Allaying fears among borrowers, Finance Minister Nirmala Sitharaman on Monday said both public and private-sector banks have been asked to refrain from being too harsh when it comes to ensuring loan repayment.
While making an intervention during the Question Hour in the Lok Sabha, she said: “I have heard complaints about how mercilessly loan repayments have been followed up by some banks. The government has instructed all banks, both public and private, that harsh steps should not be taken when it comes to the process of loan repayment and they should approach the matter with humanity and sensitivity in mind.”
Alleging that some banks are being overzealous in loan recovery, Dhairyasheel Mane, Eknath Shinde-led Shiv Sena MP from Hatkanangle in Mahararashtra, said “exorbitant” interest rates were being charged by some banks. Minister of state for finance Bhagwat Kishanrao Karad said the government doesn’t interfere in the banks’ decision on the interest rates at which banks provide loans.
Sitharaman recently said that both banks’ balance sheets and the corporate finances were in an advantageous position and that momentum needs to be sustained. “They (banks) are now very clearly looking forward towards expanding on core banking activity. Now, the expression that the Reserve Bank has used about this is that India is in a twin balance sheet advantage position,” she said
Thanks to various steps taken by the government and the Reserve Bank of India in recent years, asset quality of public sector banks (PSBs) improved significantly – their gross and net NPAs stood o at 4.97% and 1.24% respectively in March 2023. During 2022-23, PSBs earned a record aggregate net profit of around Rs 1.05 trillion, almost three times the level in 2013-14.
Prime minister Narendra Modi had sad Saturday cited the turnaround in the bankinhg sector after the crisis in the latter years of UPA was due to taken by his government like strengthening of the management of the PSBs, stress on professionalism and consolidation of small banks into large banks.
“By Acts like the Bankruptcy Code, banks were protected from losses. Furthermore, by tightening the grip over those who looted the government property by attaching their property, the banks known for losses and NPAs are now being discussed for their record profit,” he said at a virtual Rozgar Mela.