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NPA is biggest scam, UPA looted public money for corporates: Narendra Modi at FICCI meet

"NPAs are the biggest liability transferred to us by the previous government. This is bigger than the Commonwealth, 2G and coal scams," Prime Minister Narendra Modi said.

By: ENS Economic Bureau | New Delhi |
Updated: December 14, 2017 8:00:50 am
modi, ficci, modi at ficci meeting, modi at ficci, ficci modi, pm modi PM Narendra Modi at FICCI Annual general Meeting on Wednesday. (Source: ANI)

Indicting the previous government for the NPA crisis, Prime Narendra Modi on Wednesday termed the surge in non-performing assets (NPAs) in the banking system as the biggest scam of the UPA government, even bigger than Commonwealth and 2G scams. Modi also questioned the role of the previous government in sanctioning of loans to select industrialists.

Yeh NPAs UPA sarkar ka sabse bada ghotala tha. Commonwealth, 2G, koyla, sabhi se zyaada bada ghotala. Yeh ek tarah se sarkar mein baithe logon dwaara udyogpatiyon ke madhyam se janta ki kamaai ki loot thi. (These NPAs were the biggest scam of UPA government. A bigger scam than Commonwealth, 2G, coal scams. In a way, this was a way for people in the government to loot the public’s wealth through the medium of industrialists),” Modi said while addressing Ficci’s 90th Annual General Meeting here.

The prime minister also questioned the silence and inaction of institutions, including Ficci. “Mujhe jaankari nahi hai ki pehle ki sarkar ki neetiyon ne jis tarah banking sector ki durdasha ki, us par Ficci ne koi survey kiya hai ya nahi? Yeh aaj kal NPA ka jo halla mach raha hai, woh pehle ki sarkar mein baithe arthshastriyon ki, is sarkar ko di gayi sabse badi liability hai. (I am not aware that if Ficci has done any survey on the way the previous government’s policies worsened the condition of the banking system. The hue and cry over NPAs these days is the biggest liability transferred by economists of the previous government),” Modi said.

Also read | Banks not deciding for fear of action, admits CVC K V Chowdary

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The prime minister asked what were institutions like Ficci doing when some people in the government were putting pressure on banks to sanction loans to select industrialists. People in the previous government knew, banks knew, industrialists too knew, even the market-linked institutions knew about the wrongdoings, he added.

Yeh log maun reh kar sab dekhte rahe, kya unhe jagaane ki koshish, kisi sanstha dwaara ki gayi (These people kept looking by staying mum. Did any institution tried to wake them up?),” Modi said.

The Prime Minister said that the government is working to strengthen the banking system. He said the government is working to protect the interests of the account holders, but rumours are being spread about the Financial Resolution and Deposit Insurance (FRDI) Bill.

Despite the government and RBI announcing measures to address the NPA issue, banks have only seen them rise.

While the Gross NPA of state owned banks stood at Rs 176,000 crore in June 2013, it rose to Rs 829,338 crore by June 2017, a rise of 371 per cent.

A similar trend was seen in private sector banks too as the gross non-performing assets of private banks soared to Rs 100,481 crore at the end of September 2017 against Rs 22,020 crore in September 2013, a rise of 356 per cent.

The jump in the NPA ratio in the last two years can be attributed to a combination of the recognition norms being pursued by banks after the RBI highlighted the same in late 2015 – Asset Quality Review (AQR) initiated by the then RBI Governor Raghuram Rajan — as well as to inadequate progress in the health of the companies. The banks were supposed to clean up their balance sheets by March 2017.

On GST, the Prime Minister said that the government’s effort is to ensure that maximum businesses register for GST. He said the more formal the system becomes, the more it will benefit the poor. It will enable easier availability of credit from banks and reduce cost of logistics, thereby enhancing competitiveness of businesses, he said.

He said organisations such as FICCI have a role to play in making GST more effective. He also said that FICCI must also voice concerns, when necessary, on issues such as builders exploiting the common man.

Modi said that he has come through poverty and understands the need to work for the poor. He said the poor seemed to be struggling against the system for things such as bank accounts, gas connections, scholarships, pensions etc. The government is working to end this struggle and to create a system that is transparent and sensitive, he said.

He said the hopes and aspirations of people are to rid the country from internal problems like corruption, and black money. The prime minister added that political parties and chambers of industry should keep in mind the country’s requirements and feelings of the people and work accordingly.

Enlisting the achievements of this government, Modi said 87 reforms related to 21 sectors have been implemented in the last three years. He said more than 30 crore poor have opened their bank accounts through the Jan Dhan Yojana, adding that a study has found that inflation has decreased in the rural areas where more such accounts were opened.

He said the presentation of Union Budget in February this year enabled the departments to get money at a fixed time and get one year to work on the schemes.

He said the government’s new urea policy has led to increase in urea production by 18-2 million tonnes. He further said that the policies in the textile sector will create one million employment opportunities. The government is also working to achieve housing for all by 2022.

The prime minister said that the government understands the requirements of the country and is therefore making new policies. Citing an example, Modi said the government had recently taken an important decision about bamboo. He said earlier there were two different laws defining whether bamboo is a tree or not and now the government has decided that the bamboo that grows out of the forests will not be considered trees. “This decision will benefit millions of small entrepreneurs who are connected to the bamboo based industry,” he said.

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