India’s state-owned banks wrote off US$12.5bn in 2016-17
The finance minister said loans worth 816.83 billion rupees were written off by the public sector banks in the 2016-17 fiscal year
In addition to recent scams, India’s banking sector continues to be burdened by bad loans, leading to huge write-downs. Indian Finance Minister Arun Jaitley stated in the upper house of Parliament on Tuesday that loans worth 816.83 billion rupees (US$12.57 billion) were written off by the state-owned banks in the 2016-17 fiscal year.
During the current (2017-18) fiscal year up to September 2017, the amount written off was 287.81 billion rupees, reports the Press Trust of India.
In 2016-17, the State Bank of India, the country’s largest, wrote off 203.39 billion rupees, the minister said. Last month the State Bank of India reported its first quarterly loss in 17 years, shocking market analysts.
Bad loans have increased sharply over the past four years as an economic slowdown took its toll on the ability of companies to repay debt. And the bulk of India’s 9.46 trillion rupees in non-performing loans at the end of September 2017 were held by state-owned banks.
To address the crisis, the government last year announced the recapitalization of state-owned banks by infusing around 2.11 trillion rupees.
There have also been many cases of banks, mostly in the private sector, under-reporting on non-performing assets (NPAs). The Reserve Bank of India recently imposed a penalty of 30 million rupees on Axis Bank for violation of NPA classification norms, after an inspection of the bank, with reference to its financial position as on March 31, 2016.
Earlier, other private-sector lenders such as HDFC Bank and Yes Bank had under-reported their NPAs.