SBI writes of Rs 10,000 as bad loans; 19 PSBs totalling Rs 41,000 as bad loans

During the December quarter of FY19 the rate of bad loans written off by a set of 19 large and mid – scaled public sector banks (PSBs) had climbed up to 34 on a year on year basis (y-o-y) to around Rs 41,000 crore, resulting in decline in their non performing resources (NPAs). The banks had written off loans valuing just Rs 33,259 crore in Q2FY19, hopping 24 per cent y-o-y, showing a moderate however consistent pace in writing off the loans, the Financial Express reported.

The report stated, Vijaya Bank had seen a sharp rise in write offs i.e 243 times y-o-y to Rs 487 crore in Q3FY19, followed by IDBI, which experienced a 4,783 per cent y-o-y increase in write offs to Rs 562 crore in Q3FY19.

Sources told the Financial Express, State Bank of India (SBI), India’s top performing bank, wrote off loans, nearly amounting to Rs 10,000 crore during Q3FY19, rising 7 per cent from Rs 9,312 crore, one year back. In spite of the fact that, it was lesser than Rs 13,537 crore SBI wrote off during Q2FY19.

Only five PSBs – Punjab National Bank (PNB), Organization Bank, UCO Bank, Allahabad Bank and Andhra Bank – were the five PSBs among the 19 PSBs that registered a y-o-y decline in write-offs during the December quarter.

PNB wrote off Rs 3,082 crore in Q3FY19; declining 50 per cent y-o-y, whereas loans written off by Corporation Bank dropped 28 per cent y-o-y to Rs 2,843 crore. Allahabad Bank had written off loans worth Rs712 crore and Andhra Bank wrote off Rs 55 crore, falling 13 per cent y-o-y and 78 per cent y-o-y, respectively. UCO Bank’s write-offs slipped 61 per cent y-o-y to Rs 622 crore, the Financial Express reported.

As per the Reserve Bank of India (RBI) rules and policy mandated by banks’ boards, NPAs, counting those in regard of which full provisioning has been made on completion of four years, are withdrawn from the balance sheets of banks using write-offs.

Write-offs are portion of a regular exercise by banks to clean up their balance sheets and get tax benefits. Borrowers of written-off loans continue to be liable for reimbursement and banks keep up efforts to recoup them. If In any case recuperations are made by written-off accounts, they are shown in banks’ non-interest income.

During FY18, loans written off by 21 PSBs had leapfrogged to 57 per cent y-o-y and crossed the milestone of Rs 1-lakh-crore. However it is probable banks may recoup some amount of this money; the write-offs can be substantial in the current fiscal too.

(With agency inputs)