Lok Sabha Question No. 144 (UNSTARRED), answered on 2024-11-25
Subject: Policy for Write-off Loans of Willful Defaulters
Ministry: FINANCE
Asked by: Shri Rajeev Rai

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO-144

ANSWERED ON MONDAY, NOVEMBER 25, 2024/AGRAHAYANA 4, 1946 (SAKA)

## POLICY FOR WRITE-OFF LOANS OF WILLFUL DEFAULTERS

## 144. SHRI RAJEEV RAI

Will the Minister of FINANCE be pleased to state:-

(a) whether  the  Government  has  formulated  any  policy  to  write-off  loans  of  willful  defaulters during the last five years;

- (b) if so, the details thereof;

(c) the details of loans written off by the Government during the last three years, sector-wise and State-wise;

- (d) the reasons for advancing these loans to the borrowers without valid collaterals; and
- (e) the steps taken by the Government to recover these loans before write-off?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

(SHRI PANKAJ CHAUDHARY)

(a): No sir.

(b): Does not arise.

(c):  Government  does  not  write-off  loans  given  to  borrowers  by  banks.  Banks  write-off  nonperforming assets, including, inter-alia , those in respect of which full provisioning has been made on completion of four years, as per the Reserve Bank of India (RBI) guidelines and policy approved by banks'  Boards. Such  write-off  does  not  result  in  waiver  of  liabilities  of  borrowers  and  therefore, write-off  does  not  benefit  the  borrower.  The  borrowers  continue  to  be  liable  for  repayment  and banks continue to pursue recovery actions initiated in these accounts. Sector-wise details of loans written-off  by  scheduled  commercial  banks  (excluding  regional  rural  banks  and  payment  banks) during  the  last  three  financial  years  are  at Annex .  Further,  RBI  has  apprised  that  state-wise information regarding the loans written-off is not maintained by it.

(d): As per inputs received from RBI, it has advised banks to have in place a loan policy duly vetted by their Boards. Banks take credit related decisions, including requirement of collaterals, based on their  internal  assessment  of  the  commercial  viability  of  the  loan  within  their  Board-approved policies and broad regulatory guidelines.

(e): Before writing-off loans, banks initiate recovery actions through various recovery mechanisms available to them, such as filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code,  2016,  through  negotiated  settlement/compromise,  and  through  sale  of  non-performing assets.

## Annex Lok Sabha Unstarred question no. 144 regarding Policy for Write-Off Loans of

## Willful Defaulters

## Loans written-off by Scheduled Commercial Banks

(Amounts in crore Rs.)

| Sector                            | FY 2021-22   | FY 2022-23   | FY 2023-24   |
|-----------------------------------|--------------|--------------|--------------|
| Agriculture and Allied Activities | 32,253       | 30,733       | 38,764       |
| Industry                          | 1,67,000     | 2,16,865     | 1,80,506     |
| Services                          | 57,508       | 86,869       | 52,862       |
| Retail Loans                      | 94,617       | 1,02,511     | 90,470       |

Source: RBI

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