In 10 years of Congress rule, banks write off Rs 1.14 lakh crore, but in just one year of BJP rule, Rs 97,000 crore were written off.
IndiaTomorrow.net,
New Delhi, Feb 9: Huge surge has been witnessed in the amount of bad debts written off during the last financial year 2014-2015.
According to The Indian Express, which got information from Reserve Bank of India through RTI, in the last 11 years (2004-2015), around 30 government banks have written off more than Rs 2,11,000 crore as bad debts. More than half of this amount (that is Rs 1,14,000 crore were written off in last three years (2012-2015).
But what is more startling is the fact that around 46% (Rs 97,000 crore) of the total bad debts amount of 11 years was written off in the last financial year ending March 2015 alone. “The bad debts written off in financial year ending March 2015 make up 85 per cent of such loans since 2013,” wrote the daily.
From 2004 to 2014, Congress-led UPA was in the power at centre and Dr. Manmohan Singh was Prime Minister. The Congress was ousted from power by BJP in May 2014 General Elections and Narendra Modi became Prime Minister.
Following the story published in the daily on 8th February, both RBI and Union Finance Ministry have sent clarification.
“The fact of the matter is that write-offs are basically technical and are done within the framework of Income Tax Act, 1961 and RBI Guidelines regarding provisions for bad loans as per Standard Accounting Practices. Banks write-off advances at Head Office level as part of the balance sheet cleaning exercise and these loans continue to remain outstanding in the branch books. Recovery efforts continue to be made in the respective branches with respect to these bad loans. Write-off does not mean that recovery comes to a stop,” said the finance ministry.
Reserve Bank of India explained: ‘Writing off’ of non-performing assets is a regular exercise conducted by banks to clean up their balance sheets. Substantial portion of this write-off is, however, technical in nature. It is primarily intended at cleansing the balance sheet and achieving taxation efficiency. In ‘Technically Written Off’ accounts, loans are written off from the books at the Head Office, without foregoing the right to recovery. Further, write offs are generally carried out against accumulated provisions made for such loans. Once recovered, the provisions made for those loans flow back into the profit and loss account of banks. The data published in the above news item is the total write-off made by banks, which includes a large portion of technically written off accounts where the recovery efforts continue as usual.”
However, none has explained the surge in the amount of bad debts written off.
Moreover, the government is not willing to disclose the biggest defaulters whose bad debts were written off.
In response to the query of the esteemed English daily about the details of the biggest defaulters, whether individuals or business entities, whose bad debts to the tune of Rs 100 crore or more had been written off, the RBI said: “The required information is not available with us.” Banks are required to report the bad debts on a consolidated basis, it said.
