Blaming the previous UPA government for the bad loans mess, Prime Minister Narendra Modi on Saturday said the indiscriminate lending to a select few on the basis of phone calls by namdaars (dynasts) under the regime, had left the country’s “economy on a landmine”.
Mr. Modi alleged that the Manmohan Singh government hid the correct figures on non-performing assets, terming it the biggest scam of the previous government.
“…till four or five years ago, maximum money of the banks was reserved for a select few who were close to one family,” he said, while speaking at the launch of the India Post Payments Bank.
‘Banks pressured’
“And how did people get this loan?…there was a trend of phone banking. If a dynast calls, then people get loans easily. Any rich businessman who needed a loan would get a dynast to call the bank, and the banks would give them loans worth millions and billions. A call from the dynast was above all rules and regulations,” he added.
He said the banks were later pressured to advance fresh loans to defaulters under the garb of loan-restructuring.
“Those involved in such frauds knew that one day they will be exposed, and hence their planning started … The correct numbers for the amount of loans that banks were unable to recover were hidden from the country,” the PM said.
He said that while the country was told such loans were worth about ₹2 lakh crore, the NDA government found it to be ₹9 lakh crore.
“We realised soon after we came to power in 2014 that the Congress and these dynasts have put the country’s economy on a landmine,” he said, adding that if the truth had come out, the explosion of the landmine would have made it difficult to handle the economy. He, however, said his government had “defused” the landmine.
“We not only found the disease, but searched for the cause and have taken steps to treat it,” he said, enlisting measures such as reviewing of existing loans and the Fugitive Economic Offenders Bill. Promising that “every penny of the loans given by banks at the behest of dynasts will be recovered,” he said, “I want to again assure the country that of all these big loans, not even a single loan has been given by this government.”
He pointed out that in a span of 60 years, from Independence till 2008, all the banks in the country gave out loans worth ₹18 lakh crore. However, after 2008 — in a matter of 6 years, this amount increased to ₹52 lakh crore.
