Prime Minister Narendra Modi during his fiery response to the no-confidence motion moved by the opposition also touched on the chronic problem of Indian banks’ Non-Performing Assets (NPA).
During the speech he gave on late Friday evening, he accused the erstwhile UPA government of creating a system of “underground loot” from 2008 to 2014, when loans were sanctioned without any proper appraisal, Times of India has reported.
As also recorded in our live blog, after attacking Congress for not giving minimum support price (MSP) to the farmers, Modi turned to the subject of India’s economy. He stated that when his government came to power, they were shocked at the state of the economy. He thus told the tale of Indian NPAs.
Modi claimed that the problem started in 2008 and with elections due in 2009 Congress felt that it had a year left (in power), and thus had the brainwave to empty as many banks as they could. Modi alleged that loans were given and when the time for repayment came, further loans were given – which gave birth to a cycle.
Interestingly Modi also claimed that the rise of the NPAs was also catalysed by the decision to reduce customs duty, which increased the capital goods import which was financed by bank loans. Thus he claimed that the production of capital goods was hit and loans were sanctioned without any assessment.
He also claimed that the delay in providing environmental clearances, which resulted in the project’s delay also resulted in bank loans getting stuck causing NPAs to rise.
In order to explain the “underground loot” modus operandi, Modi commented that, much before the introduction of net-banking, Congress invented “phone banking” whereby a phone call resulted in sanctioning of loans for their cronies – Economic Times reports.
The PM claims that the Congress though got addicted and continued this practice even after it retained power in 2009, hence the loot went on till 2014. He thus cited figures to claim that banks gave a whopping Rs 52 lakh crore in loans from 2008 to 2014 an almost 300% rise from previous sixty years figure of Rs 18 lakh crore.
In order to prevent such “loot”, Modi claimed that the present government has put up checks across the system and even brought in the insolvency and bankruptcy code (IBC). IBC has already resulted in the recovery of a whopping Rs 36,000 crore and a further payment of Rs 83,000 crore worth of pending loans.
Besides this Modi claimed that the government has cracked down on wilful defaulters measures to tackle stressed assets.
He ended this segment on an almost ominous note by stating that had the Congress retained power in 2014 then the country would be going through a huge crisis now.