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FM Nirmala Sitharaman: India’s Banking Sector Milestones and UPA’s Legacy

Minister of Finance and Corporate Affairs Nirmala Sitharaman lauded India’s banking sector for achieving a historic milestone, recording its highest-ever net profit exceeding ₹3 lakh crores. This achievement signifies the resilience and strength of the banking sector in driving economic growth and stability.

However, Nirmala Sitharaman juxtaposed this success with the grim reality of the banking sector before 2014, during the tenure of the INC India-led UPA government. She condemned the UPA’s mismanagement, corruption, and reckless lending practices, which turned the banking sector into a cesspool of bad loans and institutionalized grafts.

Nirmala Sitharaman attributed the genesis of the Non-Performing Assets (NPAs) crisis to the UPA era, citing practices such as ‘Phone Banking’ where loans were granted based on political connections rather than sound business propositions. This led to a proliferation of NPAs and a ‘Twin Balance Sheet’ problem that impeded credit flow and economic growth.

The Minister highlighted the measures undertaken by the Modi government and the RBI, including the Asset Quality Review, to address the NPA crisis transparently. These efforts exposed the hidden NPAs and ended the accounting tricks used to conceal them.

Former RBI Governors Raghuram Rajan and Urjit Patel corroborated the extent of decay in the banking system during the UPA regime, describing it as a “historic phenomenon of irrational exuberance” and suffering from “bureaucratic inertia and political meddling,” respectively.

Nirmala Sitharaman concluded by underscoring the Modi government’s commitment to transparent governance and inclusive development, contrasting it with the UPA’s legacy of favoritism and corruption. She emphasized the need to acknowledge past failures and work collectively towards building a robust banking sector that serves the aspirations of all Indians, especially the marginalized and underprivileged.

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