Blaming the previous UPA government for the current banking sector stress, Railway Minister Piyush Goyal said this government has fixed responsibility on big defaulters and banks are being strengthened through various measures.
Before BJP came to power, banks were pressurised to give loans aggressively between 2008-2014 despite irregular repayments by big borrowers, he said.
Loans were reclassified under corporate debt restructuring and structural debt restructuring for the purpose of ever-greening of those loans that were actually fallen into NPA category, Goyal told reporters.
“Through this, the losses of banks and their precarious position was kept under the carpet,” he said.
The government has taken various steps to help bank clean up their balance sheets and RBI instituted asset quality review is one of them, he added.
Goyal said gross advances by public sector banks jumped nearly seven-times in nine years from Rs 8.08 lakh crore in March 2005 to Rs 52.15 lakh crore by March 2014, however, the GDP didn’t grow at a similar pace, meaning there was reckless and indiscriminate lending due to political pressures.
Stressed assets or bad loans of public sector banks (PSBs) was Rs 7.33 lakh crore as on June 2017, compared to Rs 2.75 lakh crore as on March 2015.
Goyal said the BJP government is carrying “this legacy” created by the Congress-led UPA regime before coming to power in mid-2014.
The minister said the government has every intention to solve this banking sector crisis.
RBI’s asset quality review (AQR) mechanism, initiation of Insolvency and Bankruptcy Code (IBC) and referring insolvent cases under the National Company Law Tribunal to recover bank sector dues are the steps that the government has already taken, he added.
DH
