The write-off this financial year has soared 61.8 percent as against Rs 89,048 crore in the previous year.
Banks have written off a whopping Rs 1, 44,093 crore of bad loans in the financial year ending in March 2018. This can be attributed to huge losses and non-performing assets (NPAs).
The write-off this financial year has soared 61.8 percent as against Rs 89,048 crore in the previous year.
According to a report in , the total loan write off by private and public sector banks in the last decade starting 2009 has spiked to Rs 4, 80,093 crore as on March 31, 2018. As per figures compiled by ICRA, 83.4 percent of this amount—Rs 4, 00,584 crore – was from state-owned banks. Of the write-off for FY 2017-18, Rs 1, 20,165 crore is the share of bad loans from public sector banks alone.
Banks usually resort to write-offs in the case of loans which fall in the ‘doubtful recovery’ category. Pradeep Ramnath, former chairman and MD of Corporation Bank told the paper that write-offs are fundamentally book adjustments, where bad loans go out of the books of the banks. By doing this the banks are eligible for tax benefits while they continue to pursue recovery measures.
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The data compiled by ICRA shows that the State Bank of India (SBI) wrote off Rs 40,281 crore in 2017-18, while Indian Overseas Bank Rs 10,307 crore and PNB wrote off Rs 7,407 crore.
Over the last 10 years, SBI alone has written off bad loans worth of Rs 1,23,137 crore, while PNB wrote-off Rs 25,811 crore, as per data from the ICRA.
On the other hand, private banks wrote off Rs 23,928 crore in FY 2017-18 against Rs 13,119 crore the previous year. Similarly, Axis Bank wrote off Rs 11,688 crore and ICICI Bank Rs 9,110 crore. In the last 10 years, the total write-offs by private banks can be summed up to Rs 79,490 crore.
Add to this, public sector banks suffered a loss of over Rs 87,000 crore in FY18 due to higher provisioning towards NPAs as well as losses in the bond portfolio.