In order to clean up the balance sheets and avail tax benefits, the banks in the country have written off loans worth Rs 9.9 lakh crore in the last five years, according to the information shared in the parliament on Tuesday. In the financial year 2023-24, the number stood at RS 1.70 lakh crore, compared with RS 2.08 lakh crore in FY 2022-23.
In a written reply in the Rajya Sabha, the Minister of State (MoS) for Finance Pankaj Chaudhary stated that the bank loan write-off was highest during 2019-20 when the figure came in at Rs 2.34 lakh crore. In 2020-21, banks wrote off Rs 2.02 lakh crore which further came down to Rs 1.74 lakh crore in the following year.
Replying to the question asked by Congress party member Randeep Singh Surjewala, the MoS said, “Banks evaluate, consider the impact of write-offs as part of their regular exercise to clean up their balance sheet, avail tax benefits and optimise capital, in accordance with the said guidelines and policies of the respective boards.”
The MoS clarified that the write-off of loans by the bank does not mean that the borrower is now free of any liabilities to repay the loans. He stated that the borrowers continue to be liable and the banks use the various channels available to recover the loans they have written off.
As per the policy by banks’ boards and guidelines laid out by the Reserve Bank of India (RBI), banks remove the non-performing assets (NPAs) from their balance sheet in the form of write-offs, including those for which the banks have made full provisions on completion of four years, the MoS pointed out.
The Rs 9.9 lakh crore write-off that banks made during the last five years, the recovery was to the tune of Rs 1.84 lakh crore, equivalent to 18 per cent of the total write-off.
The RBI data shows that the gross NPA (GNPA) of the scheduled commercial banks (SCB) came down to Rs 4,80,687 crore as on 31 March 2024 (Provisional data) from Rs 5,71,544 crore a year ago. The GNPA of SCB was Rs 8,96,082 crore as on 31 March 2020. This shows the declining trend as far as the NPAs in SCBs are concerned, the MoS noted.
