Write-offs don't lead to waivers, claims Jaitley

New Delhi [India], Oct 1 (ANI): Hours after Congress president Rahul Gandhi targeted the government for waiving off debts of "crony capitalists", Finance Minister Arun Jaitley in his blog post on Monday stated that write-offs by banks are not counted as loan waivers and are done as per the Reserve Bank of India's (RBI) directive.
Jaitley further said that the banks are continuing the long recovery process rigorously.
"Technical write-offs are resorted by banks as per Reserve Bank of India guidelines. However, this does not lead to any loan waiver. Recovery of loans continues rigorously by banks," Jaitley wrote in a Facebook post.
Finance Minister's response comes after a media report stated that between April 2014 and 2018, 21 state-owned banks wrote off Rs 3,16,500 crore of loans even as they recovered Rs 44,900 crore.
"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," Jaitley said.
"Borrowers of such written off loans continue to be liable for repayment. Recovery of dues takes place on the ongoing basis under legal mechanisms, which include, inter-alia, the Securitization, and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) and Debts Recovery Tribunals (DRTs)," he added.
Jaitley further said that the public sector banks are making a concerted effort in recovery and have already recovered Rs 36,551 crore of bad loans of NPAs during April-June quarter of the current financial year against the total recoveries of Rs. 74,562 crore in the financial year 2017-18.
"The cash recovery targets for PSBs for the financial year 2018-19 is Rs. 1,81,034 crore. NPAs has peaked and has declined by Rs. 21,000 crore during the quarter ending June 2018 over March 2018," Jaitley wrote.
Jaitley also hit out at the erstwhile United Progressive Alliance (UPA) government under then Prime Minister Dr. Manmohan Singh for resorting to aggressive lending from 2008 to 2014, which, he claimed, was the main reason behind the spurt in NPAs.
"The Government when it came to power in 2014 inherited the problem of large-scale NPAs in the banking sector. The main reason for this spurt in NPA is that gross advances of PSBs increased rapidly as a result of aggressive lending from 2008 to 2014. The total loan outstanding of PSBs, which was about Rs. 18 lakh crore till March 2008, increased to about Rs. 52 lakh crore till March 2014," he added. (ANI)