FM Sitharaman Links UPA-Era Phone Banking To Banking Sector NPAs

Union Finance Minister Nirmala Sitharaman on Friday alleged that the practice of “phone banking” during the previous United Progressive Alliance (UPA) government between 2004 and 2014 led to a sharp rise in non-performing assets (NPAs) and caused financial stress for banks. Addressing a credit outreach programme in Narsaraopet, she claimed that loan decisions were influenced by political directions rather than eligibility, resulting in large-scale repayment failures.

Sitharaman alleged that during the UPA era, banks received instructions through phone calls from political leaders in Delhi to provide loans to selected individuals who did not meet lending criteria. She said such practices weakened the banking system and contributed to rising bad loans. “The loans that were given were never repaid. Banks fell into debt,” she said while criticising the earlier approach to credit distribution.

The Finance Minister said the situation changed after Prime Minister Narendra Modi assumed office in 2014, with the government focusing on expanding access to formal banking services. She highlighted the shift towards banks reaching beneficiaries directly, including villagers, small traders, women and entrepreneurs. Sitharaman said government-backed schemes have enabled people to access loans without collateral requirements and reduced dependence on private moneylenders charging high interest rates.

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During the credit outreach programme, Sitharaman and Andhra Pradesh Chief Minister N. Chandrababu Naidu distributed loans worth Rs 3,216 crore to 1,03,246 beneficiaries under various Central government schemes. The loans covered multiple sectors, including Rs 2,363 crore for agriculture, Rs 325 crore for micro, small and medium enterprises (MSMEs), and Rs 624 crore for housing, education, vehicles and solar energy projects. Ambulances donated by Union Bank under its Corporate Social Responsibility initiative and bicycles for girl students were also distributed during the event.

Chief Minister Chandrababu Naidu praised the programme, saying bank loans play an important role in supporting farmers, youth, women and entrepreneurs. He said initiatives such as the credit outreach programme help people avoid high-interest borrowing from informal lenders. Naidu also credited Sitharaman with taking steps to address NPAs and promote digital banking reforms, while highlighting financial support from the Centre for projects including Amaravati, Polavaram and the Visakhapatnam Steel Plant.

Naidu further stated that Andhra Pradesh would receive additional financial assistance through various Central schemes, including funds for rural employment, horticulture development in Rayalaseema and other state projects. He said the state government’s loan restructuring efforts, supported by the Centre, helped save Rs 1,538 crore. The event was attended by state ministers, MPs, bank representatives and senior officials, including State Finance Minister Payyavula Keshav and Energy Minister Gottipati Ravikumar.

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