New Delhi (Agency): In the last nine financial years, from 2014-15 to 2022-23, Indian banks have written off bad loans worth Rs 14.56 lakh crore, according to information given to Parliament on Monday. These loans, which could not be recovered, are called Non-Performing Assets (NPAs).
Large industries and services had a big part in these written-off loans. They made up about half of the total, at Rs 7,40,968 crore.
Scheduled Commercial Banks (SCBs), which are the most common type of bank in India, have managed to recover a total of Rs 2,04,668 crore in written-off loans, including corporate loans. This was achieved from April 2014 to March 2023, according to the Minister of State for Finance, Bhagwat Karad.
The amount of loans written off, after accounting for recoveries, has been reducing in public sector banks (PSBs). In the 2017-18 financial year, this ‘net write-off’ was Rs 1.18 lakh crore. By the 2022-23 financial year, it had dropped to Rs 0.84 lakh crore.
For private sector banks, the net write-off for the 2022-23 financial year was Rs 73,803 crore.
The net write-off, compared to the total loans and advances given at the start of the year, was 1.57% for private banks and 1.12% for public sector banks in the 2022-23 financial year. This percentage has slightly increased for private banks and decreased for public banks compared to the 2017-18 financial year.
The government and the Reserve Bank of India (RBI) have taken many steps to recover bad loans and reduce NPAs. These efforts have brought down the gross NPAs of PSBs from Rs 8.96 lakh crore in March 2018 to Rs 4.28 lakh crore in March 2023.
The government has changed some laws to make it easier to recover bad loans. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has been changed to make it more effective.
Also, the limit for cases that debt recovery tribunals (DRTs) can hear has been increased from Rs 10 lakh to Rs 20 lakh. This allows DRTs to focus on bigger cases and increase the amount recovered for banks and financial institutions.
A company called National Asset Reconstruction Company Limited (NARCL) has been set up to manage stressed assets worth more than Rs 500 crore each. The government has also approved a guarantee of up to Rs 30,600 crore for NARCL to buy these stressed assets.
In response to another question, Karad said that the State Bank of India (SBI) plans to raise up to Rs 50,000 crore in the 2023-24 financial year. This will be done through a type of long-term bond called Basel III compliant AT-1 bonds, Tier-2 bonds, and infrastructure bonds. These funds will help the bank replace existing capital bonds, strengthen its capital base, and support growth.
Banks don’t need to maintain a Cash Reserve Ratio and Statutory Liquidity Ratio on these long-term bonds for infrastructure lending. Raising these long-term infrastructure bonds helps banks manage their assets and liabilities better.
Finally, Karad mentioned the Pradhan Mantri Mudra Yojana (PMMY) scheme launched in 2015. As of June 30, 2023, over 42.20 crore loans totalling Rs 24.34 lakh crore have been given under this scheme across the country.
