New Delhi: Scheduled commercial banks have written off loans of Rs 46,382 crore during the first six months of the financial year 2021-22, the government said in the Lok Sabha on Monday.
The Union Finance Ministry, however, refused to provide details of major corporates whose loans were written off, citing Section 45 E of the RBI Act which prohibits disclosing credit information. Section 45 E provides that credit information submitted by a bank shall be treated as confidential; it is not meant to be published or otherwise disclosed.
Borrowers not off the hook
- The written-off loans do not let borrowers off the hook; they continue to be liable for repayment
- Banks continue to pursue recovery actions by filing suits in civil courts or Debts Recovery Tribunals
- Besides, banks can take action under the Securitisation Act and file cases in the National Company Law Tribunal through sale of NPAs
As per the RBI data on global operations, bad loans whose full provisioning has been made on completion of four years are removed from the balance sheet by way of write-offs. This evaluation by banks is part of their regular exercise to clean up their balance sheet, avail tax benefit and optimise capital. This is in accordance with RBI guidelines and policy approved by bank boards, said the government.
The written-off loans do not let borrowers off the hook. They continue to be liable for repayment; the process of recovering dues from the borrowers in written-off loan accounts continues.
Banks continue to pursue recovery actions initiated in written-off accounts by filing suits in civil courts or in Debts Recovery Tribunals, taking action under the Securitisation Act and filing cases in the National Company Law Tribunal (NCLT) through the sale of non-performing assets.