A week after the government claimed it was targeting black money hoarders by demonetizing old high-value currency notes, India’s largest public sector bank, State Bank of India, has reportedly started writing off more than ₹7,016 crore, over 80 percent of the amount owed to it by its top 100 defaulters.
SBI has decided to drop the money, mostly wilfully defaulted, creating a special category dustbin for ‘toxic loans’ called Advance Under Collection Account (AUCA), technically known as a write-off.
Now, loans given to Vijay Mallya’s Kingfisher Airlines, one of the top wilful defaulters, with outstanding dues of almost ₹1,201 crore, and 62 others will not be listed in the bank’s annual balance sheet.
Kingfisher Airlines owes a total of ₹6,963 crore to 17 banks, of which SBI's loan is ₹1,201 crore.
As many as 63 accounts in the list have been fully written off, 31 have been partially written off and six have been shown as non-performing assets (NPAs), the DNA reported.
In addition to Kingfisher Airlines, the top 20 write-off list are KS Oil (Rs 596 crore), Surya Pharmaceuticals ( ₹526 crore), GET Power ( ₹400 crore) and SAI Info System ( ₹376 crore), the report said.
The report also says the bank has written off ₹48,000 crore worth bad loans in July this year. The documents accessed by the daily, however, do not specify the entry time of these “write-offs”.
Banks exercising write-offs is a unique idea to clear bad loan, ideally after exhausting all avenues of recovery, restructuring and compromises. By writing-off bad and non-performing assets, banks can improve NPA ratios through cleansing of the balance sheet and tax benefits.