Over half of the total loans written off by Scheduled Commercial Banks in the financial year 2022-23 (FY23) belonged to large industries and services sector, as per data presented by the Ministry of Finance in Parliament on Monday.
A total of Rs 2.09 lakh crore worth of loans were written off by banks in FY23, out of which 52.3 per cent were linked to large industries and services, Minister of State for Finance Bhagwat Karad said in response to a question in the Lok Sabha.
In the previous year, there was a dip in total written-off loans to Rs 1.75 lakh crore, out of which 39.8 per cent accrued to the large industries and te services sector. A closer look at the data for the last five years shows that the share of large industries and services was the highest at 62.3 per cent out of the total written-off loans amounting to Rs 2.03 lakh crore in 2020-21.
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In July this year, The Indian Express through information received from the Reserve Bank of India (RBI) under the Right to Information Act had reported that banks had written off bad loans worth over Rs 2.09 lakh crore during the year ended March 2023, taking the total loan write-off by the banking sector to Rs 10.57 lakh crore in the last five year.
This huge loan write-off aided banks to bring down gross non-performing assets (GNPA) – or loans defaulted by borrowers — to a 10-year low of 3.9 per cent of advances in March 2023. Gross NPAs of banks had fallen from Rs 10.21 lakh crore in FY2018 to Rs 5.55 lakh crore by March 2023, mainly on the back of loan write-offs by banks.
Banks have written off a whopping Rs 15,31,453 crore since FY2012-13, as per RBI data. However, what is to be noted is that loans written off by banks will remain in the books of banks as unrecovered loans. The central bank RTI reply had said that the banks recovered only Rs 1.09 lakh crore from Rs 5.87 lakh loans written off in the last three years, revealing that they could only recover 18.60 per cent of the write-offs during the three-year period.
The total defaulted loans (including write-offs but excluding loans recovered from write-offs in three years) amount to Rs 10.32 lakh crore, according to back-of-the-envelope calculations. Including write-offs, the total NPA ratio would have become 7.47 per cent of advances as against 3.9 per cent reported by the banks.