SBI bad debt collections less than 8% over 8 years

MUMBAI: National Bank of Indiais technical to write of doubtful debts over the past eight years amounted to Rs 1.23 lakh crore, while the recovery of bad debts during the same period was less than Rs 9000 crore. The country’s largest bank shared data on its technical depreciation and recoveries over the past decade with shareholder Vivek Velankar, which was first published by Moneylife.
According to the data, more than a third of the total write-offs made since fiscal 2013 were in fiscal year 20 at Rs 46,348 crore. In the previous year (FY19), write-offs amounted to Rs 27,225 crore. During the same period, recoveries were Rs 5,366 crore (FY20) and Rs 2,215 crore (FY19). Bad debts peaked after 2018 following a circular issued by the RBI on February 12 that forced banks to clean up their bad debts.
A technical write-off refers to an accounting practice of not considering a particular loan as an asset to offset deposits. “Write-off should not be confused with waiving the loan when the borrower’s debts are canceled. The rights of the bank are not diminished due to a technical write-off, as the bank continues to aggressively pursue the recovery, ”said one banker.
Regarding the recovery representing a small percentage of the write-off, a source close to the bank said there was always a lag between the write-off and the recovery due to the legal process involved. He added that recoveries on some of the loans written off over the past two years had not yet been completed.

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