, and its impact will be recorded in future, he said.
The non-performing assets (NPA) in the banking system surged dramatically after 2015 when the Reserve Bank of India brought in stricter norms, followed by Insolvency and Bankruptcy Code (IBC) and a strict 180-day timeline for resolution.
“It is a lesson we must learn. Moderation is important rather than just running after results,” Arun Jaitley said. He said that not only was the discriminate lending an error but its dressing up was an error too. “We assigned methodologies to recover the dues, but we also created a system where we reduced the ability of bankers to find a solution,” the finance minister said.
This, he said, landed a situation of high-debt, for which dressing up was done. Arun Jaitley suggested that some commercial judgements should be left to bankers. Arun Jaitley last year had said that the Narendra Modi government has inherited the banking crisis from the UPA government.
Without taking the name, the finance minister indicated that high GDP growth in the UPA era was without the support of macroeconomic fundamentals. On Sunday, in his blog, Arun Jaitley quoted two International Monetary Fund (IMF) reports to allude that in the UPA era, there was high inflation, high fiscal deficit, high current account deficit etc.