DNA: Mumbai: Tuesday, June 19, 2018.
Public sector
banks resorted to write-offs or compromise settlements worth over Rs 3 lakh
crore to reduce their bad loan burden in the past four years and nine months,
the Reserve Bank of India has said.
The
"reduction in NPAs due to write-offs (including compromise)" was Rs
3,07,899 crore between the financial year 2013-14 and December 2017, the
central bank said in response to an application filed under the Right to
Information Act.
Bad loans,
also called non-performing assets (NPAs), of 21 government-controlled banks
shot up 234 per cent and loan write-offs also surged about 147 per cent in the
same period, RBI figures show.
In its reply,
RBI said the banks removed nearly Rs 34,430 crore loans from their books in
13-14. The highest write-off during the period was Rs 85,082 crore in the last
nine months of the last fiscal.
A write-off
is intended for cleansing the balance sheet and achieving taxation efficiency.
In 'compromise', the bank agrees to accept in full and final settlement of its
dues an amount less than the total loan due to it.
SBI along
with its erstwhile five associates topped the list at Rs 1,18,574 crore in the
nearly 5-year period. Punjab National Bank wrote off Rs 29,861 crore, followed
by Bank of India (Rs 19,467 crore) and IDBI (Rs 17,961 crore) in the given time
frame.
Among other
public sector banks, Canara Bank has written off Rs 15,508 crore, followed by
Indian Overseas Bank (Rs 11,944 crore), Bank of Baroda (Rs 11,535 crore) and
Corporation Bank (Rs 11,253 crore).
Activist
Harinder Dhingra, who had filled the RTI, said, "Write-offs are a major
source of corruption and many PSU board of directors have settled NPA accounts
of more than Rs 100 crore for 25 per cent to 50 per cent thus causing huge
losses to PSU Banks."
Banks and RBI
always try to give the impression that a write-off does not mean waiving a
loan. SBI maintains that "write-off is only an accounting treatment"
whereas Bank of Baroda calls it a "normal process which takes place almost
every year with all the banks". Though data available with DNA shows
write-offs spiked more than the bad loan recoveries.
The bad loan
burden of public sector banks stood at Rs 7,23,513 as of December 2017, which
is a big blow to the economy. The burden of bad loans will further rise as RBI
recently withdrew various loan restructuring schemes and tightened few rules.
The
government banks hold two-thirds of banking business in the country, along with
about 80 per cent bad loans. To handle the mounting bad loan pressure, the
government is in the process of creating a 'bad bank'. The government has
already set up an expert panel under Sunil Mehta, non-executive chairman of
PNB, which is about to submit its report.
Surge Of
147%
RBI said loan
write-offs rose 147% between fiscal 13-14 and Dec 2017
SBI topped
the list at Rs 1,18,574 cr. PNB wrote off Rs 29,861 cr
Govt
Efforts
Finance
minister Piyush Goyal will meet top government bankers on Tuesday to discuss
the ‘challenges of assets quality front and competition from private banks and
other private financial institution.
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