SBI wrote off Rs 1.65 lakh crore loans in last four fiscal years, shows data

State Bank of India, the country's largest bank, charges an interest rate of 8.3 percent on gold loans of Rs 5 lakh with two-year tenures. The EMI will amount to Rs 22,682.

Country's largest lender, State Bank of India (SBI) wrote off loans worth Rs 1.65 lakh crore in last four fiscal years followed by Punjab National Bank (PNB) which wrote off Rs59,807 crore, Union Finance Minister Nirmala Sitharaman  informed the Parliament on December 12.

SBI wrote off Rs 19,666 crore loans in fiscal year 2021-2022, Rs 34,402 crore in 2020-21, Rs 52362 crore in 2019-20 and Rs 58905 crore in 2018-2019, according to the data submitted by the finance minister.

Banks typically write off loans where there is no scope of recovery . Banks need to set aside money to cover potential losses from such loans. This impacts the profitability of banks.

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.

According to the data submitted by the minister, PNB wrote off Rs 59,807 crore loans in last four fiscal years, followed by IDBI Bank which wrote off Rs33,135 crores of loans. Among private sector banks, ICICI Bank wrote off Rs42,164 crores of loans while HDFC Bank wrote off Rs31,516 crore loans.

Loan write offs have significantly contributed to the decline in bank NPAs over years. According to the Reserve Bank of India (RBI) financial stability report for June 2022, the gross non-performing asset (NPA) ratio of banks fell to six-year low of 5.9 percent in March 2022. The net non-performing assets (NNPA) ratio fell to 1.7 percent in March 2022.