Banks recovered Rs 33,534 crore from written-off loans in 2022, says goverment

SCBs wrote off Rs 10,09,511 crore during the last five financial years.

Scheduled commercial banks (SCBs) recovered Rs 33, 534 crore in the financial year 2021-22 from loans that were earlier written off, the Ministry of Finance said in the parliament on March 27.

Further, the banks recovered Rs 30,104 crore in FY21, Rs 30,106 crore in FY20, Rs 25,501 crore in FY19, and Rs 12,881 crore in FY18 from written-off loans, the ministry replied citing the Reserve Bank of India (RBI) data.

A loan is written off when there is no scope of recovery left and banks want to simply take the bad asset off their balance sheets. The banks need to set aside money in the form of provisions to cover such loans. This affects their profitability.

During the question hour in Lok Sabha, DMK MP AKP Chinraj sought to know about written-off loans of Essar group entities, especially Essar Investments; and the reasons for not maintaining recovery data of write-off loans by the RBI or the Ministry.

In reply to this, the Ministry of Finance said the RBI is prohibited from disclosing borrower-wise credit information.

“The RBI has further informed that the information in respect of recovery in written-off loan accounts is maintained bank-wise,” the ministry replied.

In December 2022, the government in the parliament said that SCBs wrote off Rs 10,09,511 crore during the last five financial years.

At that time, Finance Minister Nirmala Sitharaman, citing RBI data, said public sector banks could recover only Rs 1,03045 crore from written-off loans from the last five financial years.

The aggregate recovery in the last five years amounts to Rs 4,80,111 crore, the minister said in December 2022.