Moneycontrol
Aug 09, 2017 03:39 PM IST | Source: Moneycontrol.com

Top 3 private banks double their loan write-offs in FY17 at Rs 20,000 cr

ICICI Bank had written off the highest amount of loans at Rs 15,175 crore in FY17, while HDFC Bank and Axis Bank had written off Rs 2,386 crore and Rs 2,222 crore, respectively

ByBeena Parmar
Top 3 private banks double their loan write-offs in FY17 at Rs 20,000 cr

Country’s top three private banks ICICI Bank, HDFC Bank and Axis Bank have “written-off” loans worth Rs 44,137 crore in five years, nearly half of that were in the financial year 2016-17.

The amount written off by the three banks in FY17 stood at Rs 19,783 crore, more than double as compared to Rs 7,292 crore in FY16, as per the banks’ annual reports. This is just below half of the loans written-off over five years.

ICICI Bank had written off the highest amount of loans at Rs 15,175 crore in FY17, while HDFC Bank and Axis Bank had written off Rs 2,386 crore and Rs 2,222 crore, respectively, (including some asset sales) during the financial year.

While a report earlier this week showed that 27 public sector banks made write-offs of Rs 2.5 lakh crore worth of loans in the last five years, in FY17 alone, the banks have written off Rs 81,683 crore, the highest in the last five fiscals (from 2013 to 2017), the finance ministry said quoting Reserve Bank of India data.

The amount was 41 percent higher than that in the previous fiscal.

As per the RBI norms, loans are written-off after making adequate provisions to take advantage of tax benefits.

In respect of technical write-offs, the RBI has permitted write- offs at headquarter level, while recovery efforts would continue by the banks at their branch level.

State Bank of India and its erstwhile associates alone have written off Rs 27,574 crore in 2016-17, according to the RBI data on "write offs" done by public sector banks. SBI merged its five associate banks with itself from April 1, 2017.

According to All India Bank Employees’ Association (AIBEA), bad loans written off by the SBI group in the past five years stood at Rs 93,041 crore.

After SBI cut interest rates on savings deposits last week, in a report, CH Venkatachalam, General Secretary of AIBEA said, “People should not be penalised for corporate default and banks' inability to recover those loans…SBI has said that they will gain Rs 4,400 crore per year by reducing the savings deposit interest but see how much they have sacrificed by the write-off of bad loans of big corporates.”

The amount written off by PSU banks soared from Rs 27,231 crore in 2012-13 to Rs 57,586 crore in 2015-16, and further to Rs 81,683 crore in 2016-17. During 2013-14, write-off figure was Rs 34,409 crore which rose to Rs 49,018 crore in the subsequent fiscal.

Therefore, the cumulative amount written off in the last five fiscals ending March 2017 was Rs 249,927 crore.

Gross non-performing assets (NPAs) of public sector banks were 12.47 percent of gross advances as on March 31, 2017. Gross advances were Rs 51.42 lakh crore, while gross NPAs were Rs 6.41 lakh crore.
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