NPA Written Off Settlements - PSBs Lost Rs 10 Lakh Crore in Last 5 years

In a recent study published by some media house shown that the Bank Lost Rs 10 Lakh Crore Loans in Last 5 years in Write Off. According to Reserve Bank of India (RBI) data, public sector banks have recovered Rs 4,80,111 crore, including Rs 1,03,045 crore from written-off loans, during the last five financial years.

Though the Finance minister is insisting that these are not lost and recovery in NPA (non performing asset) accounts, including written-off loans, are an on-going process but in facts public sector banks have recovered a total of  Rs 4,80,111 crore, including recovery of Rs 1,03,045 crore only from written-off loans during the last five financial years.

Bankwise Written Off NPA Loan Accounts

NPA Written Off

1. The SBI has written off bad loans worth Rs 19,666 crore in 2021-22, 

2. Union Bank of India which has written off bad loans worth Rs 19,484 crore, 

3. Punjab National Bank (Rs 18,312 crore), 

4. Bank of Baroda (Rs 17,967 crore), 

5. Bank of India (Rs 10,443 crore), 

6. ICICI Bank (Rs 10,148 crore), 

7. HDFC Bank (Rs 9,405 crore), 

8. Axis Bank (Rs 9,126 crore), 

9. Indian Bank (Rs 8,347 crore), and 

10. Canara Bank (Rs 8,210 crore),

Also ReadRBI Says Core activities of a Bank Should not be Outsourced

How Does Written Off help banks ?

Banks evaluate and consider the impact of write-offs as part of their regular exercise to clean up their balance sheet, avail of tax benefit and optimize capital. This helps in covering the extra provisioning and reversing to profitability.

Why do Written off accounts not debt free ?

The written off accounts are not completely debt free as per RBI guidelines. According to RBI guidelines and policy approved by banks’ boards, NPAs, including those in respect of which full provisioning had been made on completion of four years, were removed from the balance sheet of the bank concerned by way of write-off.

The borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues,

The actions include filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, through negotiated settlement and compromise and sale of NPAs.

Therefore, write-off does not benefit the borrowers as per RBI guidelines but ultimately loss to the depositors.

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