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Rs.14 Trillion Bad Loans Written Off by Banks in Last 8 Years


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  1. Huge Loan Write-Offs: Banks have forgiven unpaid loans totaling Rs 14.56 lakh crore over the past nine financial years.
  2. Major Portion from Industries and Services: Out of this total, loans from big industries and services amounting to Rs 7.41 lakh crore were written off.
  3. NPA Classification: When a borrower doesn’t pay back the loan principal or interest for 90 days, it’s considered a Non-Performing Asset (NPA).

On Monday, it was shared in Parliament that banks have forgiven a large amount of unpaid loans – about Rs 14.56 lakh crore – over the last nine years, starting from 2014-15. Out of this total amount, loans that were canceled from big industries and services make up Rs 7.41 lakh crore.

The Minister of State for Finance, Bhagwat Karad, informed the Lok Sabha in a written response that banks managed to recover a sum of Rs 2.04 lakh crore from these written-off loans, which includes loans to companies, from April 2014 to March 2023. In another response, the minister said that the amount of loans that banks decided not to collect (net write-offs) in public sector banks was Rs 1.18 lakh crore in the year FY18. This number decreased to Rs 0.91 lakh crore in FY22 and Rs 0.84 lakh crore in FY23, as per preliminary data from the Reserve Bank of India (RBI).

For private sector banks, the net write-off for FY22-23 was Rs. 73,803 crore according to RBI’s initial data. The percentage of loans written off compared to the total loans given out by private sector banks was 1.25% in FY17-18 and 1.57% in FY22-23. For public sector banks, the percentages were 2% and 1.12% for the same periods.

In the year ending March 2023, banks decided not to collect more than Rs 2.09 lakh crore worth of loans that were not being paid back, as reported by the Reserve Bank of India.

When a borrower doesn’t pay back a loan or its interest for 90 days, it’s called a Non-Performing Asset (NPA).

Efforts have been made by the government and RBI to recover these unpaid loans. This has helped decrease the total unpaid loans of public sector banks from Rs 8.96 lakh crore in March 2018 to Rs 4.28 lakh crore in March 2023, according to Karad.

Additionally, changes have been made to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, to make it more effective. The debt recovery tribunals (DRTs) now handle cases up to Rs 20 lakh instead of Rs 10 lakh, which helps them focus on bigger cases, leading to more recovery for banks and financial institutions. Companies and individuals who deliberately didn’t pay back loans have been stopped from raising funds from the capital markets.