Bank Union Opposes Government Banks' Loan Mela

The Maharashtra State Bank Employees Federation (MSBEF) has raised their concern against the Banks' Credit Outreach Program or Loan Melas, which is putting the overall pressure on higher NPA due to lack of due diligence process.
The Maharashtra State Bank Employees Federation (MSBEF) spoke out against 'loan melas' organized by Government owned banks in India. Bankers' Union said that the credit granted without due diligence at such events leads to a buildup of non-performing assets. 

Further, union said that such 'melas' add to the retail Non-Performing Assets (NPAs) for the banks as the loans are granted without much diligence. They opposes the Loan mela held at Aurangabad in the presence of Union Minister of State for Finance Bhagwat Karad, where public sector lenders has distributed Rs 2,900 crore in loans. 


According to the MSBEF, no political party assists in the loan recovery process because past experience indicates that borrowers stop repayments for such loans. The same political parties demand for waiver of those loans so as to appease voters during elections.

Such Loan Melas ultimately add Non performing assets to the bank and subsequently NPAs cause public sector banks to fail and are then used to push for lender privatisation. 


Government should address policy issues such as effective legal structure for recovering overdues, timely appointment of board of directors etc. It should also ensure that banks hire an adequate number of employees, charge minimal service fees to customers, and provide adequate and timely credit to small and medium-sized farmers and businesses.
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