State-run banks wrote off Rs2,41,000-cr of bad loans in 3 years
04 April 2018
State-run banks wrote off Rs2,41,000 crore of loans between April 2014 and September 2017, saving borrowers, mostly corporates, from bankruptcy, the Rajya Sabha was informed on Tuesday.
State-run banks have a growing portfolio of non-performing assets (NPAs) or bad loans and it is a regular exercise for banks to clean up their balance sheet, even though they continue to pursue repayment of loans from defaulters, minister of state of finance Shiv Pratap Shukla said in a written reply.
Writing off loans is done, inter-alia, for tax benefit and capital optimisation, he said.
"Borrowers of such written off loans continue to be liable for repayment," he added.
While banks escape payment of tax due to losses it is a double loss for the government – both in returns and tax revenue – say analysts.
"As per Reserve Bank of India (RBI) data on global operations, public sector banks have written-off (including compromise) an amount of Rs 2,41,911 crore from financial year 2014-15 till September 2017," the minister said.
Shukla said banks continue to pursue loan recovery on an ongoing basis under the legal mechanism, including SARFAESI Act and debt recovery tribunals, adding, "Therefore, write-offs do not benefit borrowers."
The minister also said that borrower-wise credit information is not available for disclosure as the RBI Act prohibits such disclosures as these are treated as confidential.