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2,300 high-value loan defaulters
owe ₹2 lakh crore.

The government on Monday informed the Lok Sabha
that all Scheduled Commercial Banks have
written off nearly Rs 10.6 lakh crore in the
last 5 years, out of which nearly 50 per cent
belong to large industrial houses.

It also said that nearly 2300 borrowers,
each having a loan amount of Rs 5 crore or more, wilfully defaulted around Rs 2 lakh crore.

As per the Reserve Bank of India (RBI) guidelines
and policy approved by bank boards, NPAs,
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.

“Such write-offs do not result in waiver of
liabilities of borrowers to repay,” Minister
of State in the Finance Ministry Bhagwat Karad
said in written response.

The process of recovery of dues from the borrower in written-off loan accounts continues, write-off
does not benefit the borrower, Karad added.

Further, Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms.

These mechanisms include filing of civil suits
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 sale of non-performing assets.

“Government does not spend any amount on write-offs
of corporate loans,” he said.

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The Minister did not name individual borrowers whose accounts have been written off citing the RBI Act. Quoting RBI, he said that all Scheduled Commercial Banks (SCBs) have collected an aggregate amount of Rs. 5,309.80 crore as penal charges, including penalty charges against delay in payment of loans, during the financial year 2022- 23.

Wilful Defaulter –

In response to another question, Karad said that Scheduled Commercial Banks (SCBs) and All India Financial Institutions report certain credit
information of all borrowers having aggregate
exposure of Rs. 5 crore and above to the Central Repository of Information on Large Credits (CRILC).

“As reported in CRILC database, as on 31.3.2023,
total 2,623 unique borrowers were classified
as wilful defaulters, with aggregate outstanding
of over Rs 1.96 lakh crore by SCBs,” he said.

Further, he said that banks initiate/continue with action against wilful defaulters under the various recovery mechanisms available, such as filing a suit
in civil courts. Banks can also negotiate settlements or, compromise or even sell non-performing assets.

Further, as per the RBI’s Framework for Compromise Settlements and Technical Write-offs on June 8 2023, compromise settlements are undertaken by lenders
in respect of wilful defaulters without prejudice
to the criminal proceedings underway against such debtors, he said.

The Minister also clarified that the primary
regulatory objective behind allowing wilful
defaulters to enter into compromise settlement
is to enable multiple avenues for lenders to
recover the money in default without much delay.

Apart from the time value loss, inordinate delays
result in asset value deterioration, hampers
ultimate recoveries, he said.

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Link –
https://www.thehindubusinessline.com/economy/indian-banks-write-off-106-lakh-crore-in-5-years-50-linked-to-large-corporates/article67604297.ece
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