Unbelievable: Rs 1.44 lakh crore Vanish From Banks

Last Financial Year, banks wrote off 1.44 lakh crore. This money cannot be recovered.

When you take a loan, banks would be after your blood. But believe it or not, last financial year banks wrote off a whopping Rs 1.44 lakh crore. In other words, this money is just lost and cannot be recovered. And politicians speak of how difficult it is to write off agricultural loans.

Most of this loans that were written off were given to corporates like Vijay Mallya, Nirav Modi and others. Not to you and me who struggle to repay our housing or vehicle loans.

Rs 1.44 lakh crore is a huge amount which you may not be able to count. This huge amount came about as banks were forced to stop evergreening of bad loans and go for NPA recognition. In other words, banks could no longer keep pushing these loans to the next financial year – a practice that was in vogue earlier. This comes about amid huge losses to the banks government securities portfolio following the rise in bond yields.

Here are some astounding figures: SBI alone wrote off Rs 1,23,137 crore over the last 10 years.

Bank of India: Rs 28,068 crore.

Canara Bank with Rs 25,505 crore.

PNB with Rs 25,811 crore.

All this came about as banks were weighed down by huge losses and non-performing assets. The record Rs 1,44,093 crore of bad loans was written off in financial year ending March 2018. And this figure is up 61.8 per cent from Rs 89,048 crore in the previous year.

And here is something more shocking. The total loan write-off by private and state-owned banks in the last 10 years since 2009 is a whopping Rs 4,80,093 crore as on March 31, 2018. 83.4 per cent of this amount, or Rs 400,584 crore, was from public sector banks. This is according to figures compiled by rating agency ICRA. Of the write-off for 2017-18, Rs 1,20,165 crore loans were written off by public sector banks.

Banks normally resort to write-offs in the case of loans which are in the doubtful recovery category. “It is technical in nature. It’s a book adjustment. When a bad loan is written off, it goes out of the books of the bank. The bank will also get tax benefits. However, the bank will continue the recovery measures even after the loan is written off,” said Pradeep Ramnath, former chairman and MD of Corporation Bank was quoted in The Indian Express.

Private banks wrote off Rs 23,928 crore in the year ended March 2018 against Rs 13,119 crore the previous year.

And figures are: Axis Bank wrote off Rs 11,688 crore.

ICICI Rs 9,110 crore.

The total write-offs by private banks in the last 10 years amounted to Rs 79,490 crore.

What a mess. And no one is responsible.