Rs 10.6 Lakh Cr Written-off By Banks In 5 Years: Govt Tells Parliament
The government on Monday has informed the Lok Sabha that all Scheduled Commercial Banks (SCBs) written off nearly Rs 10.6 lakh crore in the last 5 years. Out of which nearly 50 per cent belong to the large industrial houses. It also said in the Lok Sabha that nearly 2300 borrowers, each having a loan amount of Rs 5 crore or more have wilfully defaulted to overall around Rs 2 lakh crore.
According to the Reserve Bank of India (RBI) guidelines and policy approved by bank boards, NPAs, including those of which a full provisioning has been made on completion of four years, have been removed from the balance sheet of the bank concerned by the method of write-off.
Minister of State in the Finance Ministry Bhagwat Karad said in a written response that such write-offs do not result in the waiver of liabilities of borrowers to repay. The process of recovery of dues from the borrower in written-off loan accounts also continues and write-off does not benefit the borrower, he added.
Further, Banks are ensuring to pursue recovery actions initiated in written-off accounts through various recovery mechanisms. These mechanisms include filing in Debts Recovery Tribunals or civil suits, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act(Sarfaesi), 2002, filing of cases in the National Company Law Tribunal(NCLT) under the Insolvency and Bankruptcy Code(IBC), 2016, through negotiated settlement or compromise and sale of non-performing assets. Karad said, “Government does not spend any amount on write-offs of corporate loans.”
The Minister did not name any individual borrowers whose accounts have been written-off citing the RBI Act. Quoting the RBI, he said that all Scheduled Commercial Banks (SCBs) have collected an aggregate amount of Rs 5,309.80 crore as penal charges, including penalty charges against delay in payment of loans, during the fiscal year 2022- 23.
While responding to another question, Karad said that All India Financial Institutions and Scheduled Commercial Banks (SCBs) have reported certain credit information of all borrowers having aggregate exposure of Rs 5 crore and above to the Central Repository of Information on Large Credits (CRILC). He also said that as reported in CRILC database, as on 31 March 2023, a total of 2,623 unique borrowers were classified as wilful defaulters, with aggregate outstanding of over Rs 1.96 lakh crore by SCBs.
Further, he said that banks initiate or continue with the action against wilful defaulters under the various recovery mechanisms available, such as filing a suit in civil courts or DRT. Banks can also compromise or negotiate settlements or even sell nonperforming assets. Further, according to the RBI’s Framework for Compromise Settlements and Technical Write-offs on 8 June 2023, compromise settlements are undertaken by lenders in respect of wilful defaulters without prejudice to the criminal proceedings underway against such debtors, he mentioned.
The Minister also clarified the stance of the government that the primary regulatory objective behind allowing wilful defaulters to enter into compromise settlement is to enable multiple avenues for lenders to recover the money in default without much delay. Apart from the time value loss, inordinate delays result lead to asset value deterioration and hampers ultimate recoveries.
