Winning Bizness Desk
Mumbai. A Right to Information (RTI) reply has revealed that different banks have written off bad loans worth over Rs 2.09 lakh crore during the year ended March 2023. This shocking revelation has come to the fore by a reply given by the Reserve Bank of India (RBI). This brings the total loan write-offs by the banking sector to a significant Rs 10.57 lakh crore in the last five years. According to the experts, the write-offs have helped banks to bring down gross non-performing assets (GNPA) or loans defaulted by borrowers to a 10-year low of 3.9% of advances in March 2023. Resultantly, Gross NPAs of banks had fallen from Rs 10.21 lakh crore in FY2018 to Rs 5.55 lakh crore by March 2023, just because of loan write-offs by the banks. As per the RBI data, since FY 2012-13, all banks have written off Rs 15,31,453 crore.
Recovery from bad loans very minimal
According to a senior bank official, the loans written off by banks still remain in the books of banks as unrecovered loans. Banks write off loans to reduce NPAs in their books, however, it is important to mention that banks have reported abysmal recoveries from the written off loans so far. All these banks could recover only Rs 30,104 crore in FY21, Rs 33,534 crore in FY22 and Rs 45,548 crore in FY23. RBI’s RTI reply further said that banks recovered only Rs 109,186 crore from Rs 586,891 crore loans written off in the last three years, adding that they could only recover 18.60% of the write-offs during the three-year period.
Total defaulted loans Rs 10.32 lakh cr
According to the data provided in the RTI, the total defaulted loans amount to Rs 10.32 lakh crore. The total NPA ratio, including write-offs, would have become 7.47% of advances as against 3.9% reported by the banks, it said. During the fiscal ended March 2023, loan write-offs by banks rose to Rs 209,144 crore, as against Rs 174,966 crore a year ago in March 2022, and Rs 202,781 crore in March 2021. A loan is classified as an NPA when the repayment of the principal amount or the interest remains outstanding for a period of 90 days.
