Amid the mounting NPA crisis, Union Finance Minister Arun Jaitley took to a blog to pin the blame for the current situation on the previous UPA government. In a post on Facebook on Thursday, Jaitley goes on to call Congress president Rahul Gandhi a liar and a "clown prince".
Denying Rahul Gandhi's claims that the Centre waived off loans worth Rs 2.5 lakh crore for 15 top industrialists, Jaitley said nothing could be more far from truth. He explains that the amounts were lent to the banks before 2014, prior to the Narendra Modi-government coming to power at the Centre.
Jaitley goes on to make a serious allegation that the UPA government kept rolling over these loans, despite their default status. "Secondly, the UPA Government, in order to conceal these loans despite the default, kept rolling over the loans. These loans were ever-greened," he says. "Today the UPA leaders stated that when they went out of Government, the Non-Performing Assets (NPAs) were only Rs.2.5 lakh crores. The truth is that actually NPAs were hidden under the carpet."
Furthermore, Jaitley cites an asset quality review (AQR) conducted by the Reserve Bank of India (RBI) in 2015 to substantiate his claims. "...as a result of AQR and subsequent transparent recognition by banks it was found that the NPAs were actually Rs.8.96 lakh crores and the real amount was being hidden."
Jaitley adds that no "effective steps" were taken to recover or reduce the NPAs. "Post 2014-15, NPAs increased not because more monies were lent but because interest was mounting up on the overdue amounts. Some of the defaulters were given a second restructuring so that the defaults could continue to be hidden." During the UPA era, on the other hand, most of the default accounts were not declared NPAs.
"The truth, Mr. Rahul Gandhi, is that your government allowed the banks to be looted. The loans were inadequately securitised. Your government was in complicity. The recoveries are being done by the banks only now," Jaitley rallies.
On the other hand, Jaitley contends that the only effective move that has taken place in this regard is the Insolvency and Bankruptcy Code (IBC), passed by the Lok Sabha on May 5, 2016. As a result of this, 12 major defaulters have been identified and the recovery process is on. While the banks under the UPA government took little steps to recover the loans, "the NDA government which through IBC, changed the debtor-creditor relationship and enabled the banks to effectively pursue the recovery", says Jaitley.
The finance minister's blog on Facebook comes at a time when the gross non-performing assets (GNPAs) plus restructured standard advances in the banking system continue to be elevated at 12.1 per cent of gross advances at end-March 2018. Meanwhile, the cumulative loss of public sector banks crossed Rs 87,357 crore in 2017-18, with scam-tainted Punjab National Bank Ltd. topping the chart with a hit of nearly Rs 12,283 crore, followed by IDBI Bank Ltd.
At the same time, the aggregate gross NPAs of scheduled commercial banks increased primarily as a result of transparent recognition of stressed assets as NPAs, from Rs 3,23,464 crore, as on March 31, 2015, to Rs 10,35,528 crore, as on March 31, 2018 , reports news agency PTI.
Lenders have made cash recovery of Rs 36,551 crore in the first quarter of the current fiscal. This is 49 per cent higher than the same quarter of the last fiscal. During 2017-18, banks recovered Rs 74,562 crore.
