Lok Sabha Question No. 2382 (UNSTARRED), answered on 2019-07-08
Subject: Write Off of Bank Loans
Ministry: FINANCE
Asked by: Manish Tewari

## GOVERNMENT  OF INDIA MINISTRY  OF FINANCE

ANSWERED  ON-08.07.2019

## LOK SABHA UNSTARRED QUESTION NO-2382

## WRITE OFF OF BANK LOANS

## 2382. SHRI MANISH TIWARI

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  it is a fact that  Rs. 5,55,603  crores  worth  of loans  have been written  off by  public and private   banks   from   1st April,   2014 till   now,   if  so,  the  details   thereof   and  the  reasons therefor;
- (c) whether  the Gross Non  Performing  Assets (NPA)  stand at 9.3% of all outstanding  loans given by  public  and private  sector  banks  till  31st of March 2019,  if so, the details  thereof;  and (d) the steps taken  by  the Reserve  Bank of India to bring  down  the quantum  of NPA  over the last five years  especially  since 1st April,  2014?
- (b) the details  of action  taken  against  officials  responsible  for sanctioning  these written  off loans,  especially  in public  banks,  bank-wise;

## ANSWER

(a) to (d) As per Reserve  Bank of India (RBI) data on domestic  operations,  aggregate gross advances of Public  Sector  and Private  Sector  Banks increased  from  Rs. 21,70,823  crore  as on 31.3.2008  to Rs. 58,01,260  crore  as on 31.3.2014.  As per RBI inputs,  the primary  reasons for spurt  in stressed assets have been observed  to be, inter-alia , aggressive  lending  practices,  wilful default/loan   frauds/corruption in  some  cases,  and  economic   slowdown.   Asset  Quality Review  (AQR)  initiated  in 2015 for clean and fully  provisioned  bank  balance-sheets  revealed high  incidence   of  NPAs.   As  a  result of  AQR   and  subsequent   transparent   recognition   by banks,  stressed accounts  were  reclassified  as NPAs  and expected  losses on stressed loans,  not provided  for earlier  under  flexibility given  to restructured  loans,  were  provided  for. Primarily as  a  result of  transparent   recognition   of  stressed  assets  as  NPAs,   gross  NPAs   of  Public Sector  and  Private Sector  Banks,   as per  RBI  data  on  global   operations,   rose  from Rs. 3,12,706 crore  as on 31.3.2015,  to Rs. 10,21,464  crore  as on 31.3.2018,  and as a result  of Government's   4R's  strategy   of  recognition, resolution,   recapitalisation and  reforms,   have since declined  by  Rs. 1,00,951 crore  to Rs. 9,20,513  crore  as on 31.3.2019  (provisional  data). The gross NPA  ratio  of public  and private  sector banks  has also declined  from  11.52% as on 31.3.2018,  to 9.37% as on 31.3.2019  (provisional  data).

## THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE (SHRI  ANURAG  SINGH  THAKUR )

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 balance-sheet  of the bank  concerned  by  way  of write-off.  Banks themselves  write-off  NPAs  as part  of their  regular  exercise  to clean  up their  balance-sheet, tax benefit  and capital  optimisation, in accordance  with  RBI guidelines  and policy  approved by their  Boards.  As borrowers  of written-off  loans continue  to be liable  for repayment  and the process of recovery  of dues from the borrower  in written-off  loan  accounts  continues, write-off  does not benefit  the borrower.  Thus,  the amount  written-off  after 1.4.2014  pertains substantially to  loans   sanctioned   during   previous   years.   As  per  inputs   received   from   RBI, public  and private  sector banks  wrote-off  an amount  of Rs. 6,19,244 crore  from  1.4.2014 till 31.3.2019  (provisional  data).

