Prime Minister Narendra Modi commented on the huge turnaround seen in the Indian banking industry with the collective net profit of all banks crossing Rs 3 lakh crore for the financial year 2023-24.
Modi was to say that it was due to the policies of the previous government that, with continuous losses and huge NPAs, the banks were virtually in a mess when his government took over.
He added that these problems meant limited access to banking for the underprivileged sections. Modi said the new strength in the banking sector will now clear the way for better access to credit, particularly for the weaker segments of the poor, farmers, and MSMEs.
“When we came to power, our banks were reeling with losses and high NPAs due to the phone-banking policy of UPA. The doors of the banks were closed for the poor. This improvement in the health of banks will help improve credit availability to our poor, farmers and MSMEs (micro small and medium enterprises),” the Prime Minister said.
The Prime Minister emphasized that the RBI and all top economists are on the same page about the resounding role played by the strong banking sector in taking India's economy to new heights.
Harking back to his address to an RBI function in Mumbai recently, Modi said he had "no doubt" about the strength and global competitiveness of India's banking system. He said the stellar turn-around from a situation of losses to profits, with record credit growth, is a picture to behold.
Modi attributed this turn-around to the clear policy direction, the unwavering intentions, and the decisive action by the government; and said where the intention is pure, the results automatically follow.
Discussing the comprehensive reform agenda, the Prime Minister outlined the government's three-pronged approach of recognition, resolution, and recapitalization. He disclosed that a substantial capital infusion of Rs 3.5 lakh crore had been injected to bolster public sector banks, alongside numerous governance reforms. Notably, the implementation of the Insolvency and Bankruptcy Code (IBC) had successfully resolved loans amounting to Rs 3.25 lakh crore.
“A capital infusion of 3.5 lakh crore was undertaken for the helping public sector banks along with many governance-related reforms. Just the Insolvency and Bankruptcy Code has resolved loans amounting to 3.25 lakh rupees,” the Prime Minister pointed out.
Modi further revealed that over 27,000 applications involving defaults exceeding Rs 9 lakh crore had been resolved even before admission under the IBC framework, showcasing the efficacy of the reform measures.
Modi went on to point out that the tangible results from these efforts include the gross NPAs of banks, which stood at 11.25 percent in 2018, had plummeted to below 3 percent as of September 2023. He said categorically, with confidence, that the era of the twin balance sheet problem belonged to the past.
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