SBI Shareholder Writes to FM Nirmala Sitharaman Seeking Complete Information on Loan Write-offs
Moneylife Digital Team 27 July 2020
Pune-based activist Vivek Velankar has requested finance minister (FM) Nirmala Sitharaman to direct State Bank of India (SBI) to share detailed information on loan write-offs, efforts taken for recovery, properties attached against these bad debts and manpower allocation done by the lender over the past eight years. 
Mr Velankar, who is a shareholder of SBI, in a letter to the FM says "I request your kind attention to this serious offence by SBI and request you to kindly instruct SBI to put forth transparently all information about the efforts bank has made on recovery of written off accounts of big defaulters above Rs100 crore. In fact, I request you to compel all other nationalised banks also to publish this information proactively on their websites in larger public interest."
As reported by Moneylife, using his rights as shareholder, Mr Velankar had found out that SBI had written off of Rs1,23,432 crore, and then recovered just over 7% or Rs8,969 crore over the past eight financial years. (Read: SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!)
In his latest letter, Mr Velankar, who is also president of Pune-based Sajag Nagrik Manch, told FM Nirmala Sitharaman that, "There were lot of heated arguments in the country a couple of months ago on written off loans of big accounts. That time it was clarified by your department that technical write off does not mean waiving off loans and efforts are on for recovery of these written off loans and due to stringent laws brought in by your department the process of recovery has become more effective and faster."
Earlier, Mr Velankar had tried obtaining this information under Right to Information (RTI) Act, but SBI denied it claiming that collating this information would be a waste of its resources. Being a shareholder of SBI, he then asked for this information as question for the annual general meeting (AGM). While he did not get a chance to ask his question during SBI's annual general meeting (AGM), the Bank shared this information which is quite shocking. "This information also exposes how the bank writes off loans of 100s of crores of rupees of large defaulters while denying waiver of simple interest on loans for common customers," Mr Velankar had told Moneylife.
Here is the information sought by Mr Velankar with help from the finance minister...
1. You (SBI) have given me list of accounts which have been written off technically; I would like to know when case was filed in NCLT for each of this account.
2. What efforts Bank has made to recover the written off amounts for year 2012-13 to 2016-17.
3. How much property is attached for each of the written off account and what is the status of sale of those properties. 
4. Provide me manpower allocation done by bank for recovery of written off accounts grade wise. (Is there separate cell formed for this purpose and if yes constitution of the cell as far as manpower allocation is concerned?)
5. Amount of expenses incurred by bank from 2012-13 till 2019-20 year-wise for recovery of written off loans. (This should include legal as well as staff salary and other expenses). 
The Bank’s reply to Mr Velankar shows that during the eight years from FY12-13 to FY19-20, SBI has 'technically/prudentially written off’ a massive sum of Rs1.23 lakh crore from its books, but manged to recover only 7% or Rs8,969 crore in this period. This makes a mockery of the aggressive claims by a string of high-profile government spokesperson and economic advisors that a ‘technical’ write-off does not stop the recovery process. 
When a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. However, as SBI has shown, most of the times, there is no recovery or negligible recovery for the amounts written off. 
The fact is that once a loan turns bad in India, it is almost impossible to recover anything because it has already been ever-greened for several years, a former chairman of a bank had told Moneylife.
 Earlier in April, the Reserve Bank of India (RBI) had said that Indian banks have technically written off a staggering amount of Rs68,607 crore due from 50 top wilful defaulters, including absconding diamantaire Mehul Choksi. RBI had revealed this information in reply to an RTI filed by Saket Gokhale.
RBI said that this amount (Rs68,607 crore) comprising outstanding and the amounts technically or prudentially written off till 30 September 2019. 
Mr Velankar, in his letter, says, "I even wrote to them (SBI) to at least convey me whether this information is not available or bank cannot provide me this information but till date no response what so ever is received by me. This raises doubts in minds of common citizen like me about bank’s intentions. 
"It seems that in spite of efforts made by your department to make stringent provisions for recovery of written off loans bank is not acting on this with some fraudulent motives. In fact, this information should have been available on bank website but in spite of asking also this information is not disclosed clearly means that either bank is not intentionally taking much efforts to recover these written off loans or doing only selective recovery. This seems to be intentional move by the bank to let down the efforts done by your department on this issue," the activist says in his letter to finance minister Nirmala Sitharaman.
You may also want to read…
1 year ago
I do not know why banks are lax when they deal with large defaulters. One reason given is that all these defaulters who take loans to never intend to return have no real assets in their accounts that could be attached as collateral. Some of these people have fictitious assets made with the express purpose of defrauding the banks. Then there is the usual association with those in power and who control who should get how much loan. The politicians do not serve as guarantors for fear of later default and media exposure. Our Institutions seem to be lacking upright men at the helm.
A direct effect of the lax recovery is the need to increase the provision to account for write offs without a dip in the bank profits. This only means lower deposit interest rates for the depositors and higher interest for new loan customers. Such an arrangement is most public unfriendly.
1 year ago
Why CM Maharashtra, Mumbai Not Declare Mr Rajnish Kumar Chairman SBI as Anti National for Gigantic Financial Frauds and Open Brazen Loot of Public Money of Poor Indians? I am Babubhai Vaghela from Ahmedabad. Thanks....
1 year ago
Suo Moto Empowered Judges sitting at High Courts and Supreme Court of India should Take Cognizance and Direct the State Bank of India Headed by Rajnish Kumar to Disclose the Larger Public Interest Information about Public Money.
1 year ago
Now investment in YES bank was eroded 30% with in a short period. It will not be far off, 100% investment in YES bank will be eroded. Writting off bad loans is a regular habit of public sector banks. These banks never seriously pursue the recoveries. Why to bother about recoveries, when easiest method of
" writting off" is available. Those who had sanctioned these written off loans might have retired long back or reached the heavenly abode.
To get a huge loan from public sector bank, What one reqires is a strong recommendation or benami partnership from a high level politician. Who recommend Baba Ramdev?
Meenal Mamdani
1 year ago
Hats off to Mr. Velankar for filing this RTI request.

