Banking crisis is UPA’s notorious legacy, bad loans pile up: FM releases economic white paper

After the Modi government came to power in 2014, the banking industry faced a crisis. According to the Indian Economic White Paper presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on February 8, when the NDA government led by Vajpayee left office in 2004, the total non-performing assets were 7.8%. In September 2013, the ratio (including restructured loans) climbed to 12.3%, “largely due to political interference by the UPA government”.

“The banking crisis is one of the most important and notorious legacies of the UPA government. When the Vajpayee-led NDA government came into office, the gross non-performing assets ratio of public sector banks was 16% and it was 7.8% when it left office. 9, 2013 In March, the ratio (including restructured loans) climbed to 12.3%, largely due to the UPA government’s political interference in commercial lending decisions of public sector banks. Worse, even such a high proportion of bad loans is underestimated,” “India Economic White Paper” stated.

According to the document, total advances by public sector banks in March 2004 were only Rs 660 crore. In March 2012, this figure soared to Rs 3,900 crore. “Also, not all problem loans are acknowledged. There’s a lot going on behind the scenes.”

The white paper also cites a report released by Credit Suisse in March 2014 that said the top 200 companies with interest coverage ratios below 1 owed banks about 8.6 billion rupees. “Nearly 44% (Rs 380 crore) of these loans have not been identified as problem assets. This alone will increase the GNPA ratio by another 6.7%.”

Regarding NPAs, the white paper also quotes a former RBI governor who said in a written reply to a parliamentary panel in 2018 that “a large number of NPLs originated from the period 2006 to 2008.”

India has “massive non-performing loans, a high fiscal deficit (although much of it is hidden), a high current account deficit, five consecutive years of double-digit inflation, which has hit many Indians and the Fragile Five club.” Member” 2013.