I have been reading/listening to the statements by many political leaders who claim to be experts in the economic field, and their only point of contention is the country’s in bad shape and what PM Modi has done to strengthen the economy. These are the same people who used to say the economy was in much better shape under finance/economy experts Finance Minister P Chidambaram and PM Manmohan Singh. These types of statements by some politicians are blatant lies, which in the present scenario does not mean a thing.
One of the best parameters to look into the economy is the banking sector. Let us see the condition of Commercial Banks during the UPA regime, and thereafter:
- By the year 2008, the loans disbursed by the commercial banks stood at Rs 28 lakh Cr, by the year 2014 this figure increased to Rs 61 lakh Cr, which means this figure went up by Rs 33 lakh Cr.
- In the year 2013-14, there were no profits generated by commercial banks, in fact, there was a loss to the tune of 11.2 %. This happened due to loan restructuring and bad debts. The general public at that time was thinking their money is safe with the bank, but actually, this was far from true.
- By the end of the commercial year 2021, the combined profit of all the commercial banks stood at Rs 1 lakh Cr. This happened due to the overhauling of the banking sector by PM Modi’s government. It is been said that by the year 2030 Indian economy will have a value of $ 7.5 trillion.
- Today, the gross profits of twelve nationalised banks have jumped by 31%, and the figure in Rs is 40,991 Cr, this figure is for the first 6 months of the financial year 2022-23. The corresponding net profits rose by 50%. United Commercial Bank’s(UCo Bank) profit increased by 145%, the figure stands at Rs 504 Cr. The biggest bank in the country, ie State Bank of India-its profits increased by 74%, it now stands at Rs 13,765 Cr. Canara Bank’s profit increased by 89%, it now stands at Rs 2525 cr. Bank of Baroda’s profit jumped by 58.7 % at Rs 312 Cr. Bank Of Maharashtra’s profit went up by 103%. These are the conditions of nationalized banks just after Corona and during the Ukraine-Russia war during 2022-23.
- Why the profits of banks increased- the first point is income from interest increased, it only means that companies/people taking loans are in a position to pay interest and loan EMIs, it directly means that the economy is on strong footing. The second reason is the reduction in the nonperforming assets (NPA) of the banks. For example, SBI’s NPA was 4.9% in 2021, it got reduced to 3.5% in 2022. Earlier the reason for the increase in NPA was that some loans were shown as nonrecoverable and they were transferred to NPA. Which indirectly meant that the loan has been pardoned. Similarly, the NPAs of all other nationalized banks got reduced.
- The reduction in NPA was possible only after the present government took concrete steps for loan recovery. In the year 2015, the recovery of the NPA loan was less than Rs 50,000 Cr, in the year 2020 NPA loan recovery was Rs 1.72 lakh Cr, and from this amount, almost Rs 1 lakh Cr was recovered through the new law of insolvency/bankruptcy introduced by the present government. Rs 50,000 Cr was recovered through Surfacy Act, this act gives banks to right to recover up to Rs 10,000 Cr by way of auctioning the debtor’s property without the permission of courts, Rs 2000Cr were recovered by the judgment of courts.
These were some facts about the banking sectors, which is an indication of a strong economy under the present government.
Waiting for your views on this blog.
Anil Malik
Mumbai, India
7th June 2023