Government banks have raised Rs. 8 lakh crore loans written off

Mumbai, Dt. 21

It is learned that during the seven years of the present government, public sector banks have written off Rs 3 trillion in loans. During the same period, the government had invested an estimated Rs 4.5 trillion in banks. The write-off amount has more than doubled compared to the capital thus raised. Banks had written off loans worth Rs 1.5 lakh crore in 2020-21. However, the last one year has seen a decline in the number of loan write-offs by banks.

During the financial year 2015-16 to 2020-21, Rs. Out of Rs 2.5 lakh crore, Rs 1.04 lakh crore was disbursed in FY18 alone. During this time, the central government used the rupee to stabilize the economy and keep the banking system afloat. As part of the central government's policy to improve the state of the banking sector, Rs 15,500 crore was disbursed to four public sector banks in the last financial year.

In the financial year 2020-21, Rs. 1.5 lakh crore loan was written off, which is Rs. It was less than the Rs 2.5 lakh crore loan. According to a report by CARE Ratings, the NPA ratio of banks stood at Rs 6.5 lakh crore at the end of the March 2018 quarter due to higher recovery of loans and higher write-offs, which rose to Rs. This is a significant decrease from Rs 4.5 lakh crore.

The amount written off in FY17 was Rs 1.5 lakh crore, according to an RTI reply received by the Reserve Bank. The amount written off every year in the last four years has been more than one trillion rupees.

To clean up their books, banks write off their bad loans and raise money from borrowers. It may be mentioned here that the amount of bad loans in the banking sector has been increasing since the financial year 2015, due to which the books of public sector banks were under increasing stress. In FY18, gross NPAs reached 11.50 per cent of total gross advances. However since then the amount of bad loans has decreased with the increase in writeoffs.

Generally, banks have to provide 100 per cent provision for bad loans older than four years, so banks prefer to use the standard of right offices so that their balance sheets do not deteriorate. The RBI also found that the rate of loan write-offs in private sector banks was much lower than in public sector banks.