“The borrowers of written-off loans continue to be liable for repayment, and the process of recovery of dues from the borrower in written-off loan accounts continues. Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available, such as filing of a suit in civil courts or in Debts Recovery Tribunals, action under the SARFAESI Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, through negotiated settlement/compromise, and through sale of NPAs. Therefore, write-off does not benefit the borrowers,” she said, while replying to a question in the Lok Sabha.
Sitharaman said that over the last five years, nearly Rs 10.1 lakh crore had been written off and banks had managed to recover over Rs 1 lakh crore from these accounts. This was part of the recovery of Rs 4.8-lakh-crore made by state-run lenders.
The statement came amid repeated attacks by opposition parties on “loan write-offs”, which the FM said was due to RBI guidelines and the policies of the lenders. She said that on completion of four years, in the case of NPAs where full provisioning for potential losses has been made, banks can remove them from the balance sheet through a write-off. “Banks evaluate/consider the impact of write-offs as part of their regular exercise to clean up their balance-sheet, avail of tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their boards,” she said.