SBI's Rs7,000-cr loan 'write off' not loan waiver, says Arun Jaitley

Amidst the flood of deposits of old currency to banks in the wake of the demonetisation of Rs1,000 and Rs500 notes, the country's top lender State Bank of India (SBI) had to write down bad loans worth Rs7,000 crore, including loans given to Vijaya Mallya-promoted Kingfisher Airlines.

The government and the bank, however, maintain there was no loan waiver and the liability on the borrowers still remains.

Finance minister Arun Jaitley also defended the bank saying there was no write-off of loans and that it was only provisioning for bad loans that have become difficult to recover.

Explaining the issue to opposition members in the Rajya Sabha, Jaitley asked them not to go by the literal meaning of write-off.

"So there is a little bit of malapropism involved in this. Don't go by literal meaning write-off. Write-off does not mean loan waiver. Loan still remains. You still continue to pursue," he said while intervening in a debate in the house on the government's demonetisation action.

Jaitley was replying to CPM leader Sitaram Yechury who referred to a newspaper report, which said SBI wrote off loans of wilful defaulters, including Rs1,200 crore of Kingfisher Airlines. However, the member did not take any names. Congress leader Anand Sharma had also raised the issue in his speech.

"It (write-off) does not mean that the loan ceases to be a loan. We will still chase the loan. The entry in the book changes that is from being performing assets, it become a non-performing (asset)," Jaitley said

Without specifically referring to the Kingfisher case, the finance minister said, this loan was restructured when another government was in power.

"This is the only loan for which second restructure was wanted by that government. So, we inherited a terrible legacy. But only in the accounting book, the performing assets becomes non-performing that's all. Otherwise the liability to pay and right to recover still remains," he said.

SBI chairman Arundhati Bhattacharya also sought to downplay reports of loan write-off of 63 wilful defaulters saying that they have been clubbed under a different head and efforts are on to recover loans from such defaulters.

SBI, the leader of the consortium of 17 banks, has taken physical possession of many properties including Goa's plush Kingfisher Villa. The auction by the bank failed to attract any bidder.

"These are not write offs. They are old entries done over time. We have fully provided for these loans so they are put into an account called Accounts Under Collection. There is a very robust process for following up all these loans for recovery including monthly review by management and quarterly review by board, PTI quoted Bhattacharya as saying.