All scheduled commercial banks (SCB) operating in India have cumulatively written off loans of Rs2,02,781 crore in FY21. As expected, public sector banks (PSBs) lead the pack and have written off bad loans worth Rs1,31,894 during FY21, the Rajya Sabha was informed.
In a written reply, Dr Bhagwat Karad, minister of state for finance, says, "As per Reserve Bank of India (RBI) data, an aggregate amount of Rs2,02,781 crore has been written off by SCBs during the financial year 2020-21."
He also reiterates that as per RBI guidelines and policy approved by bank boards, non-performing loans (NPLs), including those in respect of which complete provisioning has been made on completion of four years, are removed from the balance sheet of the bank by way of write off.
"Banks evaluate or consider the impact of write-offs as part of their regular exercise to clean up their balance sheet, avail of tax benefits, and optimise capital according to RBI guidelines and policy approved by bank boards. The borrowers of written-off loans continue to be liable for repayment, and the process of recovery of dues from the borrower in written off loan accounts continues," Dr Karad says.
Naranbhai Jemlabhai Rathwa, a member of Parliament (MP), had asked about bad loans written off in the fiscal year ended in March 2021. He also questioned whether it is also a fact that there is no transparency in the process as the loans of big defaulters are normally written-off while small borrowers do not get any mercy from the banks and the reasons for this.
According to the minister, banks continue to pursue recovery auctions initiated in written-off accounts through various recovery mechanisms available, which include filing a suit in civil courts or debt recovery tribunals (DRTs), action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act), filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code (IBC), through the sale of non-performing assets (NPAs).
During FY21, the State Bank of India (SBI) is at the top in writing off bad loans among all SCBs in the country. SBI wrote off loans worth Rs34,402 crore, followed by Union Bank of India with Rs16983 crore, and Punjab National Bank (PNB) at Rs15877 crore. Among private-sector lenders, Axis Bank tops the list with a loan write off worth Rs12,018 crore. It is followed by ICICI Bank Ltd at Rs9,507 crore and HDFC Bank at Rs9289 crore.
Interestingly HDFC Bank is the country's largest private sector lender, followed by ICICI Bank and Axis Bank. However, the sequence is reversed in terms of loan write-off, with Axis Bank coming at the top. The gross NPAs of PSBs rose to Rs8.96 lakh crore as of 31 March 2018 from Rs2.79 lakh crore as of 31 March 2015.
As a result of the Union government's strategy of recognition, resolution, recapitalisation and reforms, the NPAs have since declined to Rs5.60 lakh crore as of 31 December 2021, Dr Karad had told the Rajya Sabha earlier.
He says, "As per data reported by RBI, PSBs have effected a total recovery of Rs3,12,987 crore, in NPA accounts and written-off loans since FY19 to FY21."
Here too SBI leads the pack of lenders who have written off amounts during the past three fiscal years. SBI wrote off Rs1.46 lakh crore from FY18-19 to FY20-21. It is followed by Punjab National Bank (PNB) at Rs58,397 crore, Bank of Baroda (BoB) at Rs49,986 crore, and Union Bank of India (UBI) at Rs 49,449 crore.