Borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues, write-off does not benefit the borrower. Finance Minister for state Anurag Singh Thakur said in a written reply to the Lok Sabha.
As per RBI guidelines and policy approved by bank boards, non-performing loans, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off.
Banks evaluate the impact of write-offs as part of their regular exercise to clean up their balance-sheet, avail tax benefit and optimise capital in accordance with RBI guidelines and policy approved by their boards, he said.
However, Anurag Thakur said, as borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues, write-off does not benefit the borrower.
"As per RBI data, scheduled commercial banks (SCBs) have written-off loans of Rs. 2,36,265 crore, Rs. 2,34,170 crore and Rs. 1,15,038 crore during FY2018-19, FY2019-20 and the first three-quarters of FY2020-21 respectively," he said.
"A number of recovery mechanism are available to banks to effect recovery, such as filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, through negotiated settlement/compromise, and through the sale of non-performing assets," he told.