Finance Minister Arun Jaitley
Finance Minister Arun Jaitley on Monday blamed the aggressive lending by public sector banks (PSBs) under UPA rule for rise in NPAs. He added that loan write-offs by public sector banks do not lead to loan waivers and the exercise helps lenders clean up their balance sheets and achieve taxation efficiency.
"Technical write-offs are resorted by banks as per Reserve Bank of India (RBI) guidelines. However, this does not lead to any loan waiver. Recovery of loans continues rigorously by Banks. In fact the defaulting management of most Insolvent companies has been removed under the IBC," the Finance Minister said in a blog post.
Jaitley said the total loan outstanding of state-run banks which was about Rs 18 lakh crore till March 2008, increased to about Rs 52 lakh crore till March 2014.
"Asset Quality Review initiated by RBI in 2015, and subsequent transparent recognition by banks revealed high NPAs. NPAs of PSBs increased from Rs 2.26 lakh crore in March 2014 to Rs 8.96 lakh crore in March 2018," the Finance Minister said.
Jaitley also blamed the laxity in credit risk appraisal and loan monitoring for spurt in stressed assets. "Stressed account was treated as non-NPA through flexibility in loan classification, evergreening and often repeated restructuring," the minister added.
"Borrowers of such written off loans continue to be liable for repayment. Recovery of dues takes place on ongoing basis under legal mechanisms, which include, inter-alia, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), and Debts Recovery Tribunals (DRTs)," Jaitley said.
He said public sector banks have recovered Rs 36,551 crore of bad loans or NPAs during April-June quarter of the current financial year as compared to Rs 74,562 crore recoveries made in the full 2017-18 fiscal.
Jaitley was commenting on reports that the country's 21 state-owned banks wrote-off Rs 3.16 lakh crore of loans in four years of the BJP government and made recoveries of Rs 44,900 crore of written off loans, Jaitley in a Facebook blog said "technical write-offs" are resorted to by banks as per the Reserve Bank of India (RBI) guidelines.
Congress President Rahul Gandhi used the report to attack the government, saying demonetisation converted black money into white and Rs 3.16 lakh crore of loans were written off.
"Modi's India - For Common Man: Notebandi-line up and put your money in banks. All your details into Aadhar. You can't use your own money. For Crony capitalists: Notebandi-convert all your black money to white. Let's write off 3.16 lakh crore using common man's money," Gandhi said in a tweet.