Public sector banks told to focus on recovering written-off loans

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The Finance Ministry has asked state-owned lenders to increase recovery of written off accounts to about 40 per cent. Currently, the recovery rate from written-off accounts is less than 15 per cent. In the previous five years ending March 2022, the public sector banks could recover only 14 per cent of the written-off loans amounting to Rs 7.34 lakh.

Of Rs 7.34 lakh crore, lenders could recover only Rs 1.03 lakh crore. So after recovery, the net written-off stood at Rs 6.31 lakh crore at the end of March 2022.

To review the situation, the Department of Financial Services is likely to hold a meeting soon with senior officials of the public sector banks.

The said meeting would take stock of pending cases in various courts, such as the Debt Recovery Tribunals and the the Debt Recovery Appellate Tribunal.

Banks have been told be focus more of the big written-off accounts. Banks have written off Rs 11.17 lakh crore as bad loans from their books in the last six years till the financial year 2021-22. According to RBI data, banks in India wrote off an aggregate amount of Rs 8,16,421 crore and Rs 3,01,462 crore, respectively, during the last six financial years.

Non-performing assets, including those in which full provisioning has been made are removed from the balance sheet of the bank concerned by way of the write-off. Banks write off NPAs as part of their regular exercise to clean up their balance sheet, avail tax benefits and optimise capital. The write-off is carried out by the banks in accordance with the RBI guidelines and policies approved by their boards. (With inputs from PTI)