Information on loans written-off of major corporates confidential, informs MOS Finance in Lok Sabha

The government failed to disclose writing off of loans of major corporates on the grounds that the information is confidential.

In a reply to a question by Bharatiya Janata Party (BJP) member Sushil Kumar Singh in the Lok Sabha today, Minister of State for Finance Dr Bhagwat Karad, said that details of major corporates whose loans were written-off, is treated as confidential and cannot be disclosed or published, according to Section 45E of the Reserve Bank of India Act, 1934.

Singh had asked if it is a fact that loans worth Rs 1.5 crore were written off by banks in the first nine months of the current financial year. He had also sought the names of major corporates, whose loans were written off during the period and the amount written off.

RBI has informed that under the provisions of section 45E of the Reserve Bank of India Act, 1934, RBI is prohibited from disclosing credit information. Section 45E provides that credit information submitted by a bank shall be treated as confidential and not be published or otherwise disclosed.

Karad stated in his reply that according to Reserve Bank of India’s global operations data, scheduled commercial banks wrote-off loans of Rs 46,382 crore in the first six months of the current financial year, 2021-22.

The Minister’s reply said, “As per Reserve Bank of India (RBI) guidelines and policy approved by bank Boards, non-performing loans, including, inter-alia, those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off. Banks evaluate/consider the impact of write-offs as part of their regular exercise to clean up their balance-sheet, avail of tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their Boards. ‘The borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues. Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available, such as filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, through negotiated settlement/compromise, and through sale of non-performing assets.”