'Modi-nomics', Modi govt destroyed public banks, financial institutions: Cong

The Congress on Wednesday alleged the Modi government has destroyed public sector banks and other financial institutions in India to mess up the $2 trillion banking sector and was also protecting wilful loan defaulters.

New Delhi:Taking a jibe at BJP after Prime Minister Narendra Modi held a meeting with the chief executives of state-owned and private banks, Congress said on Wednesday that "Modi-nomics" and Modi government has destroyed banking sector and financial institutions.

In a statement released by Congress, chief spokesperson Randeep Singh Surjewala said, "PM met CEOs and executives of India's Banking sector today. We hope they had the gumption to tell PM how his government has destroyed the banking sector and financial institutions."

"Even if they maintained a studied silence in the face of PM's aversion to hear the honest uncomfortable truth, there were three events, just in the last one week, that reflect the miserable state of India's financial system," Surjewala added.

The Congress said three important events in the last one week reflect the "miserable state" of India's financial system and the banking sector --

• RBI's Financial Stability Report for July 2020 warned that bad loans of the banking sector can reach a "20-year high";
• former RBI Governor Urjit Patel's revelation that while the RBI wanted to be tough against loan defaulters, the Modi government wanted him to "go soft";
• and former RBI Deputy Governor Viral Acharya's tell-all book's disclosure on the government's mismanagement in making the entire financial sector 'unstable', 'risky' and on the 'verge of collapse'.

The Congress leader alleged that India's financial sector had collapsed under the Modi government and the NPAs had increased to Rs 9,35,000 crore as in September 2019 (9.1%) as against NPAs of Rs 2,16,739 crore (3.8% of total loans) in March 2013-14.

The RBI's July 2020 'Financial Stability Report' reflects that bad loans in the banking system can reach a whopping 14.7%, a 20-year high, Surjewala added.

The party alleged that the government is protecting wilful defaulters and said that the All Indian Bank Employees Association (AIBEA) has listed 2,496 "wilful defaulters" with default amounts totalling a whopping Rs 1,47,000 crore.

"With the Banks not allowed to recover loans from defaulters, all further lendings have come to a halt. Bank credit growth was 14 per cent when the Modi government assumed power in 2014. Bank credit growth is now down to 4 per cent and will become zero soon, as per RBI's own report," Surjewala remarked.

As such huge amounts are being technically written off by the NDA government, there is zero effort to investigate or punish the defaulters, he alleged.

He further added that by not allowing banks to recover loans, their credit growth gets down to 4% from 14% under the regime of the Modi Government.

"That is precisely why Rs 3 lakh crores guaranteed loans to MSMEs announced with much fanfare only Rs 1,23,000 crore was sanctioned and even lower amount of Rs 68,311 crores has been dispersed," he added.

Calling the merger of banks a "flop story", Surjewala asserted that the relative value of PSU Bank Index has fallen by 2.63% in the last 6 years, while overall BSE-index has grown 11% on CAGR basis.

While suggesting the way forward, the Congress leader said, "Restore the 'autonomy of RBI', allowing them to go after bank defaulters, restore confidence in banks through a promise of 'no witch-hunting' and allowing them to lend prudentially as per their 'risk norms' and expand credit guarantee program for MSME to stimulate credit offtake and propel investment."