Banks wrote off ₹10 lakh cr in last 5 yrs: FM

Finance Minister Nirmala Sitharaman has said that scheduled commercial banks (SCBs) wrote off ₹10,09,511 crore in the last five financial years. "As per inputs received from the RBI, scheduled commercial banks wrote off an amount of ₹10,09,511 crore in the last five financial years," she said in the Lok Sabha on Monday.

The data shows SBI wrote off the highest ₹19,666 crore, followed by Union Bank of India (UBI), which wrote off loans worth ₹19,484 crore and Punjab National Bank at ₹18,312 crore, in the past five years.

The FM said such borrowers continue to be liable for repayment, and the process of recovery in written-off loan accounts continues. The FM said as per the RBI data, public sector banks (PSBs) have recovered an aggregate amount of ₹4,80,111 crore, including a recovery of ₹1,03,045 crore from written-off loans, during the last five financial years. 

In a separate reply on the non-performing assets of the public sector banks, minister of state in the finance ministry Bhagwat Karad said public sector banks’ (PSB) NPAs have dipped from Rs 8,95,601 crore as on March 2018 to ₹5,40,958 crore as on March 2022, primarily due to multiple factors, including NPA write-offs. 

Karad said the gross NPAs of public sector banks (PSBs), which had peaked at ₹8,95,601 crore in 2018 -- primarily as a result of the asset quality review undertaken by the Reserve Bank of India (RBI) -- have since declined to ₹5,40,958 crore as on March 31, 2022.

"The decline in NPAs can also be due to write-off which is primarily an exercise undertaken for cleaning of balance-sheet, avail of tax benefit and optimise capital by PSBs, as per RBI guidelines and banks’ board approved policies," he said in the Lok Sabha. He also attributed the decline in the NPAs to the government’s strategy of recognition, resolution, recapitalisation and reforms.

"Decline in NPAs can be due to upgradation of NPA accounts, recoveries in NPA accounts and lower slippages. In the last five financial years, the PSBs have made an aggregate recovery of ₹4,80,111 crore from NPA accounts and upgradation of NPAs of ₹1,45,356 crore," said the minister. 

Further, slippages into NPAs have reduced from ₹3,38,710 crore for FY17 to ₹1,44,315 crore for FY22, all of which has resulted in the decline in NPAs, he said. "The decline in NPAs can also be due to write off which is primarily an exercise undertaken for cleaning of balance-sheet, avail of tax benefit and optimise capital by PSBs, he added.

With regard to the details of the top 50 loans that were written off, the RBI says it doesn't maintain account-wise information on written-off loan accounts, said the minister. State Bank of India (SBI) tops the chart among PSBs that have written off bad loans worth ₹7,782 crore in FY22, followed by the Punjab National Bank (PNB) at ₹3,441 crore and Union Bank of India at ₹2,750 crore. 

In the list of wilful defaulters as on March 31, 2022, fugitive diamantaire Mehul Choksi's Gitanjali Gems Ltd tops the list at ₹7,848 crore, followed by Era Infra Engineering Ltd at ₹5,879 crore and Concast Steel and Power Ltd at ₹4,596 crore. ABG Shipyard Ltd owes ₹3,708 crore to PSBs, while Frost International Ltd owes ₹3,311 crore. On the currency in circulation, the FM said there has been a 9.86% increase in the value of the notes in circulation to ₹31,05,721 crore in 2022 so far.