Loans worth Rs 2.41 lakh crore of crony corporates written-off, confirms Modi government

The government was asked to furnish details of the corporates whose loans were written off and the reasons for it being done.

Loans worth Rs 2.41 lakh crore of crony corporates written-off, confirms Modi government

In response to a question on writing off loans of crony corporates by a Rajya Sabha MP, the government has conceded that the public sector banks have written off loan amount worth Rs 2,41,911 crore from financial year 2014-15 till September 2017.

The question was raised on the floor of the House by Ritabrata Banerjee, Rajya Sabha MP from West Bengal. He had asked, “Whether it is a fact that 2.4 lakh crore amount of Public Sector Banks (PSBs) loans of crony corporate have been written off by the present Union Government till September 2017.”

He had further asked the government to furnish details of the corporates whose loans were written off and the reasons for it being done.

Though the government confirmed that loans worth Rs 2.4 lakh crore were written off, it refused to furnished details of the same citing provisions under Reserve Bank of India Act, 1934. The government said that sought information was confidential and not supposed to be published or disclosed.

Responding to the question on behalf of the Ministry of Finance, a minister of state also clarified that borrowers of the loans that were written off continue to be liable for repayment. Pointing that it was a regular exercise carried out by the banks, the recovery of dues would take place “under legal mechanisms”.

The government has also clarified that writing off loans does not benefit a borrower in any manner.

Here’s the full response by the government:

“As per Reserve Bank of India (RBI) data on global operations, Public Sector Banks have written-off (including compromise) an amount of Rs. 2,41,911 crore from financial year 2014-15 till September 2017.

Writing-off of non-performing assets is a regular exercise conducted by banks to clean up their balance sheet, and achieving taxation efficiency. Writing  off of loans is done, inter-alia, for tax benefit and capital optimisation. Borrowers of such written off loans continue to be liable for repayment. Recovery of dues takes place on ongoing basis under legal mechanisms, which include, inter-alia, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, Debts Recovery Tribunals and Lok Adalats. Therefore, write-off does not benefit borrowers.

RBI has apprised that borrower-wise credit information is not available for disclosure under section 45E of the Reserve Bank of India Act, 1934. Section 45E provides that credit information submitted by a bank shall be treated as confidential and not to be published or otherwise disclosed.”