Non-performing assets (NPA) worth Rs 5,55,603 crore were reportedly written-off in the last five years under the Narendra Modi-led Bharatiya Janata Party (BJP) govt, according to an RTI reply by the Reserve Bank of India (RBI).

George Matthew reporting for the Indian Express (IE) wrote that as per the reply, a staggering Rs 1,56,702 crore non-performing loans were written off in nine-months that ended in December 2018.

A total of Rs 7,00,000 crore were written-off in the last 10 years, out of which 80 per cent of the write-offs were accrued in the last five years, since April 2014. To preserve their reputation and keep a clean record, the banks were more than eager to show lower bad loans by writing off Rs 1,08,374 crore in 2016-17 and Rs 161,328 crore in 2017-18, the report said.

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Rs 82,799 crore was waived in the first six months of 2018-19. Subsequently Rs 64,000 crore was waived in just two months, in the October-December 2018 quarter, IE reported.

The annual cost of Congress’ Minimum Income Guarantee Scheme, NYAY, to provide a minimum income of Rs 72,000 to the poorest 25 crore people in India, is estimated to be around 3.6 lakh crore. The amount of NPAs written-off in the last five years — Rs 5.6 lakh crore —is enough fund the scheme for one-and-a-half year.

Sources at the RBI told IE that not much is known about the borrowers and whose loans were written-off.

Banks claim recovery processes continue even after waiving of bad loans, however sources told IE not more than 15-20 percent of the loan is recovered. The write-offs are rising more alarmingly than the recoveries and recapitalisation.

In an earlier circular for banks, the RBI had reportedly said, “Banks are required to extinguish all available means of recovery before writing off any account fully or partly. It is observed that some banks are resorting to technical writeoff of accounts, which reduces incentives to recover. Banks resorting to partial and technical writeoffs should not show the remaining part of the loan as standard asset.”

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Statutory auditors need to certify the amount of technical writeoff, but RBI had earlier said that writing off NPAs is just a habit or common practice for banks.

“A substantial portion of this writeoff is, however, technical in nature. It is primarily intended at cleansing the balance sheet and achieving taxation efficiency. In ‘Technically Written Off‘ accounts, loans are written off from the books at the Head Office, without foregoing the right to recovery. Further, writeoffs are generally carried out against accumulated provisions made for such loans. Once recovered, the provisions made for those loans flow back into the profit and loss account of banks,” the RBI had said, reported IE.

However, the banking sector and the RBI do not reveal the identity of defaulters, whose loans have been written off.

A former RBI official told IE, “I have nothing against writeoff but it’s to be done scarcely and within a policy with all efforts to recover the money. Any asset which is backed by tangible asset is never written off. You must be subject to scrutiny for these writeoffs. There must be a policy. You ask any banker. They have written off Vijay Mallya’s loan. Then how are they going to recover that money? All I am saying is that write off the loan as per policy but that has to be done by somebody who is authorised to do it. Use it sparingly and do it where essential. If there’s an asset, why are you writing it off?”

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Bank unions have long been demanding that the names of defaulters should be made public.

All India Bank Employees Association (AIBEA) general secretary C H Venkatachalam told IE, “It is known that bulk of these bad loans are attributable to big businesses and the affluent. Many cases of default are found to be deliberate, wilful and on account of diversion of funds. Unfortunately bank loan default is still a civil offence and hence criminal proceedings are not being instituted against them.”

Last year the BJP-led government had announced a Rs 2.11 lakh crore recapitalisation programme to bail out banks, stuck with over Rs 10 lakh crore non-performing assets.