Interesting Facts About India Union Budget: Finance Minister Piyush Goyal used the Budget 2019 to drive home the government’s achievements in improving banks’ financial health amid the ongoing NPA crisis, and to highlight the success of the recently introduced bankruptcy law.
In his speech, he noted that the period of 2008-2014 can be recognised as the period of aggressive credit growth as the outstanding loans of public sector banks ballooned from Rs.18 lakh crore to Rs. 52 lakh crore. This happened because many projects were started which could either not be completed or had low capacity utilization.
Piyush Goyal assured in his budget speech that the government has taken good care of the NPA issue plaguing the banking sector which has led to the Twin balance sheet problem. “We have followed the 4R process – Recognition, Resolution, Recapitalization and Reforms.” he said
RBI in assets quality review since 2015 discovered huge amount of stressed asset. “We have put a stop to questionable crony banking,” Piyush Goyal claimed.
Praising his government, he claimed that Rs 3 lakh crore has been recovered via Insolvency and Bankruptcy Code process. ” IBC has institutionalized a resolution friendly mechanism which is helping in recovery of NPA loans while preserving the underlying businesses and job” claimed Goyal
Moreover, to restore the financial health of public sector banks, recapitalization has been done up to Rs 2.6 lakh crore . Further amalgamation of banks were done to reap the benefits of economies of scale,improve access to credit and cover larger geographical area.
Backing government efforts, Piyush Goyal also pointed out that three PSU banks — Bank of Baroda, Bank of Maharashtra and Oriental Bank of Commerce — have been removed from the prompt corrective action (PCA) list of RBI.
Charan Singh, Chief Economist of EGrow Foundation said more banks which are still under PCA require review. A complete review of banking and Basel norms are required for which a banking commission would be helpful, he added