A  comprehensive   4R's  strategy   has  been  adopted   to  bring   down   the  quantum   of  NPAs, consisting   of  recognition   of  NPAs   transparently,  resolution   and  recovering   value   from stressed  accounts,   recapitalising Public   Sector   Banks   (PSBs),  and  reforms   in  PSBs  and financial  ecosystem  to ensure  a responsible  and clean system.  Steps taken  under  this strategy include, inter-alia , the following:

Staff  accountability in  PSBs  is  examined   at  the  very   outset,   when   a  loan   turns   into   NPA, without  waiting  for writing-off  of the loan  after full  provisioning  is made upon completion  of four years.  Bank-wise  details  regarding  staff accountability are at Annex.

- (i) Change   in  credit   culture   was  effected,  with   the  Insolvency   and  Bankruptcy Code (IBC) fundamentally changing  the creditor-borrower relationship, taking  away  control of  the  defaulting   company   from   promoters/owners and  debarring   wilful   defaulters from the resolution  process and debarring  them  from  raising  funds from  the market.
- (iii) Key reforms  were  instituted  in PSBs as part  of PSBs Reforms  Agenda,  include  the following:
- (ii) Over the last four financial  years,  PSBs were  recapitalised  to the extent  of Rs. 3.12 lakh  crore,  with  infusion  of Rs. 2.46 lakh  crore  by  the Government  and mobilisation of over Rs. 0.66 lakh  crore  by  PSBs themselves.
- (a) Board-approved Loan  Policies of PSBs  now  mandate   tying up  necessary clearances/approvals and linkages before disbursement, scrutiny of group balance-sheet  and ring-fencing  of cash flows,  non-fund  and tail  risk  appraisal  in project  financing.
- (c) Monitoring   has  been  strictly   segregated   from   sanctioning   roles  in  high-value loans,   and  specialised   monitoring   agencies  combining   financial   and  domain knowledge  have been deployed  for effective monitoring  of loans above Rs. 250 crore.
- (b) Use  of  third-party data  sources  for  comprehensive   due  diligence   across  data sources has been instituted,  thus mitigating  risk  on account  of misrepresentation and fraud.
- (d) To ensure  timely   and  better   realisation   in  one-time   settlements   (OTSs),   online end-to-end OTS platforms  have been set up.

Enabled by the above steps, financial   gains  from  cleaning   of  the  banking   system are  now amply   visible.   Gross  NPAs   of  public   sector   and  private   sector   banks,   as  per  RBI  data  on global   operations,   have  reduced   over  the  last  financial   year   by   Rs.  1,00,951 crore,   and recovery  of Rs. 3,92,253 crore  has been effected by  these banks  over the last four financial years,  including  a record  recovery  of Rs. 1,54,186 crore  in the last financial  year.

## Lok Sabha Unstarred  Parliament  Question  No. 2382,  for  8.7.2019

## Staff  against whom  staff accountability  was fixed in NPA  accounts during the last five  financial years

|   S. N. | Bank                    | Number   |
|---------|-------------------------|----------|
|       1 | AllahabadBank           | 434      |
|       2 | AndhraBank              | 1,193    |
|       3 | Bank ofBaroda           | 1,318    |
|       4 | Bank ofIndia            | 1,522    |
|       5 | Bank ofMaharashtra      | 457      |
|       6 | CanaraBank              | 3,298    |
|       7 | CentralBankof India     | 6,125    |
|       8 | Corporation Bank        | 4,873    |
|       9 | DenaBank                | 366      |
|      10 | IDBI BankLimited        | 962      |
|      11 | IndianBank              | 1,480    |
|      12 | IndianOverseasBank      | 1,658    |
|      13 | OrientalBankof Commerce | 1,017    |
|      14 | Punjaband SindBank      | 417      |
|      15 | PunjabNationalBank      | 4,488    |
|      16 | SyndicateBank           | 1,432    |
|      17 | UCOBank                 | 410      |
|      18 | UnionBankof India       | 813      |
|      19 | UnitedBank ofIndia      | 508      |
|      20 | VijayaBank              | 554      |
|      21 | StateBank ofIndia       | 8,035    |

Source: Banks

Note:  IDBI  Bank  Limited  has  been  recategorised  as  a  private  sector bank by RBI with effect from 21.1.2019.