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Banks Write Off Rs 14.56 Lakh Cr NPAs Over Nine Financial Years

BW Online Bureau May 13, 2024

During the financial year, net write-off loans in public sector banks (PSBs) stood at Rs 1.18 lakh crore in FY 2017-18, which decreased to Rs 0.91 lakh crore in FY 2021-22 and further to Rs 0.84 lakh crore (as per RBI provisional data) in FY 2022-23

Banks have written off bad loans totaling Rs 14.56 lakh crore over the past nine financial years beginning 2014-15, as revealed in Parliament on Monday. Out of this amount, bad loans from large industries and services accounted for Rs 7,40,968 crore.

Scheduled Commercial Banks (SCBs) managed to recover a sum of Rs 2,04,668 crore in written-off loans, including corporate loans, from April 2014 to March 2023, according to Minister of State for Finance Bhagwat Karad in a written reply to Lok Sabha.

Meanwhile, net write-off loans by private sector banks amounted to Rs 73,803 crore (RBI provisional data) in FY 2022-23.

The comprehensive measures undertaken by the government and RBI have contributed to a decline in gross NPAs of PSBs from Rs 8.96 lakh crore as of 31 March 2018 to Rs 4.28 lakh crore as of 31 March 2023, Karad stated.

To bolster recovery efforts, amendments were made to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Additionally, the pecuniary jurisdiction of debt recovery tribunals (DRTs) was raised to Rs 20 lakh from Rs 10 lakh, enhancing their focus on high-value cases.

Furthermore, the establishment of the National Asset Reconstruction (NARCL) aims to address stressed assets above Rs 500 crore each. The government has sanctioned a guarantee of up to Rs 30,600 crore to support Security Receipts issued by NARCL for acquiring stressed loan assets.

Regarding capital raising, the State Bank of India (SBI) board approved raising up to Rs 50,000 crore in Basel III compliant AT-1 bonds, Tier-2 bonds, and infrastructure bonds during FY2023-24. This capital infusion aims to replace existing capital bonds, fortify the bank's capital base, and facilitate asset growth.