Union Finance Minister Nirmala Sitharaman on Monday attacked the previous UPA regime for its alleged failure to recover money from those who turned their loan accounts into non performing assets, and said under the Modi government, banks for the first time got back money from defaulters.
Sitharaman also said in the Lok Sabha that actions have been taken, including registration of FIRs, against those who have cheated small savings depositors through various fraudulent activities.
She said the Reserve Bank of India is also monitoring activities of App based financial companies.
Responding to questions by DMK’s T R Baalu about the government’s action against loan defaulters and NPAs, the minister said “writing off” loans does not mean “complete waive off” and the banks are following every loan to recover the outstanding amount.
“Over Rs 10,000 crore, I am saying ‘over’ as I don’t want to disclose the actual figure, have been recovered by PSU banks from loan defaulters after taking over their assets.
“For the first time in the country, under the Modi government, the banks got back money from many NPAs. While during the UPA government, no money was recovered from the NPAs,” she said.
Sitharaman’s remarks invited sharp reaction and protests from Congress leader in Lok Sabha Adhir Ranjan Chowdhury.
The finance minister said the opposition party must listen to the “bitter truth” and alleged that the loans were given during the previous UPA regime due to political considerations.
Earlier, the minister said the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) was introduced in the Lok Sabha in August, 2017 and thereafter was referred to the Joint Committee of Parliament for examination and report thereon. The main objective of the FRDI Bill was to create a specialised resolution mechanism for select financial sector entities.
The government had withdrawn the FRDI Bill in August, 2018 for further comprehensive examination and reconsideration of the subject.
The government has not taken a decision to bring a new law to provide for a legal framework for resolution of financial firms, she said.
Sitharaman said with a view to provide a greater measure of protection to depositors in banks, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has raised the limit of insurance cover for depositors in insured banks from the level of Rs 1 lakh to Rs 5 lakh per depositor with effect from February 4, 2020 with the approval of the central government.
The minister said the government has already notified the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 on November 15, 2019 to provide a generic framework for insolvency and liquidation proceedings of systemically important Financial Service Providers (FSPs) other than banks.
Subsequently, she said, the government has also notified on November 18, 2019, that the insolvency resolution and liquidation proceedings of the Non-Banking Finance Companies (including housing finance companies) with asset size of Rs 500 crore or more shall be undertaken in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
Accordingly, the framework to deal with the select Non-Banking Finance Companies is already in place under IBC, 2016, she said.