New Delhi: Banks have written off Rs 1,44,093 crore bad loans in the 2017-2018 financial year – a 61.8% from Rs 89,048 crore in the previous year, the Indian Express reported on Friday.
Of the write-off for 2017-18, Rs 1,20,165 crore (83.39%) loans were written off by public sector banks.
Banks normally resort to write-offs in the case of loans which are in the doubtful recovery category. “It is technical in nature. It’s a book adjustment. When a bad loan is written off, it goes out of the books of the bank. The bank will also get tax benefits. However, the bank will continue the recovery measures even after the loan is written off,” said Pradeep Ramnath, former chairman and MD of Corporation Bank while speaking to the daily.
The figures show that the State Bank of India wrote off Rs 40,281 crore in 2017-18, while fraud-hit PNB wrote off Rs 7,407 crore and Indian Overseas Bank Rs 10,307 crore.
Besides, public sector banks suffered a loss of over Rs 87,000 crore in the fiscal year ended March 2018 owing to higher provisioning towards NPAs and losses in the bond portfolio.
Recently, the government considered merging four banks. The banks in contention are IDBI Bank, Oriental Bank of Commerce, Central Bank of India and IDBI bank Ltd .The four banks have accumulated a massive loss of Rs 21 thousand crores in the last financial year. Of the 4, IDBI performed worse suffering lost of Rs 8,237.82 crore. According to the reports, if the merger happens, it will make the merged bank second largest in country after SBI.
Simultaneously, the government is also looking at selling 51% of stake. The probably merger will help in better management of assets, to shut down unprofitable branches. RBI last year had advocated merger of state run banks for better performance. So far, none of the banks or the government have spoken on record about the possible merger. Last year, government merged SBI with five of its associate banks and also Bharatiya Mahila Bank.