Indian Bank Recovered Just 1% in 3 Years after Writing Off Bad Loans Worth Rs4,792 Crore of Big Defaulters
While the common borrower is still struggling to repay monthly instalments, one more  big bank has shown how big defaulters are having their cake and eating it as well without any qualms or worries. Similar to other public sector lenders, Indian Bank too wrote off Rs4,792 crore bad debt of big defaulters (loan of Rs100 crore and above) while recovering just 1% or Rs66 crore from them. Indian Bank gave this information to Pune-based Right to Information (RTI) activist Vivek Velankar.
While sharing partial information, Indian Bank told Mr Velankar to search its annual reports for the past eight years to know the total amount written off and the recovery made during this period. More shockingly, the Bank says it has information of big defaulters, their loan written offs and recovery only for the past three financial years (from FY17-18 to FY19-20) and none for the period prior to it.
As per data collected and shared by Mr Velankar from Indian Bank’s annual reports during FY14-15 to FY19-20, the lender wrote off total bad loans worth Rs10,249 crore and recovered just Rs2,183 crore.
Indian Bank also followed the same route like other public sector banks (PSBs) for denying information like names of big defaulters whose bad loans worth thousands of crores of rupees were written off. 
Replying to Mr Velankar, the bank says, " we have the obligation to maintain secrecy of our customer's account, details exempted from disclosure under section 8(1)(e) (information available to a person in this fiduciary relationship) and 8(1)(j) as the disclosure of such information could cause unwarranted invasion of privacy of the individual and does not involve larger public interest) under the RTI Act, hence no information is provided.”
Except the State Bank of India (SBI), every other PSB has declined to share information like names and amounts borrowed by big borrowers which turned into non-performing assets (NPAs). Even in the case of SBI, Mr Velankar could access the list of big defaulters because he is a shareholder and had asked the question during the annual general meeting (AGM) of the Bnk. 
Coming back to the Indian Bank, Mr Velankar says, "The information about big defaulters and loan write off is often being denied to me under RTI. However, all this information is part of the banks' mandatory reporting to the Reserve Bank of India (RBI), and hence they cannot deny it under any section of the RTI Act. Also, how is it that every bank is citing a different section of RTI Act for such refusal? For example, Canara Bank denied me this information under section 8(1)(j), and Punjab National Bank (PNB) cited sections (8)(1)(d), (8)(1)(j) and 8(1)(e).
"UCO Bank too refused to share the list of names of defaulters under Section 8(1)(d) and 8(1)(e), while Indian Bank is using 8(1)(e) and (8)(1)(j) of the RTI Act to deny the information. Why are these public information officers (PIOs) of our PSBs using different sections of the RTI Act for not revealing the names of big defaulters?"
Interestingly, last year, UCO Bank, which was founded in 1943 under the aegis of industrialist GD Birla, through an advertisement, had declared Yash Birla, great grandson of GD Birla, as a defaulter. In a public notice which also carried a photo of Yash Birla, UCO Bank had said the account was declared a non-performing asset (NPA) on 3 June 2019. (Read: Yash Birla is a Wilful Defaulter, says UCO Bank in a Public Notice)
Not only this, a few years ago, banks, mostly public sector lenders, had decided to ‘name and shame’ the guarantors of defaulter borrowers by publishing their photographs and other details in newspapers and on  notice boards of bank branches and community centres. This move was heavily criticised by everyone and banks seem to have curtailed this practice.
Mr Velankar asks the same question. "When a common borrower defaults, the same bank publishes his name and all the details through advertisements in newspapers. Why do they want to keep the names of bigger defaulters hidden? Why don’t the 'confidentiality' and 'fiduciary relation' clauses apply while publicising the names of the common borrowers?" he asks.
Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. 
This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean-up process. The beneficiaries are invariably some of our biggest industrialist defaulters. 
In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. 
Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts.
