The Congress on Wednesday accused the Narendra Modi government of having "destroyed" the banking sector and financial institutions of the country, and said the way forward was to "restore the autonomy of the RBI" and reinstitute the confidence of the banks by allowing them to lend prudently. Congress chief spokesperson Randeep Surjewala alleged that "Modinomincs has messed up" the USD 2 trillion banking sector.
"The Modi government has destroyed public sector banks and financial institutions. 'Delivery' and not 'televised dialogues' is the way forward," he said in a statement. Surjewala also alleged that the Modi government's response of Rs 20 lakh crore-package towards the coronavirus pandemic was a "hogwash", which turned into an "empty formality".
"Non-food credit growth is almost zero and bank credit growth is reducing from four per cent to the baseline 'zero'. Banks are just redepositing the money back with the RBI." "The way forward is to restore the 'autonomy of RBI' allowing them to go after bank defaulters, restore confidence in banks through a promise of 'no witch-hunting' and allowing them to lend prudentially as per their 'risk norms' and expand credit guarantee programme for MSMEs to stimulate credit offtake and propel investment," he said.
Referring to the prime minister's meeting with heads of banks and non-banking financial companies on Wednesday, Surjewala said, "We hope they had the gumption to tell the PM how his government has destroyed the banking sector and financial institutions." Prime Minister Narendra Modi held a meeting with top bankers and impressed upon them the need to push lending towards the productive sectors for the revival of the economy hit by the COVID-19 pandemic.
Surjewala said, "Even if they maintained a studied silence in the face of the prime minister's aversion to hearing the honest uncomfortable truth, there were three important events in the last one week, that reflect the state of India's financial system and the banking sector." The RBI in its financial stability report for July 2020 has warned that bad loans of the banking sector can reach a 20-year high, he said.
The Congress leader referred to former RBI governor Urjit Patel's allegations in a book that the RBI wanted to be tough against loan defaulters, but the Modi government wanted otherwise. He also referred to former RBI deputy governor Viral Acharya's allegation, made in a book, that the government's "mismanagement" is making the entire financial sector "unstable, risky and on the verge of collapse".
Congress leader Rahul Gandhi has hit out at the government over the claims by Patel and Acharya, a charge denied by BJP's IT department in-charge Amit Malviya, who said, "Writing sensational one-liners doesn't make you an expert on economics." Surjewala alleged that in March 2013-14, NPAs were Rs 2,16,739 crore (3.8 per cent of total loans). NPAs increased to Rs 9,35,000 crore as in September 2019 (to 9.1per cent), he claimed.