How Narendra Modi Rescued Indian Banks?

#NPAs #DeMo #UPAmishandlingofbanks #phonebankinginUPAtime #RBI #FinanceMinistry #pmoindia

My Dear Indians and Global Audience -You may remember the time of UPA-I & UPA-II regimes led by Shri Manmohan Singh, The Prime Minister of India both times then, who is a Harward & Oxford educated as well and who held all the prestigious appointments that could be available for a person in handling Economics or Economy related portfolios / appointments such as Governor of RBI, Chairman Planning Commission, Finance Minister, Economic Advisor to the PM, and an appointment at World Bank, preferred a policy especially 2008 onwards in printing Indian Currency in excess to beat down 2008 worldwide recession and flooding the Indian market with liquidity, hence, boosting Indian economy artificially by giving large amount of loans on Phones (The Top Politicians of that regime use to pressurize banks Chairmans & MDs to give loans to the corporates those were close to top politicians of this regime) and that resulted in a boost in Growth Rate in 2009-2010 & 2010-11 though inflation touched all-time high in double digit as all these businesses were already defaulters of PSBs but they were availing loans after loans due to frequent change in policies brought in by the GoI that time quite frequently and as a result Indian Banks suffered huge losses, nearly rupees 02 lakh and 07000 crores in 2012-13 & 2013-14 and large amount of NPAs nearly rupees 12.5 lakh crores surfaced in NDA time when Modi ji took over in 2014. The Government led by Modi ji and Arun Jaitley, The FM tasked Raghu Ram Rajan, Gov RBI to check the balance sheets of PSBs and he, the Gov RBI ordered an AQR (Assets Quality Review) of 21 PSBs as it was observed that profits in earlier FYs were inflated, and it was also found that the PSBs Balance Sheets were in pathetic state, and losses were there, and they could have tanked. and shut down. So, he asked all the banks to carry out a PCA (Prompt Corrective Action) that is ordered for banks those are under financial stress and needs remedial measures immediately. The 11 banks were found under extreme stress hardly having any liquidity to extend further loans, hence, difficult to come out from the losses due to huge amount of loans extended during UPA time and turning of these big-time loans as NPAs, so, not in position to carry out operations. So, these banks were at a stage either close them or support them.

This was a challenge that was handed over by UPA / Mr. Man Mohan Singh & Sonia led Government to Narendra Modi and he has only choice either to go public to say that Congress / UPA did this to the banks and playing a blame game for political gains, but this has a great amount of associated risk as India would have got into a situation where no foreign investments coming through and a constraint in FDIs as this step could have painted a gloomy economic condition in front of global financial institutions and to the businesses that were interested in India. The second option was not to declare this situation openly in the media but fight it out making swift huge government financial support to these banks so that their liquidity is restored and recovery process along with a resolution process carried out simultentuosly through NCLAT & NCLTs. So, all the steps were taken one after one in quick succession as large amount of money nearly rupees 5.0 lakh crore was infused into PSBs so that liquidity crunch is no more felt, and they started extending loans to the needy. IBC was brought to have resolutions of stressed business those were turned as NPAs and also nearly rupees 10.40 lakh crore were written off from these 11 banks' balance sheets. Now, it is reported that all these PSBs in spite of Covid pandemic in FY 2021-22 have registered a profit about rupees 86000 crores and rupees 01 lakh 07000 crores in FY 2022-23, hence, a huge profit in two last FYs after pandemic and a growth of 8.1 % and 7.2 % is registered in subsequent FYs.

So, credit goes to Narendra Modi ji who exhibited a statesmanship and a bold leadership decision in leading from the front and addressing this biggest task without going public about it and also the FMs Arun Jaitely ji , Nirmala Sitaraman ji, and RBI Governor Shakti Kant Das ji. The news that appeared in Economists is exposition of this biggest achievement of Narendra Modi ji and his team of FMs, RBI Gov and others who made it possible and brought out PSBs out of it and the biggest bank SBI register a 56 % hike in profit in 2012-22 and 467 % in 2022-23. So, all the PSBs are turned around and now making big profits and playing a crucial role in taking India ahead in becoming a self-reliant India soon and a developed nation @2047.

So, I feel this is the greatest achievement of Narendra Modi in last 09 years and it must be told at media and in public rallies. I have taken a pledge that I shall be covering it at social media in a big way at my LinkedIn, FB, Twitter & Instagram accounts as well as at my YouTube Channel "Pulsebeat of India". Some people say that writing off is responsible for these profits so let me reply to them that Writing Off brings losses not profits. Let me also say that writing off is not Wave Off where recovery does not ensure the return of such amounts. The writing Off money is being recovered through various legal processes such as IBC and selling off assets and turning them in to operations that are making profits. Still a large amount of loans has been recovered nearly 7.0 lakh crores.

So, my grand salute to Modi ji and his team for this huge success and I consider it as the biggest achievement in last 09 years. It is indeed a case study for all the ivy-business schools world over.