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Economy
Mahesh

15/12/22 11:13 AM IST

SBI Wrote Off Rs 1.65 Lakh Crore Loans in Last Four Fiscal Years

In News
  • Banks have written off bad loans worth ₹ 10,09,511 crore during the last five financial years, Finance Minister Nirmala Sitharaman informed Parliament
Bad Loans
  • Banks write off NPAs as part of their regular exercise to clean up their balance sheet, avail tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their boards.
  • Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available, such as filing of a suit in civil courts or in Debts Recovery Tribunals, filing of cases under the Insolvency and Bankruptcy Code, 2016 and through sale of non-performing assets.
  • SCBs have recovered an aggregate amount of ₹ 6,59,596 crore, including recovery of ₹ 1,32,036 crore from written-off loan accounts during the last five financial years.
  • In cases where it is prima facie found that officials are responsible for the lapses of non-compliance with the laid down systems and procedures or misconduct or non-adherence to the due-diligence norms, action is initiated against the erring officials under the board-approved staff accountability policy.
Why write-off loans?
  • After the write-off, the lender moves the defaulted loan, or NPA, out of the assets side and reports the amount as a loss.
  • After the write-off, banks are supposed to continue their efforts to recover the loan using various options.
  • They have to make provisioning as well.
  • The tax liability will also come down as the written-off amount is reduced from the profit.
  • The chances of recovery from written-off loans are very high.
NPA
  • Substandard assets: Assets which have remained NPA for a period less than or equal to 12 months.
  • Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months
  • Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.”
Source- Tribune

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