As reported by Moneylife, during FY11-12 to FY19-20, UCO Bank, wrote off Rs25,266 crore bad debt of while recovering just 7% or Rs1,702 crore from all defaulters. (Read: UCO Bank Recovered Just 7% after Writing Off Rs25,266 Crore Bad Loans over 9 Years)
During the past eight-year period from FY12-13 to FY19-20, Canara Bank wrote off a total of Rs47,310 crore while recovering just 19% or Rs8,901 crore from defaulters. (Read: Canara Bank: Rs47,310 Crore Write Off in 8 Years; Just 19% Recovery, Latest PSB Loot)
Indian Overseas Bank too wrote off a massive Rs41,392 crore as technical write-offs in the past eight-year period from FY12-13 to FY19-20. As against these write-offs, the recovery was just 17% or Rs7,253 crore. (Read: Indian Overseas Bank, Another PSB to Write Off Rs41,392 Crore in 8 Years; Recovers Just 17%)
PNB wrote off a massive Rs44,565.59 crore as technical write-offs in a four-year period from FY16-17 to FY19-20 . As against these write-offs, the recovery was just Rs12,027.97 crore. If one were to look at large loans of Rs100 crore and above, the technical write-off in this segment alone is Rs31,966 crore, while the recovery from big defaulters is only 22% at Rs7027.94 crore. (Read: Punjab National Bank Wrote Off Rs31,966 Crore in Past 4 Years; Recovered only 22% from Big Defaulters)
Similarly, IDBI Bank, which became a private sector lender a few months ago, wrote off total bad loans worth Rs45,693 crore but could recover just 8% of it after spending more than Rs29 crore during the past seven years. (Read: IDBI Bank Wrote Off Rs45,693 Crore Bad Loans and Recovered Just 8% in 7 Years)
Union Bank of India too wrote off bad debt worth Rs26,072.81 crore between FY11-12 and FY19-20 (this information pertains only to loans of over Rs100 crore). (Read: Union Bank of India Writes Off Rs26,027 Crore as Bad Loans in 8 years; Stalls Query on Recoveries and Big Defaulters’ Names)
Bank of Maharashtra has written off bad loans of over Rs7,402 crore in the past, while recovering a paltry 4% in over eight years through recovery efforts. The lender wrote off bad debts worth Rs7,402 crore during four out of the past eight years, while recovering just Rs253.55 crore. (Read: Bank of Maharashtra Writes Off Rs7,100 Crore Bad Loans; Recovers Just 4% in 8 Years)
From 2012 to 2020, BoB had technically written off 97 accounts with bad debts of Rs100 crore and more. These add up to Rs21,476.89 crore over eight years, while recovery in that same period is just 4.91% or Rs1,056.53 crore. (Read: Bank of Baroda Follows SBI, Writes Off Rs21,474 Crore in Bad Loans; Recovers only Rs1,057 Crore in Past 8 Years)
Similarly, from FY12-13 to FY19-20, SBI, the country's largest lender, wrote off bad loans worth Rs1.23 lakh crore of bad debt but recovered a paltry Rs8,969 crore. (Read: SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!)
3 years ago
Why can't the Government allow a one time write off of all loans of PSUs and publish it clearly instead of citizens filing an RTI
3 years ago
1. In PSBs micro/macro level staff are more honest to the core, when compared to the dishonest apex-level Boards, CMDs, CEOs & EDs., etc.
2. The apex level staff possess strategic support from ruling party politicians, fugitives & Duds of Adhocism in UFM/PMO, etc.
3. Similarly, the honest to the core borrowers repay the loans/advances in time & pay taxes.
4. Without support of micro/macro-level honest staff + the honest borrowers; no PSB survives. But, during the silent-write offs, the victims are honest borrowers/depositors + honest staff.
5. It is a pipe dream for BJP led NDA to set right the anomalies cited, since India is dominated by thieves.
3 years ago
Let us write off all the NPAs of public sector banks and start banking with a clean slate. The actual collections by the public sector banks are pittance. The cost incurred in collection of these small amounts is much more. Then why to collect by toiling a lot. What about the outstandings in credit carfs. In most of the cases you don't find the addresses of credit card holders.
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