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Indian Banks Write Off Rs 10.6 Lakh Crore in 5 Years, Mostly Linked to Large Corporates: Govt Data

Approximately 2,300 borrowers, each with loans exceeding Rs 5 crore, deliberately defaulted on around Rs 2 lakh crore.
The government has said that the primary regulatory objective behind allowing wilful defaulters to enter into compromise settlement is to enable multiple avenues for lenders to recover the money in default without much delay. Photo: www.rupixen.com/Pixabay
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New Delhi: The government on Monday, December 4, informed the Lok Sabha that in the last five years, Scheduled Commercial Banks (SCBs) wrote off nearly Rs 10.6 lakh crore, with almost half of this amount belonging to large industrial houses.

Approximately 2,300 borrowers, each with loans exceeding Rs 5 crore, deliberately defaulted on around Rs 2 lakh crore, it said.

According to the Hindu BusinessLine, the write-offs, conducted in accordance with Reserve Bank of India (RBI) guidelines and approved bank board policies, involve removing non-performing assets (NPAs) from balance sheets after full provisioning.

“Such write-offs do not result in waiver of liabilities of borrowers to repay,” Minister of State in the Finance Ministry Bhagwat Karad said in a written response. The process of recovery of dues from the borrower in written-off loan accounts continues, write-off does not benefit the borrower, Karad added.

The newspaper reported that the minister did not name individual borrowers whose accounts have been written off citing the RBI Act. Quoting RBI, he said that all SCBs have collected an aggregate amount of Rs 5,309.80 crore as penal charges, including penalty charges against delay in payment of loans, during the financial year 2022- 23.

In response to another question, Karad said that SCBs and All India Financial Institutions report certain credit information of all borrowers having aggregate exposure of Rs. 5 crore and above to the Central Repository of Information on Large Credits (CRILC). “As reported in CRILC database, as on 31.3.2023, total 2,623 unique borrowers were classified as wilful defaulters, with aggregate outstanding of over Rs 1.96 lakh crore by SCBs,” he said.

The minister also clarified that the primary regulatory objective behind allowing wilful defaulters to enter into compromise settlement is to enable multiple avenues for lenders to recover the money in default without much delay. Apart from the time value loss, inordinate delays result in asset value deterioration, hampers ultimate recoveries, he said.

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