Union Finance Minister Nirmala Sitharaman. File
| Photo Credit: GIRI KVS

Finance Minister Nirmala Sitharaman on May 31 said the Modi Government has turned around the banking sector through various reforms and improved governance which has led to banks recovering more than ₹10 lakh crore from bad loans between 2014 and 2023.

She said the Enforcement Directorate has investigated around 1,105 bank fraud cases, which resulted in the attachment of ₹64,920 crore worth of proceeds of crime. As of December 2023, assets amounting to ₹15,183 crore have been restituted to the Public Sector Banks (PSBs).

“Recently, India’s banking sector achieved a significant milestone by recording its highest-ever net profit, crossing ₹3 lakh crore. The banking sector turned around due to PM Shri @narendramodi’s strong and decisive leadership. Our government atoned for the UPA’s sins in the banking sector through comprehensive and long-term reforms,” Ms. Sitharaman said in a post on X. She said there was no leniency in recovering bad loans, especially from large defaulters, and the process is ongoing.

She said, “This is in stark contrast to the situation before 2014 when the Congress-led UPA government turned the banking sector into a cesspool of bad loans, vested interests, corruption and mismanagement.”

“It’s a pity that Opposition leaders are still unable to distinguish between write-offs and waivers. After the ‘write-offs’ as per RBI’s guidelines, banks actively pursue the recovery of bad loans. And, there has been no ‘waiver ‘ of loans for any industrialist. Between 2014 and 2023, banks recovered more than ₹10 lakh crore from bad loans,” she said.

“Under the UPA, obtaining loans from banks often depended on powerful connections rather than a solid business proposition. Banks were forced to neglect proper due diligence and risk assessment before sanctioning these loans,” she said.

Reforming the banking sector

Ms. Sitharaman said the Modi government implemented a comprehensive 4R strategy of Recognising NPAs transparently, Resolution and Recovery, Recapitalising PSBs, and Reforms after coming to power in 2014. “Our reforms addressed credit discipline, recognition and resolution of stress, responsible lending and improved governance. We replaced political interference in banks with professional integrity and independence,” she said.

The minister said the Modi government will continue to take decisive measures to strengthen and stabilise our banking system, ensuring banks support India’s growth path to Viksit Bharat by 2047.

Efforts to expand banking in India faltered for decades due to Congress’s limited actions beyond bank nationalisation, which benefitted mainly the educated and elite. Before 2014, banking access was largely restricted to cities, she said. “We remain committed to further driving financial inclusion and empowering the underprivileged,” Sitharaman said.