Bad loans and their write off have always been in focus when discussion revolves around the Indian banking system and its loopholes. Banks, be it small or big, have been hit by several scams and frauds, resulting in closure of a few or merger of some. All this is related to either piling up of loans or write off of bad loans. An RTI reply has come as a shocker, revealing that in the past 15 years, more than Rs 10 lakh crore of bad loans were written off and recovery has happened of a mere Rs 82,000 crore which is like just 8.25%.
Pune-based businessman Prafful Sarda had sought details of write-offs done by various banks and the reply gives some shocking insights into the state of affairs of not only public sector banks, but also those in the private sector and foreign banks. The RTI reply reveals that from financial year 2003-2004 to 31 December 2019, some Rs 10,15,977 lakh crore were written off by various banks, including public and private sectors, foreign banks and NBFCs too. What makes the scenario particularly bleak is that the recovery has been weak at just Rs 82,571 crore. As per the data, the total loan write-offs by public sector banks from financial year 2003-2004 to 31 December 2019 was Rs 7,83,365 lakh crores, in which the State Bank of India scores high with Rs 2,28,850 lakh crore of write off, followed by the infamous Punjab National Bank at Rs 59,691 crore write off and Bank of Baroda at Rs 47,847 crore, Indian Overseas Bank at Rs 41,793 crore, Bank of India, Rs 35,056 crore, Canara Bank, Rs 30,506 crore. Shocked at the high amounts of write-offs by public sector banks, Sarda said: “The maximum loan write-off is given by PSUs as there is less intent to recover maximum loan amounts; also banks like SBI have maximum amount as its reach is from rural to urban to several remote places as well, but one should not forget that there is also negligence on the part of these banks to recover the maximum amount due unfortunately to the nexus between bank employees and defaulters, resulting in less percentage of recovery. In the past few years, we have seen several examples that due to these loan write-offs and NPA, many PSUs are getting merged with other banks, and many co-operative banks are shutting down.”