PSU banks write-off more than seven times recovery of bad loans in four years, RBI data shows

PSU banks write-off more than seven times recovery of bad loans in four years, RBI data shows
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New Delhi, Oct 1: Even as country’s 21 public sector banks wrote off Rs 3,16,500 crore of loans between April 2014 and April 2018, they recovered Rs 44,900 crore written off on a cumulative basis, amounting to over seven times recovery of bad loans in four years, RBI data showed. Interestingly, the amount of bad loans written off by PSU banks between 2014-2018 is more than the projected budgetary expenditure for health, education, social protection (Rs 1.38 lakh crore) for FY19, RBI data revealed.
The recovery of bad loans takes place on the total cumulative write-off and not only on for a write off for a particular period. The data also shows that the loans write off by the PSBs were more than 166 percent of the amount in 10 years till 2014.
The recovery rate in PSBs during the four years to March end of 2018 was at 14.2 percent that is about three times higher than the 5 percent for private lenders, according to data submitted by RBI during its post-evidence reply before the parliamentary standing committee on finance. Even though public sector banks account for 70 percent of the total banking assets, their contribution to bad loans is about 86 percent of the total NPAs.
The loans are written off from the bank books, without foregoing the right to recovery in ‘Technically Written Off’ accounts. In addition, write-offs are usually carried out against accumulated provisions made for such bad loans. The provisions that are made for these loans flow back into the profit and loss account of banks once they are recovered.