NEW DELHI: Just a little more than 10 per cent of loans that are written off by public sector banks are finally recovered from their borrowers.
A sum of Rs 4,32,584 crore was written off by public sector banks between 2015-16 and 2018-19. But, only Rs 45,659 crore, or roughly 10 per cent, was recovered from the written-off accounts in these four years, an RTI reply filed by this newspaper has revealed.
While loans amounting to Rs 56,842 crore were written off in 2015-16, in the subsequent years Rs 79,041 crore, Rs 1,24,236 crore and Rs 1,72,465 crore respectively were erased from the banks’ balance sheets.
On the other hand, the recoveries for the four years were Rs 8,033 crore, Rs 8,536 crore, Rs 10,270 crore and Rs 18,820 crore, respectively.
Bankers say prior to the new bankruptcy laws, the recovery of assets of a company or a borrower used to be very time consuming, taking decades at times.
After fast track recovery processes were introduced, the pace picked up but that has not translated into higher recoveries, as the sale of a plant, machinery or assets taken over by the banks yield very little owing to depreciation.
Writing off bad loans has always been a touchy subject, often kicking up political controversies. To deflect criticism, the government and banks have always maintained that writing off loans does not mean that the recovery process ceases.
Last week, the government and the Congress party were engaged in a spat after it was revealed in an RTI reply that Rs 68,607 crore debt of 50 top willful defaulters had been written of till September 30, 2019. A loan write-off is a tool used by banks to clean up their balance sheets.