SBI, Union Bank, BoB, Bank of Maharashtra, IDBI BankPage Visited: 14
Even as the regulator and the Centre continue to maintain their stance that the bad loans written off by banks cannot be construed as a waiver, an RTI filed by a social activist shows the extent of the malaise of big loan write-offs and poor recovery across public sector banks. This information pertains only to loan accounts of Rs 100 crore and above.
Technically, when a bank writes-off its debts, they are removed as assets from its balance sheet as it does not expect any recoveries from borrowers. The beneficiaries of such a move are invariably some of India’s biggest industrialist defaulters.
In contrast, when a bad debt is written down, a certain portion of its value remains as an asset on its balance sheet as the bank expects some recovery. However, as shown in the cases of the five banks below, most of the time, there is no or negligible recovery for the amounts written off.
State Bank of India
Documents procured by Vivek Velankar, President of Pune-based Sajag Nagrik Manch, from State Bank of India (SBI) reveals a write-off of Rs 1,23,432 crore over an eight year period: i.e. from FY13 to FY20. Shockingly, India’s largest public sector bank has recovered just over 7 percent, or Rs 8,969 crore, over the past eight financial years, Money Life reported.
As per the data provided by SBI to Velankar, Alok Industries Bhushan Power & Steel, IVRCL and Videocon Industries and Shree Mahalaxmi Corp are its top five biggest defaulters. The bank has written off loans worth Rs 8,098.05 crore to Alok Industries. Of this, it has been repaid Rs 1,703.57 crore.
Bank of Baroda
After SBI, Bank of Baroda (BoB) is the second public sector bank to write off several thousand crores of bad loans. In the same period, it wrote off Rs 1.23 lakh crore and recovered just over 7 percent, the report stated.
To Velankar’s query at its annual general meeting and two reminders seeking details of loan accounts over Rs 100 crore that were written off during the past eight years, BoB did not share the names of these account-holders citing ‘confidentiality’.
Union Bank of India
Union Bank of India has written off bad loans worth Rs 26,072 crore in the past eight years. It also refused to share information on the money recovered from such defaulters. Information provided by the bank under the Right to Information (RTI) Act to Velankar, reveals wrote off bad debt worth Rs 26,072.81 crore between FY12 and FY20.IDBI Bank
In the past seven years, IDBI Bank wrote off bad loans worth Rs 45,693 crore and recovered just 8 percent of it after spending more than Rs 29.34 crore, an RTI query to Velankar reveals.
The bank, which was re-categorised as a private sector lender in January 2019 after Life Insurance Corporation of India (LIC) raised its stake to 51 percent, refused to share information on loans of Rs 100 crore and above that were written off, the names of these borrowers or the money recovered from these big defaulters.
Between FY14 to FY20, IDBI Bank wrote off bad loans worth Rs 45,693 cror. It recovered just Rs 3,704 crore, incurred an expense of Rs29.34 crore.
Bank of Maharashtra
Bank of Maharashtra has written off bad loans of over Rs 7,402 crore, while recovering a paltry 4 percent, or just Rs 253.55 crore, in over eight years through recovery efforts.
As per the information provided by Bank of Maharashtra to Velankar as a shareholder, it has not written off any bad loan of Rs 100 crore and above for FY12, FY13, FY15 and FY16, and there was also no recovery.
For FY14, the lender wrote off Rs 275.12 crore and recovered Rs 1.74 crore. For FY17, it wrote off Rs 466.58 crore and recovered Rs 121.67 crore. For FY18, the amount written off trembled to Rs 1,024.69 crore with a paltry recovery of Rs 1.88 crore. In FY19, it wrote off bad debts worth Rs 2,096.52 crore while recovering just Rs 124.94 crore. In FY20, while the amount of written off debts surged to Rs 3,539.67 crore, it managed to recover just Rs 3.32 crore.