Lok Sabha Question No. 295 (UNSTARRED), answered on 2019-06-24
Subject: Write Off of Bank Loans
Ministry: FINANCE
Asked by: M. K. Raghavan

## GOVERNMENT  OF INDIA

## MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO: 295 TO BE ANSWERED ON THE 24 th  JUNE, 2019/ASHADHA 3, 1941  (SAKA)

## QUESTION Write  Off  of Bank Loans

## 295: SHRI M.K. RAGHAVAN:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether   the  write   off  figures   on  bank   loans   are  rising   every   year,   much   faster  than recoveries  and recapitalization;
- (c) the measures  to recover  that  money  especially  when  substantial  asset is available;
- (b) if so, the details  thereof  during  each of the last three  years  and the current  year,  bank-wise;
- (d) the  details   of  the  measures   adopted   to  such  write   off  and  the  details   of  the  authorized person to execute  a write  off; and
- (e) the details  of the total  write  off carried  out  during  each of the last ten years,  bank-wise?

## ANSWER To be answered by FINANCE  MINISTER

(a) to (e): No,  sir.  The  year-on-year  rise in recoveries  and recapitalisation in Public  Sector  Banks (PSBs) during  financial  year  2018-19 was much  faster than  the rise in write-off  figures  on bank loans.   Recoveries   and  recapitalisation rose  by   Rs.  61,593  crore   (comprising of  a  rise  of Rs.  45,593  crore   in  recoveries,   as  per  RBI  data,   and  Rs.  16,000  crore   in  recapitalisation), whereas  write-off  figures  grew  by  Rs. 36,377 crore  (as per RBI data).

## (SMT. NIRMALA  SITHARAMAN )

As per Reserve   Bank of  India  (RBI)  data  on  global   operations,   aggregate gross  advances  of Public  Sector  Banks (PSBs) increased  from Rs. 18,19,074  crore  as on 31.3.2008  to Rs. 52,15,920 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.  Further,   all  such  schemes  for restructuring stressed loans were  withdrawn. Primarily as a result  of transparent  recognition  of stressed assets as NPAs,  gross NPAs  of PSBs, as per RBI data on global  operations,  rose from Rs. 2,79,016 crore  as on 31.3.2015,  to Rs. 8,95,601 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. 89,189 crore  to Rs. 8,06,412 crore  as on 31.3.2019  (provisional  data).

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  Non  Performing  Assets 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.

Government   has  taken   comprehensive   steps  under its  4R's   strategy   of  recognising   NPAs transparently, resolving  and recovering  value  from  stressed accounts,  recapitalising PSBs, and reforms  in banks  and financial  ecosystem  to ensure  a responsible  and clean  system.

To improve  recovery,  a number  of steps have been taken  including, inter-alia , the following:

- (2) Securitisation   and  Reconstruction of  Financial   Assets  and  Enforcement   of  Security Interest   Act   has  been  amended   to  make   it  more   effective,   with   provision   for  three months'  imprisonment  in case the borrower  does not provide  asset details  and for the lender   to  get  possession  of  mortgaged   property   within   30  days.   Also, six  new   Debts Recovery  Tribunals  have been established to  expedite  recovery.
- (1) The  Insolvency   and  Bankruptcy Code,   2016  (IBC)  has  been  enacted,   which   has provided  for the taking  over management  of the affairs of the corporate  debtor  at the outset  of the corporate  insolvency  resolution  process.  Coupled  with  debarment  of wilful defaulters  and persons associated  with  NPA  accounts  from the resolution  process, this has  effected  a  fundamental   change   in  the  creditor-debtor   relationship. Further,   the Banking  Regulation  Act,  1949 has been amended  to provide  for authorisation to RBI to issue directions  to banks  to initiate  the insolvency  resolution  process under  IBC. As per RBI's directions  under the aforesaid  amended  provision  in the Banking  Regulation  Act, 1949,  banks   have  been  filed  cases  under IBC  before  the  National   Company   Law Tribunal  (NCLT)  in respect  of RBI-specified  borrowers.
- (3) Under   the  PSB  Reforms   Agenda,   PSBs  have  created   Stressed  Asset  Management Verticals  to focus attention  on recovery,  segregated  monitoring from sanctioning  roles in high-value  loans and entrusted  monitoring of loan  accounts  of above Rs. 250 crore  to specialised  monitoring  agencies for clean and effective monitoring, and created  online end-to-end One-Time  Settlement  platforms  for timely  and better  realisation.

Enabled  by  the  above  steps,  as  per  RBI  data  on  global   operations,   PSBs  have  recovered Rs. 3.59 lakh  crore  over the last four financial  years,  including  record  recovery  of Rs. 1.23 lakh crore  during  2018-19.

As per RBI data on global  operations,  PSBs-wise details  of amounts  written-off  during  the last ten financial  years  are at Annex.

Note: Figures cited above for PSBs include those for IDBI Bank Limited, which was recategorised as a private sector bank by RBI with effect from 21.1.2019.

