Sitharaman: Our govt turned banks healthy

The finance minister dealt with issues ranging from NPA to NBFCs while telling Sansad that the government mitigated bankers' fear of lending

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Finance Minister Nirmala Sitharaman has claimed that the state-run banks’ have turned healthy because of the measures of the Narendra Modi government. In a written reply to the Lok Sabha on Monday, the minister said the Centre had taken a number of steps to relieve the state-run bank of various problems. These included transparency in management, increased surveillance, hard-earned arrears.

The finance minister said, on the one hand, the government improved the business-orientation of the banks and, on the other, encouraged the employees in the sector. She said the burden of non-performing assets (NPA) on the public sector banks has reduced a lot. The total NPA, which was 8.96 lakh crore as on 25 March, fell to 7.27 lakh crore last September, Sitharaman informed.

The Centre, Sitharaman said, had introduced the bankruptcy law to address state-run banks plagued by fraudulent and unproductive assets. She said around 2.03 lakh crore were recovered in a year and a half ending in September 2019.

In the first six months of the current fiscal, 12 out of 18 state-owned banks saw profits, the finance minister said. Even in the non-reproductive wealth sector, financial resources have grown the most in the last seven and a half years, she said.

In addition, Sitharaman said, the union government had poured new capital into the state-owned banks.

The Reserve Bank (RBI) has bought government securities to raise cash in the market in the face of problems with banks and non-banking financial companies (NBFC). All these have yielded results, Sitharaman said. As a result, the finance minister said, the capital appreciation rate of banks in the ratio of loans increased significantly. The RBI reported in its Financial Stability Report that this rate at the state-owned bank was 6.7% in March 2019. It rose 15.1% in September.

Besides, the union government has also taken steps to mitigate the fear among banker to lend, Sitharaman said. The goal was to not club commercial decisions that failed and cases of corruption. She added that the new system had motivated bank officers.

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