Banks Write Off Rs 9.90 Lakh Crore Loans Over Past Five Years

Banks have written off loans totalling Rs 9.90 lakh crore over the past five fiscals, Minister of State for Finance Pankaj Chaudhary said, in a written reply in the Rajya Sabha.

The highest write-off—Rs 2.34 lakh crore—occurred in FY20, which subsequently fell to Rs 2.02 lakh crore in FY21 and Rs 1.74 lakh crore in FY22.

For fiscal 2024, the write-off amounted to Rs 1.70 lakh crore, a decrease from Rs 2.08 lakh crore in the previous year, according to Chaudhary's written response in the Rajya Sabha.

According to the RBI guidelines and policy approved by the banks' 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, he said.

"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 the said guidelines and policies of the respective boards," he said, in a reply to a question put up by Congress member Randeep Singh Surjewala.

Such write-off does not result in waiver of liabilities of borrowers to repay and therefore, write-off does not benefit the borrowers, he said.

The borrowers of written-off loans continue to be liable for repayment and banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available to them, he added.

Against Rs 9.90 lakh crore write-off, recovery was to the tune of Rs 1.84 lakh crore, or just 18% of total write-off during the last five years.

According to the Reserve Bank of India data, he said, gross NPAs of scheduled commercial banks were at Rs 8,96,082 crore (GNPA ratio of 8.21%) as on March 31, 2020, Rs 8,35,051 crore (GNPA ratio of 7.33%) as on March 31, 2021, Rs 7,42,397 crore (GNPA ratio of 5.82%) as on March 31, 2022.

It further came down to Rs 5,71,544 crore (GNPA ratio of 3.87%) as on March 31, 2023, and to Rs 4,80,687 crore (GNPA ratio of 2.75%) as on March 31, 2024 (provisional data).

It indicates that gross NPAs in SCBs have been declining over the past five years, he added.

Replying to another question, Chaudhary said that the Indian banking sector remained largely insulated from the recent crises involving other global financial entities.

The liquidity coverage ratio of Indian banks in the January–June 2024 period remained above 130% against the regulatory threshold of 100%, indicating resilience to liquidity risks.

At the same time, he said, the investment portfolio of the Indian banks has remained largely resilient to the market risks arising due to adverse price movements.

While the SCBs incurred losses to the tune of Rs 32,437 crore in 2017-18, their net profit has improved to Rs 3,41,672 crore during 2023-24, he said.

The capital position of SCBs has improved to 16.84% as of March 31, 2024, from 13.85% as of March 31, 2018.

On the issue of fake currency, Chaudhary said, it has come down to 2,22,639 in FY24, as against 2,22,639 in the previous fiscal.

Further, the National Investigation Agency has registered 39 cases related to fake Indian currency notes since withdrawal of the Rs 500 and Rs 1,000 notes in the year 2016, in which counterfeit Indian currency of face value Rs 8,50,62,500 have been seized, he said.

The government, in consultation with its various agencies and the Reserve Bank of India, takes necessary steps to curtail the use and circulation of fake currency in the country from time to time, he said.

New security features are also introduced in Indian banknotes from time to time to enhance their anti-counterfeiting properties, he said.

(With Inputs From PTI)