Union Finance Minister Nirmala Sitharaman alleged on Friday that ‘phone banking’ during the UPA rule resulted in huge NPAs, pushing banks into losses. She said that between 2004 and 2014, the Central government used to dictate loan disbursements through "phone banking."
Sitharaman was addressing a credit outreach programme in Narsaropeta in Andhra Pradesh. She claimed that during the UPA rule, leaders used to make phone calls from Delhi directing banks to provide loans to their selected individuals, though they were not eligible for such loans.
“They started phone banking system. The loans that were given were never repaid. Banks fell into debt,” she said. Sitharaman claimed that the situation changed after Narendra Modi became Prime Minister in 2014. The Finance Minister said that Prime Minister Modi envisioned a system where banks reach out to the people to provide services.
She said that banks are now reaching out to every village and providing loans to beneficiaries without requiring collateral. “We launched this programme to support street vendors by having the government provide the necessary guarantees for their businesses.
Banks are providing low-interest loans without requiring collateral benefitting both traders and women,” she said. She said the government took this decision because even small traders were relying on moneylenders and middlemen for micro-finance and paying exorbitant interest rates.
“The NDA government's goal is to encourage individuals by granting loans based simply on eligibility. Banks across the country have changed their approach, and public perception has shifted as well,” she said, adding that the credit outreach programme held in Narasaraopet is a direct example of this transformation.
Sitharaman said banks have disbursed loans worth crores of rupees to help individuals grow into traders and entrepreneurs. Chief Minister Chandrababu Naidu and Union Minister Nirmala Sitharaman distributed loans worth Rs 3,216 crore to 1,03,246 beneficiaries under Central Government schemes.
They also flagged off ambulances donated by Union Bank under its Corporate Social Responsibility (CSR) initiative. The CM and the Union Minister also distributed bicycles to girl students. Chief Minister Chandrababu Naidu said it was commendable that the credit outreach programme was organised to provide loans to various sections, including Self-Help Groups (SHGs), businesspeople, entrepreneurs, and street vendors
Loans disbursed included Rs 2,363 crore for the agriculture sector, Rs 325 crore for MSME units, and Rs 624 crore for housing, education, vehicles, and solar power projects “Bank loans serve as a foundation for a farmer's future, a youth's aspirations, a woman's empowerment, and an entrepreneur's investment dreams.
Banks are providing loans through this ‘Runa Mela’ (loan fair), saving people from the losses incurred by borrowing at exorbitant interest rates from private moneylenders,” he said. Chandrababu Naidu said Sitharaman is the leader who took a firm stand on NPAs and ushered in a digital banking revolution in the country.
The Chief Minister stated that the Centre helped the State recover from the devastation caused by the previous administration. He noted that financial support has been provided for Amaravati, Polavaram, and the Visakhapatnam Steel Plant. He said the State is set to receive Rs 7,707 crore from the Centre through the VB-G Ram G scheme.
The Centre is also providing financial assistance of Rs 40,000 crore to transform Rayalaseema into a horticulture hub, he said. CM Chandrababu said the State government rescheduled the high-interest loans incurred during the previous administration.
He thanked the Centre for extending support to reschedule the State's loans and said this has resulted in savings of Rs 1,538 crore. State Finance Minister Payyavula Keshav, Energy Minister Gottipati Ravikumar, MP Lavu Sri Krishnadevarayalu, and representatives from various banks attended the event.