Banks have written off Rs 2,02,781 crore of unhealthy loans within the fiscal ended March 2021 when the Covid-19 pandemic hit the nation and the Reserve Bank of India (RBI) allowed the banks to announce reliefs like mortgage moratorium for the debtors.
With this, banks have written off a whopping Rs 11,68,095 crore price of unhealthy loans, or non-performing belongings (NPAs), within the final ten years with a lot of the write-offs coming within the final seven years, the RBI mentioned in an RTI reply to The Indian Express. This is nearly 10.54 per cent of complete non-food financial institution advances of Rs 110.79 lakh crore and really near the federal government’s gross market borrowing of Rs 12.05 lakh crore projected for FY 2021-22 within the Union Budget.
Of the full write-off in 10 years, as a lot as Rs 10.72 lakh crore write-off has occurred since monetary yr 2014-15 when the Narendra Modi authorities assumed energy. This write-off aided banks to whitewash their unhealthy mortgage portfolio.
Normally, banks write off an NPA when all restoration measures are exhausted and probabilities of restoration of mortgage are distant. However, banks are speculated to proceed restoration steps even after a write-off. While a mortgage will be written off whether it is in default for greater than three consecutive quarters, banks haven’t disclosed the names of debtors whose loans have been written off thus far.
Banks wrote off Rs 2,34,170 crore in FY2019-20, Rs 2,36,265 crore in FY2018-19, Rs 1,61,328 crore in 2017-18 and Rs 1,08,373 crore in 2016-17, the RBI mentioned.
Five banks, led by State Bank of India (SBI), wrote off Rs 89,686 crore within the fiscal ended March 2021, with SBI accounting for Rs 34,402 crore, the RBI mentioned. Union Bank wrote off Rs 16,983 crore, PNB Rs 15,877 crore and Bank of Baroda Rs 14,782 crore in FY21.
Almost 75 per cent of the write-offs are finished by public sector banks (PSBs), serving to them to make their mortgage ebook and stability sheets respectable. “Once a loan is written off, it’s taken off the NPA book. It helps the bank to lower the NPAs and get tax benefit. Actually, the defaulted loan still exists as it’s a book entry,” mentioned an official of a nationalised financial institution.