Even though he will have to spend months to get at the bottom of this, the positive is that the pols are worried that someone is looking over their shoulder and will nail them sooner or later. Hopefully that puts fear in their hearts and therefore fewer malfeasance.
1 year ago
Pickles Nimmy is an arrogant lady. I don\'t think she will even read the letter.
1 year ago
Dear Vivek Velankar,
If you are reading this, Banks and especially like SBI which are too big to fail will never disclose such information. For this you have to understand how a bank loan scam works.
Bank loans these big are sanctioned in tandem with a cut of bank executives and in no way these executives will let the blade fall on them.

In a successful scam you need to share the cut not only with the loan approvers/executives but you also need multiple scapegoats and fake companies to make it successful. Unsecured loans are definately scam but there are ways to scam a secured loan too.

Get a loan sanctioned for 100 crores, pay your cut to the bank executives, pay your cut to the fake company and directors, let the fake firm buy equipment or materials with the loan amount, bank will try to recover the amount from the fake firm, make your directors move to a new country (some countries require paltry sum for changing citizenship). Bank can sell your paltry equipment for pennies and you can do your business legitimately.
Now this is a basic foundation of scam. You can involve many fake firms and use your creativity to scam any bank. But always remember you need the executive or the loan approvers in your pocket to successfully execute that.
1 year ago
I dont think that SBI Officers (AGMs/DGMs, etc.) will leave the defaulters just like that! I have heard an Officer has been given memo. for failing to report an`irregular' loan of Rs.90,000/- (Not NPA) given to a TG (Transgender). (being a very big amount). He was lamenting that he had received a memo. first time in his service. So just 'Imagine' the fate of the `culprits' who have sanctioned `small loans' to poor men like Malya, Chocksi, etc. May be the officer `did not fall in line' with the `Honest Group'!
1 year ago
Loan takers and defaulters fill pockets of politicians and bank executives to write off loans It is very funny that in one case reason for write off was that the address of defaulter was not known to the bank or the addressee has left that place. DHFL company asks for PAN , signature across photo ,ID address proof etc while taking deposits from public and default while repayment.
There are hoodlums in corporate world.
Free Helpline
Legal Credit