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Banking

Indian Banks Recover Just 16% of Rs 16.6 Lakh Cr Written Off in Decade: Report

Public sector banks led the write-offs with Rs 12,08,621 crore, followed by private sector banks at Rs 4,46,669 crore, and urban cooperative banks at Rs 6,020 crore.

Indian Banks Recover Just 16% of Rs 16.6 Lakh Cr Written Off in Decade: Report

Representative Image. Photo credit: PTI

Indian banks have written off loans totalling Rs 16,61,310 crore since April 1, 2014, according to data from the Reserve Bank of India (RBI) in response to a Right to Information (RTI) query filed by civil rights activist Praful P. Sarda.

The data, covering the period up to September 30, 2024, reveals that only Rs 2,69,795 crore of the written-off amount has been recovered, reflecting a low recovery rate of approximately 16%, news website, The Wire reported.

The write-offs were distributed across different bank categories. Public sector banks led the write-offs with Rs 12,08,621 crore, followed by private sector banks at Rs 4,46,669 crore, and urban cooperative banks at Rs 6,020 crore.

However, recovery figures have remained low across all sectors. Public sector banks recovered Rs 2,16,547 crore, while private sector banks recovered Rs 53,248 crore. Data on recovery rates for urban cooperative banks was unavailable.

The total unrecovered amount stands at Rs 13,91,515 crore. The recovery rate for written-off loans remains below expectations, with only a small fraction of the total amount being recouped.

Union Minister of State for Finance Pankaj Chaudhary disclosed in the Lok Sabha in November 2024 that bank write-offs in FY24 amounted to Rs 1.7 lakh crore, the lowest in five years, following a peak of Rs 2.34 lakh crore in FY20.

Despite the decrease in write-offs in FY24, more than 20% of banks reported higher write-offs compared to the previous year.

The RBI clarified that write-offs are often made for technical, prudential, or collection-related reasons. Banks continue to hold the right to recover loans even after they are written off. This process primarily serves as an accounting tool for balance sheet management and tax efficiency and does not absolve borrowers of their repayment responsibilities.

An additional RTI response from August 2024 revealed that banks have recovered just 18.7% of written-off loans over the past five years.

It is important to note that the RBI's September 2024 figures are provisional and exclude data from state cooperative banks and district central cooperative banks, as the RBI does not collect such information. All the data provided comes from the off-site returns submitted by banks.

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