Finance minister Nirmala Sitharaman gave an information to parliament on Tuesday, that banks have written off Non-Performing Assets (NPA) or bad loans of ₹ 10 Lakh Crore during the last five financial years. The finance minister gave a written reply to Rajya Sabha that NPAs or Bad Loans have been removed from the books of bank concerned by writing them off. It also includes bad loans against which full provision has been made after completion of four years.
She further said that, according to the RBI, scheduled commercial banks written off an amount of ₹10,09,511 Crore during the last five financial years. In this case scenario, Bank continues to take action to recover the amount written off through various remedies available. Basically, writing off of any amount means to acknowledge that the loss has occurred.
The bank regularly writes off NPAs because it is important to optimize its balance sheet, avail tax benefits, and achieve optimal capital levels as per RBI guidelines and policy approved by its Board of Directors. For attaining the optimal level, Banks recovered ₹ 6.59 Lakh Crore from debtors who are defaulters and recovered ₹ 1.32 Lakh Crore from Write off Loan Accounts.
It is found that 25 top most wilful defaulters of India, owe about ₹ 59,000 Crore to banks.
The finance minister made it clear that borrower is not benefited by writing off the loans. He will continues to be liable for repayment. And the banking experts say that there is no direct loss to the bank customers by writing off the amount. But, Banks may increase the charges on the ongoing services provided by them to compensate for this in this case scenario. The burden can be on consumers’ pockets as per the remedial measures told by the banking experts.
