Massive write-offs, low recovery in banking sector: Amit Mitra

Kolkata: Amit Mitra, Principal Chief Advisor to Chief Minister Mamata Banerjee and Finance Department urged the banking sector to ponder upon the massive write-offs in the last nine years and low recovery in the banking sector of the country.

Mitra at the same time reiterated the financial growth and inclusion of the Bengal government by claiming that the total credit deployed in the state in 2022-23 was Rs 4.68 lakh crore. Only for the MSME sector, the total lending by the banks was Rs 1.28 lakh crore during 2022-23.

‘Approximately, 37 jobs are created for every Rs one crore invested in the MSME sector. The MSME sector has a massive impact on GDP growth through the multiplier effect. Rs 1.28 lakh crore will translate into Rs 4 lakh crore additional GDP for Bengal once the projects roll out,’ Mitra said addressing the 16th Banking Colloquium organised by the Confederation of Indian Industry (CII).

According to Mitra, the lending to MSME by banks has been Rs 87,029 crore till August 31 from April this year which is a clear indication that the previous years’ lending to the sector will surely be surpassed.

He pointed out that during the tenure of the BJP led government at the centre from 2014- 2023, Rs 14.56 lakh crore has been written off from the books of the banks and only Rs 2.05 lakh crore has been recovered. ‘Hence, Rs 12.5 lakh crore has been hanging as write off which will never be recovered. We want an answer to this,’ he added.

Referring to a recent written reply of union minister of state for finance Bhagwat Karad in the Parliament that out of the total written-off amount of Rs 14.56 lakh crore, Rs 7.40 lakh crore are for large industry and services segments, he claimed that the amount of write-offs in the preceding last nine years (2005-2014) was Rs 2.20 lakh crore.

‘How from Rs 2.2 lakh crores , there has been a jump to Rs 14.56 lakh crores during 9 years of the Narendra Modi led government? Research needs to be done on this,’ he added. He also urged for a food of thought for the banking sector regarding wilful defaulters. ‘The top 50 wilful defaulters owes Rs 87,295 crore to scheduled banks as on March 31, 2023. The wilful defaulters are those who have refused to pay loans despite having the capacity to pay. So how will you manage these wilful defaulters? Are the bankers at fault or the present method of assessment, or is there pressure on you for lending ?’ he questioned.

Mitra also highlighted the Self-help groups (SHGs) in the state as another focus area in terms of financial inclusion. ‘The payback from the SHGs has been 99 percent, with Rs 19,150 crores lending by the banks,’ he maintained.

Manoj Pant, state Additional Chief Secretary, state Finance department mentioned that the banking sector is facing new opportunities and challenges in the digital age.

‘While technology has made our lives easier, it has also brought new concerns such as security breaches, cyber-attacks, and AEPS fraud. We need to find ways to address these challenges in order to protect the banking system and its customers.’ Pant said.