Banks wrote off NPLs worth 1.15 lakh crore in first 3 Qs of FY21

New Delhi: Banks have written off non-performing loans (NPLs) amounting to Rs 1.15 lakh crore in the first three quarters of the current fiscal year, minister of state for finance Anurag Singh Thakur informed Lok Sabha on Monday. In a written reply, he said that NPLs, including those in which full provisioning has been made on completion of four years, are removed from the balance sheet as per RBI guidelines and policy approved by bank boards.

The minister added that though loans are written off, the borrowers are still liable to repayment and the process of recovery of dues regarding the written-off loans continues. That means the write-off is not benefitting the borrower.

"As per RBI data, scheduled commercial banks (SCBs) have written-off loans of Rs 2,36,265 crore, Rs 2,34,170 crore and Rs 1,15,038 crore during FY2018-19, FY2019-20 and the first three-quarters of FY2020-21, respectively," he said.

He added in the reply that, according to RBI guidelines, banks must have a recovery policy for written-off loans, which is suitably evaluated by their boards. The policy must set down the manner of recovery of dues and period-wise targeted level of reduction in non-performing assets. The banks assess the write-offs' impact to clear their balance sheets, avail tax benefits and optimise capital according to RBI guidelines and their recovery policy.

He listed the various recovery mechanisms such as filing a suit in a civil court or Debts Recovery Tribunal, actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. Also, filing a case in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, recovery through negotiated settlement or compromise, and the sale of non-performing assets.

Citing RBI data, the minister, in his reply, said that SCBs recovered Rs 68,219 crore from written-off loan accounts during the last two financial years and three-quarters of the current one. He added that non-performing assets of banks reduced Rs 2,79,627 and reached Rs 7,56,560 on December 31st 2020. This was attained through the government's strategy of recognition, resolution, recapitalisation and reforms, he claimed.

In reply to another question, the minister said that various measures, including blocking 27 loan lending apps, were taken by the government to check unauthorised digital lending platforms. He asked the general public to be cautious against such platforms and appealed to them to verify the service provider's antecedents.

(Direct quote added from PTI report)