MSBEF rejects public sector banks' "loan melas", cites credit quality issues

6 Sep 2022 , 08:20 AM

On Monday, the Maharashtra State Bank Employees Federation (MSBEF) expressed concerns against “loan melas” held by state-owned banks, asserting that credit given at such events without due scrutiny results in the accumulation of non-performing assets.

Because the loans are given without any due diligence, such “melas” increase the retail Non-Performing Assets (NPAs) for the lenders, according to a statement from MSBEF.

The announcement is made on the same day that public sector lenders intend to distribute Rs2,900 crore in loans at a similar mela in Aurangabad, Maharashtra, where Union Minister of State for Finance Bhagwat Karad is present.

No political party helps with loan recovery, according to the MSBEF, because historical experience shows that borrowers quit making payments on these loans.

The research claims that NPAs are to blame for the collapse of public sector banks, which is subsequently used to push for lender privatization.

Such lenders must be granted “real autonomy,” the union claims.

Additionally, it should guarantee that banks hire the appropriate number of staff, impose reasonable service costs on clients, and grant small and medium-sized farms and enterprises with adequate and prompt loans.

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