NEW DELHI - The Indian government revealed in a Lok Sabha session today that Scheduled Commercial Banks have written off a staggering Rs 10.6 lakh crore worth of loans in the past five years. This figure includes substantial amounts associated with major industrial firms. The Minister of State for Finance, Bhagwat Karad, outlined the recovery efforts undertaken by the banks, including civil lawsuits and penal charges that amounted to Rs 5,309.80 crore for the fiscal year 2022-23.
This disclosure comes against the backdrop of the Reserve Bank of India's (RBI) guidelines, which direct banks to remove non-performing assets (NPAs) from their balance sheets after sufficient provisioning has been made. These write-offs are not financed by government funds. As of March end in 2023, the Central Repository of Information on Large Credits (CRILC) recorded 2,623 wilful defaulters owing debts exceeding Rs 1.96 lakh crore.
The Indian banking sector has been employing various measures to recover these debts. The Insolvency and Bankruptcy Code (IBC) and proceedings at the National Company Law Tribunal (NCLT) under the Securitisation Act are key legal instruments supporting these recovery efforts. Additionally, the RBI's Framework for Compromise Settlements, introduced on June 8th, provides a mechanism for reaching settlements with wilful defaulters while ensuring that criminal prosecutions are not affected.
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