PM Modi blames UPA govt for NPA crisis, says loans were given after phone calls by 'namdaars'

Sep 1 (AZINS) Prime Minister Narendra Modi on Saturday attacked the Congress for leaving the economy on a 'landmine' by its indiscriminate lending, saying loans were handed out to select businessmen after phone calls were made by 'namdaars' (dynasts). He assured action against 12 biggest loan defaulters while he emphasised that none of the big loans were given during the NDA regime.

"Action is being taken against 12 biggest defaulters who were given loans before 2014. None of the twelve biggest defaulters, who between them account for over Rs 1.75 lakh crore of NPAs, were given loan by the NDA government," Modi said while speaking at the launch of India Post Payments Bank (IPPB) in Delhi.

This comes days after Congress President Rahul Gandhi's attack on the government for NPAs jumping to Rs 12.5 lakh crore under the BJP rule from Rs 2.5 lakh crore under the previous UPA regime.

Modi said when his government came to power in 2014 it noticed that public-sector banks had been plundered. Loans of banks jumped to Rs 52 lakh crore from 2008 to 2014 from just Rs 18 lakh crore in the previous six decades.

In a scathing attack on the Congress, Modi blamed 'phone-a-loan' scam of the previous UPA regime where money was lent by banks to select rich businessmen close to a particular family for mounting non-performing assets (NPA) or bad loans but vowed to recover every penny from defaulters.

Loans were given without any due diligence and keeping aside all rules and norms, he said, adding defaulters were given further funds in the name of loan restructuring.

"How were these loans given? One phone call from the namdaars would get the rich loans," he said alleging a 'phone-a-loan' scam under the UPA government.

"This phone banking of Congress and its namdaars caused a lot of damage to the country," he said, adding banks obliged namdaars because top executives were appointed by the same namdaars. "Despite knowing that the loans would not be returned, banks lent money." And when these borrowers started defaulting, pressure was mounted on banks to give more time and then restructure these loans by giving more funds.

"In 2014, after our government was formed we realised that the Congress and namdaars had put India's economy on a landmine," he said.

Every penny of loans given at the behest of 'naamdaar' will be recovered, the Prime Minister said.

He said while the previous UPA government hid the bad loans, his government has properly recognised them and brought tough laws to deal with defaults and recovery money.

The Prime Minister said the country was cheated when the last government put such loan amount at Rs 2-2.5 lakh crore when it actually was Rs 9 lakh crore.

The economy would have been damaged by the explosion of that landmine but the government worked not just to detect the ailment but also took steps to uproot the disease, he said.

Modi said his government has "defused" the landmine placed by the government of namdaars and its results have been witnessed in the 8.2 per cent GDP growth clocked in the first quarter of the current fiscal.

"This growth is proof of growing strength of the Indian economy and that the country is moving in the right direction," he said.

"Today the country is not just the fastest growing economy in the world but also the one that is eradicating poverty at the fastest rate." "I again want to assure that all the bank money which was stuck because of namdars, each and every rupee of that, we will recover. It will be used for the poor," he said.

Listing out the steps taken, he said every loan of over Rs 50 crore has been reviewed and it is being ensured that the rules are followed and recoveries made. The merger of banks has been proposed, professionalism was brought in banks, insolvency and bankruptcy code came and a law to deal with fugitive defaults introduced.

Modi said swift action to recover loans from the top 12 defaulters as well as another 27 who owe Rs 1 lakh crore is being taken. "We will ensure that every penny is 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 said.

Modi launched the payments bank of Indian postal department that will take banking to the doorstep of every citizen through an unmatched network of post offices and almost 3 lakh postmen and 'Grameen Dak Sewaks'.

India Post Payments Bank (IPPB) will be like any other banks but its operations will be on a smaller scale without involving any credit risk. It will carry out most banking operations like accepting deposits but can't advance loans or issue credit cards.

The government owns 100% in IPPB, which has been set up under the aegis of the Department of Posts, and will offer products and services though multiple channels such as counter services, micro ATMs, mobile banking app, messages and interactive voice response.

IPPB will leverage tech platforms. It will use Aadhaar to open accounts, while a QR card and biometrics will drive authentication, transactions, and payments. Grameen Dak Sewaks will be armed with smartphones and biometric devices to handle transactions.

It will offer 4% interest rate on savings accounts. IPPB has teamed up with financial services providers like PNB and Bajaj Allianz Life Insurance for third-party products like loans and insurance.