Lok Sabha Question No. 2324 (UNSTARRED), answered on 2018-03-09
Subject: Loans Written Off by SCBs
Ministry: FINANCE
Asked by: RAJAN BABURAO  VICHARE

## GOVERNMENT  OF INDIA MINISTRY  OF FINANCE

TO BE ANSWERED  ON THE 09 th  MARCH, 2018/PHALGUNA 18, 1939 (SAKA)

## DEPARTMENT  OF FINANCIAL  SERVICES LOK SABHA UNSTARRED  QUESTION  NO: 2324

## QUESTION LOANS WRITTEN OFF BY SCBs

## 2324:  SHRI RAJAN  VICHARE:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  all the Scheduled  Commercial Banks (SCBs) wrote  off Rupees  2,25,180 crore  of bad loans cumulatively in the five year  period  ended March 2016 and  if so, the details  thereof;
- (c) whether  the Government  is considering  to bring  in newer  mechanisms  to deal with  these big loans and if so, the details  thereof?
- (b) whether   these  write-offs   are  just technical   in  nature   and  an  exercise   to  clean   up the  balance sheets  as  these  banks   can  continue   to  retain   the  right   to  recovery   from   these  written off accounts  and if so, the details  thereof;  and

## ANSWER To be answered by THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE

## (SHIV PRATAP  SHUKLA)

- (a)  As  per  Reserve   Bank   of  India  (RBI)  guidelines   and  policy   approved   by   Bank Boards,   nonperforming  loans,  including, inter-alia , 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.  As per Reserve  Bank  of India (RBI) data on global  operations,  based on annual  returns  of Scheduled  Commercial  Banks (SCBs), the total  amount  of write-off  (including  compromise),  for the five-year  period  ended March 2016,  was Rs. 2,30,287 crore.
- (c)    RBI  has  recently   introduced   a  revised   framework for  resolution   of  stressed  assets,  replacing various   restructuring schemes  to  enable  transparent   and  time-bound   resolution   of  high-value stressed accounts.  As per this,  Resolution  Plan  needs to be implemented  within  180 days.  In case of non-implementation lenders   shall   file  insolvency application.   Further,   in  case  of  restructuring or change  in  ownership,   independent   credit   evaluation   of  residual   debt  of  credit   rating   agencies   is required.   In  addition,   under   the  Public   Sector   Banks   (PSBs)  Reforms   Agenda   announced   by   the Government  in January   2018,  PSBs  have  committed, inter-alia, to  ensure   for  clean   lending,   strict segregation   of  roles  for  appraisal,   monitoring and  recovery,   online   processing   of  loans,   clean consortium  lending  arrangements,  Stressed Asset Management  verticals  for stringent  recovery,  and clean post-sanction  follow-up  for loans  above Rs. 250 crore.
- (b) Writing-off  of non-performing  assets is a regular  exercise  conducted  by  banks  to clean up their balance   sheet,   and  achieving   taxation   efficiency. Writing   off  of  loans   is  done, inter-alia ,  for  tax benefit   and  capital   optimisation. Borrowers   of  such  written  off  loans  continue   to  be  liable   for repayment.  Recovery  of dues takes  place on ongoing  basis under legal  mechanisms,  which  include, inter-alia, the Securitization and  Reconstruction of  Financial   Assets  and  Enforcement   of  Security Interest   Act,   Debts  Recovery   Tribunals   and  Lok   Adalats.   Therefore,   write-off   does  not  benefit borrowers.