Congress' "Phone-A-Loan" Scam Caused Bad Debt Problem, Says PM Modi

PM Modi said every penny given at the behest of 'namdars' (dynasts) will be recovered.

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Congress' 'Phone-A-Loan' Scam Caused Bad Debt Problem, Says PM Modi

PM Narendra Modi accused the previous UPA government of hiding the extent of NPAs.

New Delhi: 

Highlights

  1. PM Narendra Modi said every penny given by "dynasts" will be recovered
  2. He spoke at a function to launch payments bank of the postal department
  3. His attack drew criticism from former BJP veteran Yashwant Sinha

Prime Minister Narendra Modi today blamed a "phone-a-loan" scam of the previous Congress-led UPA government for the bad loans in the banking sector and said every penny given out by "namdars" (dynasts) will be recovered. His attack, at the launch of the India Post Payments Bank, however, drew criticism from former party veteran Yashwant Sinha, who called it a "misuse" of an official function.

Speaking at a function to launch the payments bank of the postal department, he said a majority of bank funds during the previous regime were reserved only for rich who were close to a particular family.

Against Rs.18 lakh crore loans given since Independence to 2008, the figure rose to an astronomical Rs. 52 lakh crore in six years thereafter, he said. "Loans were given on phone calls made by 'namdars' (dynasts)," he said without taking anyone's name. The attack, however, has been been used by BJP leaders to taken on the Gandhi family of the Congress.

Banks lent crores of rupees in contravention of rules to businessmen who were referred by the 'namdars', he alleged.

"Knowing fully well that loans will not be paid back, banks lent money on orders of a family to a few," he said adding the lenders were forced to restructure the debt when the borrowers defaulted.

Prime Minister Modi charged the previous UPA government of hiding the extent of NPAs.

Since coming to power in 2014, the NDA government has analysed the enormity of the situation and also asked banks to strictly recover dues, he said. "Congress had put the economy on a landmine," he said. "Our government brought out the true picture of NPAs and the scam of the previous government."

During the last four years, all loans in excess of Rs. 50 crore have been reviewed and ensured that terms are strictly complied with, he said.

PM Modi said 12 of the biggest loan defaulters have an outstanding of Rs.1.75 lakh crore. Another 27 have Rs. 1 lakh crore. "We never gave any loans to any of the 12 big defaulters," he said.

The sharp attack, however, drew its own share of criticism from former BJP leader Yashwant Sinha. "Once again PM has misused an official function, the Post Bank launch, to denigrate his opponents. Why is opposition silent? He must be made to understand that this is not done in our democracy," he tweeted.

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