Debt collection on one side and loan waiver on the other

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State Bank of India (SBI), the largest bank in India, is trying to recover Rs 96,000 crore of bad loans. The bank has circulated a list of 331 accounts, totaling Rs 96,278 crore in loans, to asset reconstruction companies (ARCs), seeking preliminary interest in acquiring these stressed assets.

SBI tries to collect Rs 96,000 loan

The accounts on the list include loans to various borrowers, including well-known groups such as Videocon, Jaypee and companies promoted by Anil Ambani. SBI is hoping to sell these loans to ARCs at a discount, in order to recover some of its money.

The sale of these bad loans is part of SBI’s efforts to clean up its balance sheet and improve its financial health. The bank has been struggling with bad loans for several years, and it is hoping to reduce its GNPA ratio to below 5% by March 2024.

The sale of these bad loans is also a sign of the government’s commitment to addressing the problem of bad loans in the Indian banking system. The government has set up the National Asset Reconstruction Company (NARCL) to take over some of the bad loans from banks, and it is also trying to improve the recovery of bad loans from borrowers through the Insolvency and Bankruptcy Code (IBC).

It remains to be seen how successful SBI will be in selling its bad loans to ARCs. However, the sale is a positive step in the right direction, and it is hoped that it will help to reduce the problem of bad loans in the Indian banking system.

Apart from this, the Government of India has waived off Rs 14 lakh crore bad loans.

India has waived non-performing loans

In the last nine financial years, banks have written off bad loans worth Rs 14.56 lakh crore,” said the central government.

Union Minister of State for Finance Bhagwat Karath, in a written reply to a question in the Lok Sabha on the waiver of bad loans, said that the central government is taking comprehensive measures through the Reserve Bank to recover and reduce bad loans.

As a result, the bad debt which was 8.96 lakh crore on March 31, 2018, has reduced to 4.28 lakh crore as on March 31. Banks have written off bad loans worth Rs 14.56 lakh crore in the nine financial years since 2014-15. Of the total amount, the loan waiver for large industries and services alone is Rs 7.41 lakh crore. According to RBI data, the net discounted loans of private sector banks in the last financial year 2022-23 was Rs 73,803 crore.

As the monetary jurisdiction of debt recovery tribunals has been increased from Rs 10 lakh to Rs 20 lakh to focus on high-value cases, more bad debts have been recovered, he said.

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