Modi government has transformed the banking sector by forcing reforms and improving management, says FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on May 31 said that the Modi government has turned around the banking sector through various reforms and better governance, which has led to banks recovering over Rs 10 lakh crore from bad loans between 2014 and 2023.

She said the Enforcement Directorate had investigated around 1,105 cases of bank fraud resulting in seizure of criminal proceeds worth ₹ 64,920 crore. As of December 2023, assets worth ₹ 15,183 crore have been returned to public sector banks (PSBs).

“Recently, the Indian banking sector achieved a significant milestone by posting the highest ever net profit of over Rs 3 lakh crore. The banking sector has turned around thanks to the strong and decisive leadership of Prime Minister Shri @narendramodi. Our government has atoned for UPA’s sins in the banking sector through comprehensive and long-term reforms,” ​​Ms Sitharaman said in a post on X. She said there is no leniency in recovering bad loans, especially from defaulters in large quantities and this process is ongoing.

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

“It is a pity that opposition leaders still cannot distinguish between write-offs and write-offs. Once “written off” as per the RBI guidelines, banks actively pursue recovery of bad loans. There has also been no ‘loan write-off’ for every industrialist. Between 2014 and 2023, banks recovered over Rs 10 lakh crore from bad loans,” she said.

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

Reform of the banking sector

Ms Sitharaman said that after coming to power in 2014, the Modi government implemented a comprehensive 4R strategy including transparent recognition of NPAs, restructuring and recovery, recapitalization of public broadcasters and reforms. “Our reforms focused on credit discipline, recognizing and solving problems, responsible lending and improving 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 action to strengthen and stabilize our banking system, ensuring that banks support India’s growth path to Viksit Bharat by 2047.

Efforts to develop banking in India have failed for decades because of limited congressional action beyond bank nationalization, which has benefited mainly educated people and elites. She said that before 2014, access to banking services was largely limited to cities. “We remain committed to further supporting financial inclusion and empowering the disadvantaged,” Sitharaman said.