Technical write-offs are not loan waivers: Jaitley rebuts Rahul Gandhi's claims

Hours after Rahul Gandhi accused NDA government of waiving off debts of crony capitalists, Union Finance Minister Arun Jaitley in a long blog post has said that technical write-offs are not loan waivers and they have to be done as per RBI directive. He wrote," Recovery of loans continues rigorously by Banks. In fact the defaulting management of most Insolvent companies has been removed under the IBC."

Reiterating the NPA situation, Jaitley said that, " main reason for this spurt in NPA is that gross advances of PSBs increased rapidly as a result of aggressive lending from 2008 to 2014. The total loan outstanding of PSBs, which was about Rs. 18 lakh crore till March 2008, increased to about Rs. 52 lakh crore till March 2014."

As  Asset Quality Review was initiated by RBI in 2015, NPAs of PSBs increased from Rs. 2.26 lakh crore in March 2014 to Rs. 8.96 lakh crore in March 2018. Explaining the rule, FM wrote, "  As per RBI guidelines and policy approved by Bank Boards, non-performing loans, including, inter-alia, those in respect of which full provisioning has been made on completion of four years are removed from the balance-sheet of the bank concerned by way of write-off." 

Jaitley too lauded the effort made by the banks in recovering bad loans, "  The PSBs are making concerted efforts in recovery of NPAs. It has already recovered an amount of Rs. 36,551 crore during the first quarter of financial year 2018-19 against the total recoveries of Rs. 74,562 crore in financial year 2017-18. The cash recovery targets for PSBs for financial year 2018-19 is Rs. 1,81,034 crore. NPAs has peaked and has declined by Rs. 21,000 crore during quarter ending June 2018 over March 2018."