Banking union opposes public sector banks’ ‘loan melas’ over fears of bad debt accumulation

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The Maharashtra State Banks Employees Federation (MSBEF) on Monday objected to “loan melas” organized by state-owned banks, saying credit given without due diligence in such events leads to hoarding of assets not efficient.

These “melas” add to retail non-performing assets (NPAs) for lenders, as loans are made without great due diligence, the MSBEF said in a statement.

The statement comes on a day when Union Minister of State for Finance Bhagwat Karad is attending one such mela in Aurangabad, Maharashtra, where public sector lenders are aiming to hand out Rs 2,900 crore of loans.

Stating that past experience suggests that borrowers stop repayments of these loans, the MSBEF said no political party is assisting in the loan recovery process.

“…The same political parties are demanding waiver of these loans in order to appease voters” during elections, he said, adding that such events taint the atmosphere of revival.

Public sector banks are being put in crisis through NPAs, and the same is being used to push for the privatization of lenders, he said.

The union said it was necessary to grant “real autonomy” to these lenders.

”The government, being the owner of the public sector banks, should give direction to the public sector banks. The government should address policy issues such as effective legal structure to collect arrears, timely appointment of board of directors, etc,” he said.

It should also ensure the recruitment of sufficient number of employees in banks, minimum service charges for customers and adequate and timely credit extended to small and medium farmers as well as industries.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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