Lok Sabha Question No. 6468 (UNSTARRED), answered on 2018-04-06
Subject: Bad Loans
Ministry: FINANCE
Asked by: A. ARUNMOZHITHEVAN

## GOVERNMENT  OF INDIA

UNSTARRED  QUESTION  NO: 6468 TO BE ANSWERED  ON THE 6th APRIL,  2018/CHAITRA  16, 1940 (SAKA)

## MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL  SERVICES LOK SABHA

## QUESTION BAD LOANS

## 6468:  SHRI A. ARUNMOZHITHEVAN:

Will  the Minister  of FINANCE  be pleased to state:

- a) whether  Public  Sector  Banks wrote  off a record  Rs. 81,683 crore  worth  of bad loans in the financial  year  ended March,  2017, if so, the details  thereof;  and
- b) whether  the banks  have wrote  off a total  of Rs. 2.46 lakh  crore  worth  of loans in the last five years,  if so, the details  thereof?

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

## (SHRI SHIV PRATAP  SHUKLA)

(a) and (b): The Reserve  Bank  of India (RBI) initiated  Asset Quality Review,  under  which restructured  loans with  performance  issues and potentially weak  loans were  identified  for progressively  enhanced  provisioning  up to March 2017. As per data reported  by  Public Sector  Banks  (PSBs),  due  to  the  Asset  Quality Review   and  transparent   recognition   of restructured  loans as NPAs,  gross NPAs  of PSBs increased  by  over Rs. 4,54,000 crore between   March   2015  and  June 2017.  PSBs  accordingly   made  up-front   provision   for expected loss on such stressed loans,  of a total  amount  of Rs. 3,79,080 crore  between March 2014 and June 2017, which  was nearly  twice  the provision  of Rs. 1,96,937 crore made in  the  preceding   10  years.   As  per  RBI  guidelines   and  policy   approved   by   Bank Boards,  non-performing   loans,   including, inter-alia , those  in  respect  of  which   full provisioning  has been made on completion  of four years  are removed  from the balancesheet  of  the  bank   concerned   by   way   of  write-off.   Thus,   amounts   written  off  in  the financial   year   ending   in  March 2017  and  the  preceding   few  years   are  substantially on account   of  such  stressed  accounts   of  earlier   years,   which   have  been  fully   provisioned following  the Asset Quality  Review.

As per RBI data on global  operations  for PSBs, the details  of the aggregate written  off amounts  for the financial  years  2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 are Rs. 27,231 crore,  Rs. 34,409 crore,  Rs. 49,018 crore,  Rs. 57,585 crore  and Rs. 81,683 crore

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, interalia , 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 (SARFAESI  Act),  and Debts Recovery Tribunals  (DRTs).  Therefore,  write-off  does not benefit  borrowers.

respectively. As  per  RBI  data,  the  loans  written   off  as  percentage   of  gross  NPAs (domestic  operations)  was 25.03% as of March  2011, which  has since declined  to 12.74% as of March  2017.

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