Banks have written off Rs 2,02,781 crore of bad loans in the fiscal ended March 2021 when the Covid-19 pandemic hit the country and the Reserve Bank of India (RBI) allowed banks to announce reliefs like loan moratorium for borrowers.
With this, banks have written off a whopping Rs 11,68,095 crore worth of bad loans, or non-performing assets (NPAs), in the last ten years with most of the write-offs coming in the last seven years, the RBI said in an RTI reply to. This is almost 10.54 per cent of total non-food bank advances of Rs 110.79 lakh crore and very close to the government’s gross market borrowing of Rs 12.05 lakh crore projected for FY 2021-22 in the Union Budget. Of the total write-off in 10 years, as much as Rs 10.72 lakh crore write-off has happened since financial year 2014-15 when the Narendra Modi government assumed power. This write-off aided banks to whitewash their bad loan portfolio.
Normally, banks write off an NPA when all recovery measures are exhausted and chances of recovery of loan are remote. However, banks are supposed to continue recovery steps even after a write-off. While a loan can be written off if it is in default for more than three consecutive quarters, banks have not disclosed the names of borrowers whose loans were written off so far.