A little more than half of loans written off by SCBs are of large industries and services firms

A little more than half of the loans written off by scheduled commercial banks in 2022-23 were those of large industries and services. Of the Rs 2.09 lakh crore of loans written off last fiscal, as much as 1.09 lakh crore or 52.3% belonged to large industries and services. 

The information was provided by Bhagwat Karad, minister of state for finance, in the Lok Sabha on Monday in response to a question on waiving off loans by Lok Sabha MPs Abdul Khaleque, Mahesh Sahoo and M Badruddin Ajmal. 

“As per the Reserve Bank of India (RBI) guidelines and policy approved by bank Boards, NPAs, including, inter-alia, 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,” Karad said, adding that banks evaluate 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 RBI guidelines and policy approved by their Boards.  

“Such write-off does not result in waiver of liabilities of borrowers to repay,” he said. 

In all, scheduled commercial banks wrote off loans amounting to Rs 10.57 lakh crore between the fiscal years 2018-19 to 2022-23. Of these, written off loans to large industries and services amounted to Rs 5.55 lakh crore or 52.5% of all such written off loans. 

RBI has apprised that information regarding the loan written-off in respect of corporate houses is not maintained by it, Karad further said. 

Scheduled commercial banks have also collected Rs 5,309.80 crore as penal charges, including penalty charges against delay in payment of loans, during the financial year 2022- 23. “RBI has further informed that the amount of money collected by the banks and other lending financial institutions as penalty charges against delay in payment of loan is not maintained by it,” Karad said. 

Wilful defaulters: 

Meanwhile, in response to another question on wilful defaulters, Karad said as per the Central Repository of Information on Large Credits (CRILC) database, a total 2,623 unique borrowers were classified as wilful defaulters as on March 31, 2023. They had an aggregate outstanding balance of Rs 1,96,049 crore by SCBs. 

Banks and All India Financial Institutions report certain credit information of all borrowers having aggregate exposure of Rs 5 crore and above to CRILC database. 

“…the primary regulatory objective behind allowing wilful defaulters to enter into compromise settlement is to enable multiple avenues to lenders to recover the money in default without much delay. Apart from the time value loss, inordinate delays result in asset value deterioration which hampers ultimate recoveries,” Karad said in response to a question by Lok Sabha MPs Aparupa Poddar and Natarajan PR. 

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