Rs. 10,09,511 worth of loans were written off in the other five fiscal years: Minister of Finance Nirmala Sitharaman.
In New Delhi: According to information provided to the Lok Sabha on Monday by Union Finance Minister Nirmala Sitharaman, scheduled banks have written off loans totaling Rs 10,09,511 crore over the past five fiscal years, and the process of collecting unpaid debt from debtors is ongoing. According to Sitharaman, the process of recovering NPA (non-performing asset) accounts, including loans that have been written off, is ongoing.
She added that during the course of the previous five fiscal years, public sector banks had collected Rs 4,80,111 crore from written-off debts, including Rs 1,03,045 crore. During Question Hour, Sitharaman stated, “According to inputs received from the RBI, scheduled financial institutions have written down a sum of Rs 10,09,511 crores during the previous five financial years.”
She said, “The recovery process of dues from the debtor in written-off consumer loans continues. The borrower of written-off loans continues to be accountable for repayment.”
According to Sitharaman, banks are still pursuing recovery operations started in accounts that have been written off using the different available recovery processes. Taking legal action includes bringing a lawsuit in civil court or before a debt recovery tribunal, taking legal action under the Securitization and Financial Asset Reconstruction Assets but the Enforcement of Security Interest Act of 2002, bringing legal action before the National Corporation Law Tribunal under Insolvency and Bankruptcy Code of 2016, and selling non-performing assets.
Therefore, she argued, “write-off does not assist the debtors.” The minister stated that NPAs, even those for which full provision had been made at the end of four years, were erased off the income statement of the bank in question by way of write-off in accordance with RBI norms and policy authorized by banks’ boards.
In accordance with RBI rules and policies that have been authorized by their boards, banks analyze and take into account the effects of write-offs to be part of their routine process to optimize capital, take advantage of tax benefits, and clean up their balance sheet.
In response to a query, Sitharaman stated that because the legal process was drawn out and there were several claimants to the confiscated assets, including banks and financial institutions, it was very difficult to recover the money of small investors and depositors from loan defaulters.
The minister stated that she was conscious of the tremendous problems the depositors were facing and that further investigation was necessary to determine how to make the procedure simpler.
Earlier, Bhagwat Kishanrao Karad, a minister of state for finance, said that the RBI’s norms prevented the disclosure of loan defaulters’ identities; but after their properties were put up for auction, their names may be made public.
State Bank of India (SBI), the largest lender in India, wrote off debts totaling Rs 2 lakh crore over the course of the other five fiscal years. In comparison, Punjab National Bank (PNB) wiped off loans totaling Rs 67,214 crore over the course of the previous four fiscal years. Among the private banks, ICICI Bank wiped off debts totaling Rs 50,514 crore, and HDFC Bank cleared off loans totaling Rs 34,782 crore. Loan write-offs have made a major contribution to the long-term fall in bank NPAs.
The gross non-performing assets (NPA) ratio of banks decreased to a six-year low of 5.9 percent in March 2022, according to the Reserve Bank of India’s (RBI) Financial Stability Survey for June 2022. In March 2022, the net non-performing loans (NNPA) ratio dropped to 1.7%.
During Question Hour, Sitharaman stated, “According to inputs got from the RBI, scheduled financial institutions have written down a sum of Rs 10,09,511 crores during the previous five financial years.” She said, “The process of recovering dues from the debtor in written-off consumer loans continues. The borrower of written-off loans remained to be accountable for repayment.”
The Reserve Bank of India placed restrictions on the bank in September 2019 and said that depositors were not allowed to withdraw much more than Rs 1,000 from the institution for six months. In October 2019, the withdrawal cap was increased to Rs 40,000 from Rs 25,000.
Sitharaman said in a statement to the Lok Senate on Monday that “the processes are quite complicated, and it does take a long time.” “On occasion, there are even groups of defaulters. Even if these defaulters’ resources are attached, it involves a very difficult legal process.
The Bharatiya Janata Party leader made reference to the PMC bank scandal when he remarked that the courts would not permit it if the Centre asked for the return of any of the assets that had been attached by the agency.
Edited by Prakriti Arora