Banks write off loans worth Rs 9.90 lakh cr in last 5 financial years

New Delhi: Banks have written off loans worth Rs 9.90 lakh crore in the last five financial years, Parliament was informed on Tuesday.

During 2023-24, banks loan write off was at Rs 1.70 lakh crore, as against Rs 2.08 lakh crore in the previous fiscal, Minister of State for Finance Pankaj Chaudhary said in a written reply in the Rajya Sabha.

Write-off was highest at Rs 2.34 lakh crore during 2019-20, which came down to Rs 2.02 lakh crore in the following year and to Rs 1.74 lakh crore in 2021-22.

As per the RBI guidelines and policy approved by banks' boards, NPAs, including 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, he said.

"Banks evaluate/consider 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 the said guidelines and policies of the respective boards," he said in a reply to a question asked by Congress member Randeep Singh Surjewala.

Such write-off does not result in waiver of liabilities of borrowers to repay and therefore, write-off does not benefit the borrowers, he said.

The borrowers of written-off loans continue to be liable for repayment and banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available to them, he added.

Against Rs 9.9 lakh crore write-off, recovery was to the tune of Rs 1.84 lakh crore, or just 18 per cent of total write-off during the last 5 years.

As per the Reserve Bank of India (RBI) data, he said, gross NPAs (GNPA) of Scheduled Commercial Banks (SCBs) was Rs 8,96,082 crore (GNPA ratio of 8.21 per cent) as on March 31, 2020, Rs 8,35,051 crore (GNPA ratio of 7.33 per cent) as on March 31, 2021, Rs 7,42,397 crore (GNPA ratio of 5.82 per cent) as on March 31, 2022.

It further came down to Rs 5,71,544 crore (GNPA ratio of 3.87 per cent) as on March 31, 2023 and to Rs 4,80,687 crore (GNPA ratio of 2.75 per cent) as on March 31, 2024 (provisional data).

It indicates that gross NPAs in SCBs have been declining over the past five years, he added.

Replying to another question Chaudhary said, the Indian banking sector remained largely insulated from the recent crises involving other global financial entities.

The liquidity coverage ratio (LCR) of Indian banks during January-June 2024 remained above 130 per cent against the regulatory threshold of 100 per cent indicating resilience to liquidity risks.

At the same time, he said, the investment portfolio of the Indian banks has remained largely resilient to the market risks arising due to adverse price movements.

While the SCBs incurred losses to the tune of Rs 32,437 crore during 2017-18, their net profit has improved to Rs 3,41,672 crore during 23-24, he said.

The capital position (CRAR) of SCBs has improved to 16.84 per cent as on March 31, 2024 from 13.85 per cent as on March 31, 2018.

On the issue of fake currency, Chaudhary said, it has come down to 2,22,639 in FY24, as against 2,22,639 in the previous fiscal.

Further, the National Investigation Agency has registered 39 cases related to Fake Indian Currency Notes (FICN) since withdrawal of legal tender of Rs 500 and Rs 1000 notes in the year 2016, in which counterfeit Indian currency of face value Rs 8,50,62,500 have been seized, he said.

The government in consultation with its various agencies and the Reserve Bank of India takes necessary steps to curtail the use and circulation of fake currency in the country from time to time, he said.

New security features are also introduced in Indian banknotes from time to time to enhance their anti-counterfeiting properties, he added.