Rs 1 lakh crore bad loans of corporates written off: RBI

Banks have sacrificed over Rs 1 lakh crore by writing off bad loans to corporates, data collected by RBI reveals.

Mayur Shetty, T ov 1", #$1%, $1.1&'M IST M(MB'I) *ata collected by Reserve Bank of India over a period of one year blows the lid off what goes as loan classification in banks. In a presentation at the annual bankers+ conference, RBI deputy governor , - -hakrabarty showed how banks have sacrificed over Rs 1 lakh crore by writing off bad loans to corporates, which is .uch higher than (nion finance .inister / -hida.bara.+s far. loan waiver in #$$01a .ove that received flak fro. the industry.
!

(nder the *ebt 2aiver and *ebt Relief Sche.e, #$$0, the -entre had waived off around Rs 3$,$$$ crore to far.ers. 4In the last 1% years, banks have written off 1 lakh crore and 567 of these are large loans. 8veryone talks of the far. loan write9off, but it is the .ediu. and large enterprises seg.ent that has a 6$7 share in /'s,4 said -hakrabarty. The deputy governor flayed banks for using +technical write9offs+ to reduce their non9 perfor.ing assets :bad loans; over the years. Technical write9off is a process adopted by banks whereby they take a hit on their profits and stop including the defaulting loan in the list of those fro. who. repay.ents are due. It is called a technical write9off because although banks do not show these loans as receivables in their books, they continue to pursue recovery in courts or other foru.. ' technical write9off enables banks to clai. that they do not have any bad loans on their books by fully providing for the loans fro. their earnings. It also reduces their ta< outgo. -hakrabarty also raised the issue of restructured loans1advances where potential defaulters are given .ore ti.e to repay without being called defaulters. 4Restructuring of loans with retrospective effect has killed credit =uality in banks,4 he said. >e warned banks that the leeway .ight not be available in future. 42e .ust .ove away fro. restructuring, there should not be any category called restructuring. The .o.ent it is restructured, it should be declared as /', there should not be any technical write9off... be prepared for that, unless you do that you .ight not be

able to get out of the .ess,4 he said. RBI nu.bers showed that the banks added Rs &,5&,0%3 crore to their bad loans between #$$" and #$1%. *uring the sa.e period, they reduced /'s to the e<tent of Rs %,6$,%%# crore. This was possible because loans worth Rs 1,&1,#56 crore were written off and another Rs 5$,00" crore were upgraded to repaying loans and Rs 1,10,1&5 crore was recovered fro. defaulters. 'ccording to -hakrabarty, after a technical write9off, there is no incentive to pursue recovery. The deputy governor said that in the case of large loans, there is no one who is accountable for .onitoring the loan, as these are sanctioned by the board or a co..ittee. 4Between #$$"91%, credit to 1$ large corporate groups has .ore than doubled. 2e have seen that wherever credit growth has been higher, /'s are also higher.4