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August 25, 2018

Banking sector facing serious crisis on macro-economic front: Amit Mitra

Banking sector facing serious crisis on macro-economic front: Amit Mitra

State Finance and Industry minister Amit Mitra on Friday expressed his deep concern over the steady rise in the Non-Performing Assets (NPAs) in banks since 2014 after the BJP government came to power. The minister warned of more financial scams in the country and maintained that this trend was bound to affect fresh lending particularly in MSME, agriculture and real estate sectors.

Presenting data from the recent Financial Stability Report of Reserve Bank of India (RBI) Mitra said: “In March 2014, the NPA was Rs 2.04 lakh crore and in the end of March 2018 it has risen to Rs 10.25 lakh crore. The figures show that scams are very much in the offing. The climbing NPAs show surfacing of crony capitalism in the system.”

The minister, while addressing the 10th Banking Summit organised by the Indian Chamber of Commerce (ICC), said the NPA ratio was 4.4 percent of the total advances in banks in March 2014, 5.3 percent in March 2015, 7.69 percent in 2016, 9.06 percent in 2017 and 11.6 percent in 2018.

Describing this as a dangerous signal, he maintained: “RBI has brought 11 PSU banks under prompt corrective measures in which the present NPA is as high as 22 percent. It is projected to be higher by the end of 2019 and people should not be kept in the dark about this macro-economic crisis in the country.”

In the current scenario, banks have been told by RBI to put a check on aggressive lending and as MSMEs are very dependent on bank loans, there are chances of these enterprises getting squeezed.

“The MSME sector provides more than 90 per cent jobs in the country, large industries provide only 8 per cent of the jobs. So there is urgent need to keep people’s confidence going amidst this rising NPAs,” he added. Mitra also highlighted the financial inclusion in the state that has been rolled reasonably well with the government working in close coordination with the banks. “MSME lending by banks that was Rs 8,387 crore when we assumed office in 2011, has gone up to Rs 44,059 crore in 2017-18 financial. Lending in agriculture has mounted to Rs 42,232 crore up from Rs 14,387 crore in 2011-12 fiscal. Lending to Self Help Groups (SHGs) has also gone up to Rs 8,155 crore from Rs 553 crore,” Mitra said.

It may be mentioned that the Bengal government holds State Level Banker’s Meeting (SLBC) meeting once in every 45 days to ensure that loan by the banks in the MSME and allied sectors goes on smoothly.

Source: Millennium Post