Gujarat: Loans of private banks double in 3 years, PSBs' rise by 16%

Loans of private banks in Gujarat have doubled from Rs 1.09 lakh crore to Rs 2.2 lakh crore in three years, compared to just 16 per cent growth in loans by nationalized banks in the same period. The latter grew from Rs 2.71 lakh crore to Rs 3.15 lakh crore.

Bank unions and representatives of industries say this is indicative of the government's effort to privatize nationalized banks. Industry sources also say that private banks offer superior quality of service, as compared to nationalized banks, and thus clients are migrating to them.

According to a recent report by the State Level Bankers Committee (SLBC) for July-September, total loans by private banks have more than doubled from Rs 1.09 lakh crore in July-September 2015-16 to Rs 2.20 lakh crore in the same period for 2018-19. Loans from all Public Sector Banks (PSBs), including the SBI Group, rose from Rs 2.71 lakh crore to Rs 3.15 lakh crore in the same period.

Ragesh Saraiya, chairman of Mahagujarat Bank Employees Association (MGBEA), claimed that this is a blatant effort by the Centre to privatize nationalized banks. "This is one of our major focus areas for the nationwide strike to be held on December 26," he says. He feels that there is no apples-to-apples comparison between loans by private banks and PSBs. "Private banks focus more on retail loans, while PSBs focus on project loans, for infrastructure projects, which have a higher risk profile. So our Non-Performing Assets (NPAs) are higher and RBI has put restrictions on lending," he says. Industry representatives also said that there are deliberate efforts to encourage private banks at the cost of PSBs. "All the creamy clients are migrating to private banks," says Shailesh Patwari.

"While PSBs are left with risky loans, which increases their NPA," adds the former president of Gujarat Chamber of Commerce and Industry (GCCI).

"Moreover, with NPA on the rise, officers of PSB are playing safe by not granting loans for the fear being blamed. On the other hand, the service of private banks is customer-friendly, which draws clients."

He added that private banks are taking full advantage of the situation in nationalized banks. "They had lured clients from co-operative banks during the Madhupura Bank scam and now they are doing the same for PSBs," said Patwari.

PSBs LOSING GROUND

• Loans by private banks grew from Rs 1.09 lakh crore in July-September 2015-16 to Rs 2.20 lakh crore July-Sep 2018-19
   
• Loans from Public Sector Banks, including the SBI group, rose from Rs 2.71 lakh crore to Rs 3.15 lakh crore in the same period