Public sector banks have written off around ₹91,000 crore in first 9 months of the current fiscal, according to data presented in the Rajya Sabha.

Another set of data showed that PSBs have just managed to recover little over ₹1 out of ₹5 in written off accounts during FY22. However, the pace of recovery has picked up from around 8 per cent in 2017-18 to little over 21 per cent in FY22.

SBI tops the table

In a written answer, Finance Minister Nirmala Sitharaman gave bank-wise details of written off amounts with State Bank of India on the top (₹17,356 crore) followed by Union Bank of India (₹16,497 crore) and Bank of Baroda (₹13,032 crore). Details about recovery for current fiscal have not been given.  

According to the Finance Minister, as per RBI guidelines and policy approved by bank Boards, NPAs, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off. Banks evaluate/consider the impact of write-offs as part of their regular exercise to clean up their balance-sheet, avail tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their Boards. “Such write-off does not result in waiver of liabilities of borrowers to repay,” she reiterated. 

Recovery actions

As borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues, write-off does not benefit the borrower. Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available, she said.

Meanwhile, in n response to another question, data provided along with written answer by Minister of State for Finance, Bhagwat Karad, revealed that all the scheduled commercial banks (PSBs, private banks and foreign banks) wrote-off around ₹1.61-lakh crore worth of loan in FY18 while recovery from written off accounts was less than ₹13,000 crore or around 8 per cent of bad debts taken off from the book in that year. For next four fiscal, the percentage rose to 10.8, 12.8, 14.9 and 19.4 per cent, respectively.

During all these five years, total amount in written off loan accounts was over ₹10 lakh crore, while recovery was over ₹1.3-lakh crore. This means net written off amount was around ₹8.7-lakh crore.

Considering bigger share in overall banking business, 12 PSBs have largest share in gross written off amount, recovery from written off loan accounts and net amount.