Virendra Pandit
New Delhi: The government could recover only 13 percent of the total write-offs of Rs. 10.09 lakh crore in the last five years, according to the Finance Ministry data submitted in Parliament on Tuesday.
The media reported on Wednesday that the scheduled commercial banks could recover just 13 percent of the total write-off in the last five years, the government data tabled in the Rajya Sabha in response to two separate questions on the issue showed.
As per inputs from the RBI, SCBs (scheduled commercial banks) wrote off over Rs. 10.09 lakh crore during the last five financial years (2017-18 to 2021-22), Finance Minister Nirmala Sitharaman said in a written reply.
“Total recovery of over Rs. 1.32 lakh crore from written-off loan accounts made during the last five financial years,” she said.
A write-off refers to removing the loan from the bank’s account book.
The Non-Performing Assets (NPAs), including those with complete provisioning made on completion of four years, are removed from the bank’s balance sheet as write-offs. Banks write off NPAs to clean up their balance sheet, get a tax benefit and optimize capital under the RBI guidelines and policy approved by their boards.
But when a bank writes off a loan, it does not mean any relief to the borrower as the sword of their written-off loans continues to hang over their heads, pending repayment, and the recovery process continues.
“Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available,” she said.
These mechanisms include filing suit in civil courts or in debt recovery tribunals; action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016; through negotiated settlement/compromise and through the sale of NPAs.
Sitharaman informed that gross NPAs of SCBs rose from over Rs. 2.51 lakh crore (gross NPA ratio of 4.1 percent) as on March 31, 2014, to over Rs. 9.62 lakh crore (gross NPA ratio of 11.46 percent) as on March 31, 2018, primarily, because of a transparent recognition of stressed assets as NPAs, as per the RBI data on domestic operations.
However, because of the government’s recognition, resolution, recapitalization, and reforms strategy, NPAs have since declined to over Rs. 6.97-lakh crore (gross NPA ratio of 5.9 percent) as on March 31, 2022.
Also, as per the RBI data on domestic operations, “stressed assets, including restructured standard assets, as a percentage of gross advances in SCBs, has declined from 9.8 percent as on March 31, 2014, to 7.8 percent as on March 31, 2022,” she said.
Staff accountability regarding NPA cases has been fixed against 3,312 bank officials (of AGM and above ranks) during the last five financial years, and suitable punitive actions have been taken commensurate with their lapses.