New Delhi: The scheduled commercial banks (SCBs) in the country have written off loans worth Rs 10,09,511 crore during the last 5 financial years. Union Finance Minister Nirmala Sitharaman said this as a reply to a question raised in the Parliament.
The public sector banks recovered only Rs 1,03045 crore from written-off loans from the last 5 financial years. The aggregate recovery in the last 5 years amounts to Rs. 4,80,111 crore.
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India’s largest lender, State Bank of India (SBI), wrote off Rs 2 lakh crore worth loans in the last 5 financial years, while Punjab National Bank (PNB) wrote off loans worth Rs 67,214 crore loans in last 4 fiscal years, followed by IDBI Bank which wrote off Rs 45650 crores of loans. Among private sector banks, ICICI Bank wrote off Rs 50,514 crores of loans while HDFC Bank wrote off Rs 34,782 crore loans.
A bank writes off a loan when it finds no way to recover the money. By doing this the banks take the bad asset or Non Performing Assets (NPA) off its balance sheets.
Loan write offs have significantly contributed to the decline in bank NPAs over years. According to the Reserve Bank of India (RBI) financial stability report for June 2022, the gross non-performing asset (NPA) ratio of banks fell to six-year low of 5.9% in March 2022. The net non-performing assets (NNPA) ratio fell to 1.7% in March 2022.
Union Finance Minister Nirmala Sitharaman said that 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 banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available.
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