Urban Mirror Correspondent
New Delhi, May 25: The Lok Gathbandhan Party today said that Rs 50,000 crore losses incurred by public sector banks (PSBs) in first quarter of 2018 will hit the Indian economy hard during the current financial year. The party expressed concern that the losses have gone up menacingly from Rs 19,000 crore in corresponding period in 2017 to Rs 50,000 crore this year which reflected that state-controlled banks have completely lost track.
The spokesman of the party said here on Friday if the NDA government pumps in more capital to run these banks it would not only squeeze the country’s strained financial resources, but also divert funds from other sector to these bleeding banks. The spokesman said PSBs, facing rot over the years, required complete overhaul with integrity, transparency and honesty. The spokesman said work culture in banking sector needs to be improved drastically since long, to weed out dishonest and corrupt officers.
The spokesperson said that major problem of non-performing assets (NPAs) will have to be addressed effectively as it has now touched around Rs eight lakh crores, with SBI alone amounting to Rs 1.86 lakh crore NPAs. The LGP has also demanded penal action against the banking sector officials for creating such a messy situation. The LGP has however very vehemently opposed privatization of Public Sector Banks.
The spokesperson said that bad loans have pushed the country’s economy to the brink of disaster, as all other parameters in financial sector are under distress. The spokesperson said situation in all banks is equally worrisome, as most of them have recorded huge losses in the first quarter. The spokesperson said the NPA which was 5.7% in 2014-15 has now touched 7.67%. The spokesperson said apparently there appears to be no way out as the RBI is simply concerned with waiving off these bad loans. The spokesperson said there has been continuous fall in the investment which could be easily assessed from decline in gross fixed capital formation which is down to 28.9% from 31% in first quarter of current fiscal year.
The spokesperson said scenario has given enough indication about the economy going to red during the last few years. The LGP said the NDA government’s claim of the rosy picture of the economy is absolutely misleading. The LGP that opaque banking system in this connection and clarification on the issue appeared to be quite misleading. Criticizing the banking sector for failing to address the problem of NPA the spokesman said the sector in collusion with the politicians has virtually destroyed the entire financial system. The LGP said banking sector reforms were long overdue and there appeared to be no commitment in this direction. The LGP said over the years the prevailing situation has destroyed credit risk management system and has brought all types of evils and fraud into the system. (lgp.org.in)
