Rs2.02 Lakh Crore Bad loans written off by commercial banks scheduled in FY21 : Government
All Regular Commercial Banks (SCBs) operating in India accumulated loan cancellations of Rs2,02,781 crore in FY20-21. As expected, Public Sector Banks (PSBs) are leading the pack and have written off bad debts worth Rs 1,31,894 in FY20-21, the Rajya Sabha has been informed.
In a written response, Dr Bhagwat Karad, Minister of State for Finance, said: “According to Reserve Bank of India (RBI) data, a total amount of Rs2,02,781 crore has been written off by SCBs over the past of the 2020-21 financial year.”
He also reiterates that, in line with RBI guidelines and policy approved by the Banks’ Boards, Non-Performing Loans (NPLs), including those for which full provisioning has been made after four years, are removed from the bank’s balance sheet. by radiation.
“Banks assess or consider the impact of write-offs as part of their regular exercise to clean up their balance sheets, gain tax benefits and optimize capital in accordance with RBI guidelines and policy approved by the boards of the banks. Borrowers of written-off loans continue to be responsible for repayment, and the process of collecting dues from the borrower on written-off loan accounts continues,” says Dr. Karad.
Naranbhai Jemlabhai Rathwa, Member of Parliament (MP), had asked about bad debts written off in the financial year ending March 2021. He also questioned whether it was also true that there were no transparency in the process as the loans of the big defaulters are normally written off while the small borrowers get no mercy from the banks and the reasons for it.
According to the minister, banks continue to pursue collection auctions initiated in written-off accounts through various collection mechanisms available, which include filing a lawsuit in civil courts or debt collection tribunals (DRTs). , an action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act), filing cases in the National Company Law Tribunal under the Insolvency Code and bankruptcy (IBC), through the sale of non-performing assets (NPA).
In FY 20-21, State Bank of India (SBI) leads in bad debt write-offs among all SCBs in the country. SBI canceled loans worth Rs34,402 crore, followed by Union Bank of India with Rs16,983 crore, and Punjab National Bank (PNB) at Rs15,877 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 Rs9,289 crore.
Interestingly, HDFC Bank is the largest private sector lender in the country, followed by ICICI Bank and Axis Bank. However, the sequence is reversed in terms of loan cancellations, with Axis Bank coming out on top.
PSB gross NPAs increased to Rs8.96 lakh crore as of March 31, 2018 from Rs2.79 lakh crore as of March 31, 2015.
Due to the recognition, resolution, recapitalization and reforms strategy of the Union government, NPAs have since declined to Rs5.60 lakh crore as of December 31, 2021, Dr Karad had told the Rajya Sabha earlier.
It says, “According to data reported by RBI, PSBs have effected a total recovery of Rs3,12,987 crore, in NPA accounts and loans written off since FY19 to FY21.”