Seems like letting go the money taken by borrowers is the only way left for the public sector banks to cleanse their balance sheets. Citing data from credit rating agency ICRA, The Indian Express reported that the loans written off by public sector banks surged to Rs 55,356 crore during April-September and are likely to breach Rs 1 lakh crore mark this financial year. The write-offs in the July-September quarter were at Rs 29,783 crore, ICRA’s research showed. The write-offs in the last six months is estimated to be 54 per cent higher than the Rs 35,985 crore written off in the corresponding period last year. This comes at a time when banks (especially public sector) are struggling to resolve cases of wilful defaulters and bad debt of corporate defaulters through insolvency proceedings.
The figures obtained by The Indian Express from the RBI through the Right to Information (RTI) Act for the last decade show that banks had written off Rs 2,28,253 crore in nine years that is from fiscal 2007-08 to 2015-16. Responding to a questionnaire from The Indian Express, ICRA said that write-offs amounted to Rs 1,32,659 crore in 2016-17 and the first six months of 2017-18 which means that the total write-off in the last ten years has now gone over Rs 3,60,000 crore.
In banking and finance, the term “write-off” means the bank or lender doesn’t count the money borrower owes to it. RBI statement said, “A substantial portion of this write-off is, however, technical in nature. It is primarily intended at cleansing the balance sheet. In ‘Technically Written Off’ accounts, loans are written off from the books at the Head Office, without foregoing the right to recovery.”