## Lok Sabha Unstarred  Parliament  Question  No. 295,  for  24.6.2019

## Reduction in NPAs of Public Sector Banks (including IDBI Bank Limited) - due to write-offs  (including compromise)

| Bank                | FY 2009-10   | FY 2010-11   | FY 2011-12   | FY 2012-13   | FY 2013-14   | FY 2014-15   | FY 2015-16   | FY 2016-17   | FY 2017-18   | FY 2018-19   | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| AllahabadBank       | 643          | 720          | 1,001        | 1,352        | 82           | 2,109        | 2,126        | 2,442        | 3,635        | 4,219        | Asset QualityReview(AQR)initiatedin 2015 clean and fully provisioned bank balance-sh revealed high incidenceof Non-PerformingAss (NPAs). As a result of AQR and subsequ transparentrecognitionby PSBs, stressed accou were reclassified as NPAs and expected losses stressed loans, not provided for earlier un flexibility given to restructured loans, w provided for. All such schemes for restructu stressed loans werewithdrawn. Primarily as a re of transparent recognition of stressed assets NPAs, the gross NPAs of Public Sector Ba (PSBs) increased. Enabled by Government's4 strategy, as per RBI data on global operati PSBs have recovered Rs. 3.59 lakh crore over last four financial years, includingrecord recov of Rs. 1.23 lakh crore during 2018-19, a Provisioncoverageratiohas increasedfrom46% March 2015 to74.2% inMarch 2019. As per RBI guidelines and bank-Board appro policy, non-performingloans, including, inter-a those in respectof whichfullprovisioninghas b made on completion of four years, are remo from the balance-sheet of the bank concerned way of write-off for cleaning up their balan sheets, availing tax benefit and achieving cap optimisation.As the process of recoveryof d from the borrower in written-off loan accou continues,write-offdoes notbenefittheborrow |
| AndhraBank          | 192          | 150          | 169          | 334          | 263          | 1,124        | 814          | 1,623        | 1,666        | 2,280        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Bank ofBaroda       | 515          | 501          | 1,215        | 2,356        | 964          | 1,563        | 1,554        | 4,348        | 4,948        | 13,102       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Bank ofIndia        | 744          | 880          | 2,415        | 2,415        | 1,767        | 866          | 2,374        | 7,346        | 8,976        | 7,405        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Bank ofMaharashtra  | 236          | 350          | 395          | 663          | 401          | 264          | 903          | 1,374        | 2,460        | 5,127        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| CanaraBank          | 1,290        | 1,050        | 1,460        | 1,535        | 1,591        | 1,472        | 3,387        | 5,545        | 8,310        | 14,267       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| CentralBank ofIndia | 294          | 554          | 629          | 1,061        | 1,995        | 1,386        | 1,334        | 2,396        | 2,924        | 10,375       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

| Corporation Bank              | 267   | 543   | 565   | 709   | 463    | 779    | 2,495   | 3,574   | 8,228   | 5,989   |
|-------------------------------|-------|-------|-------|-------|--------|--------|---------|---------|---------|---------|
| DenaBank                      | 185   | 196   | 194   | 237   | 479    | 515    | 760     | 833     | 661     | 4,672   |
| IDBI BankLtd.                 | 477   | 884   | 319   | 383   | 1,393  | 1,609  | 5,459   | 2,868   | 12,515  | 15,918  |
| IndianBank                    | 388   | 590   | 506   | 520   | 628    | 550    | 926     | 437     | 1,606   | 2,872   |
| IndianOverseasBank            | 389   | 971   | 1,166 | 1,642 | 1,474  | 2,087  | 2,067   | 3,066   | 6,908   | 7,794   |
| OrientalBank ofCommerce       | 389   | 696   | 933   | 1,416 | 1,252  | 925    | 1,668   | 2,308   | 6,357   | 6,457   |
| Punjaband SindBank            | 81    | 66    | 39    | 50    | 204    | 263    | 335     | 491     | 460     | 1,635   |
| PunjabNationalBank            | 853   | 1,592 | 126   | 997   | 1,947  | 5,996  | 6,485   | 9,205   | 7,407   | 9,983   |
| SyndicateBank                 | 419   | 351   | 891   | 1,297 | 1,025  | 1,055  | 1,430   | 1,271   | 2,400   | 6,775   |
| UCOBank                       | 371   | 586   | 391   | 617   | 1,423  | 0      | 1,573   | 1,937   | 2,735   | 4,420   |
| UnionBank ofIndia             | 513   | 1,126 | 938   | 1,129 | 913    | 931    | 792     | 1,264   | 3,477   | 7,771   |
| UnitedBank ofIndia            | 174   | 415   | 233   | 1,094 | 481    | 761    | 649     | 714     | 1,867   | 5,365   |
| VijayaBank                    | 479   | 327   | 214   | 543   | 296    | 791    | 510     | 1,068   | 1,539   | 1,518   |
| StateBankof Bikanerand Jaipur | 23    | 166   | 275   | 463   | 399    | 363    | 643     | 1,560   | 0       | 0       |
| StateBankof Hyderabad         | 71    | 202   | 265   | 343   | 31     | 355    | 1,204   | 1,430   | 0       | 0       |
| StateBankof India             | 1,990 | 4,007 | 744   | 5,594 | 13,177 | 21,303 | 15,955  | 20,339  | 39,151  | 58,905  |
| StateBankof Indore            | 57    | 0     | 0     | 0     | 0      | 0      | 0       | 0       | 0       | 0       |
| StateBankof Mysore            | 20    | 311   | 165   | 275   | 403    | 740    | 588     | 161     | 0       | 0       |
| StateBankof Patiala           | 5     | 410   | 120   | 28    | 463    | 755    | 1,156   | 3,528   | 0       | 0       |
| StateBankof Travancore        | 124   | 152   | 182   | 176   | 196    | 456    | 398     | 556     | 0       | 0       |

Source: RBI, Global Operations