Indian Overseas Bank, Another PSB to Write Off Rs41,392 Crore in 8 Years; Recovers Just 17%
Indian Overseas Bank (IOB) is the latest to join other big banks that have written off bad loans worth thousands of crores of rupees and recovered paltry amounts from defaulters. Strangely though, IOB refused to share this information under the Right to Information (RTI) Act and instead asked the applicant to check its annual reports. 
 
Data shared by Pune-based RTI activist Vivek Velankar shows that IOB has written off a massive Rs41,392 crore as technical write-offs in the past eight-year period from FY12-13 to FY19-20. As against these write-offs, the recovery was just 17% or Rs7,253 crore. 
 
 
What is strange is the way IOB has refused to furnish information under the RTI Act to Mr Velankar. It simply asked Mr Velankar, who is also president of the Sajag Nagrik Manch, to check IOB's annual reports for finding out the write-offs and recoveries of bad loans.
 
More shocking is the Bank's response, or the lack of it, citing peculiar reasons. IOB told Mr Velankar that under RTI, "Information sought for is not readily available and culling out of such information will disproportionately divert the resources of bank and will affect normal working of the bank. Under the RTI Act, central public information officer (CPIO) can provide only that information, which is available and existing with public authority."
 
 
An aggrieved Mr Velankar asks, "When other banks have information about write-offs and recovery of bad loans, how come IOB has no such details in its records? If for a moment, we even agree with its position, then how is IOBs recovery department functioning if there is no record of loan write-offs?"
 
“The information about loans written off and the recovered amount is part of the bank’s mandatory reporting to the Reserve Bank of India (RBI). This data is also used by the bank’s own staff for recovery. So how can it deny the information and say it will affect normal working of the bank?” Mr Velankar asks.
 
Further citing the COVID-19 pandemic situation, the Chennai-based public sector bank (PSB) took its own time of 50 days to reply to the RTI filed by Mr Velankar. As per the RTI Act, the PIO (public information officer) is mandated to reply within 30 days of filing the application.
 
Technically, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. 
 
 This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean-up process. The beneficiaries are invariably some of our biggest industrialist defaulters. 
 
In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. However, as State Bank of India (SBI), Bank of Baroda (BoB), Bank of Maharashtra (BoM), Union Bank of India (UBI), IDBI Bank and Punjab National Bank (PNB) have shown, most of the times, there is no recovery or negligible recovery for the amounts written off.    
 
As in the cases of the State Bank of India (SBI), Bank of Baroda (BoB), Bank of Maharashtra (BoM),  Union Bank of India (UBI), IDBI Bank and PNB that have been reported by Moneylife, this is one more example of massive ‘technical’ write-off with minuscule recoveries, leading to frequent recapitalisation of banks with the taxpayers’ money. Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts. 
 
As reported by Moneylife, PNB wrote off a massive Rs44,565.59 crore as technical write-offs in a four-year period from FY16-17 to FY19-20 . As against these write-offs, the recovery was just Rs12,027.97 crore. If one were to look at large loans of Rs100 crore and above, the technical write-off in this segment alone is Rs31,966 crore, while the recovery from big defaulters is only 22% at Rs7027.94 crore.  
 
Similarly, IDBI Bank, which became a private sector lender a few months ago, wrote off total bad loans worth Rs45,693 crore but could recover just 8% of it after spending more than Rs29 crore during the past seven years. (Read: IDBI Bank Wrote Off Rs45,693 Crore Bad Loans and Recovered Just 8% in 7 Years)
 
Union Bank of India too wrote off bad debt worth Rs26,072.81 crore between FY11-12 and FY19-20 (this information pertains only to loans of over Rs100 crore). 
 
Bank of Maharashtra has written off bad loans of over Rs7,402 crore in the past, while recovering a paltry 4% in over eight years through recovery efforts. The lender wrote off bad debts worth Rs7,402 crore during four out of the past eight years, while recovering just Rs253.55 crore. (Read: Bank of Maharashtra Writes Off Rs7,100 Crore Bad Loans; Recovers Just 4% in 8 Years)
 
From 2012 to 2020, BoB had technically written off 97 accounts with bad debts of Rs100 crore and more. These add up to Rs21,476.89 crore over eight years, while recovery in that same period is just 4.91% or Rs1,056.53 crore. (Read: Bank of Baroda Follows SBI, Writes Off Rs21,474 Crore in Bad Loans; Recovers only Rs1,057 Crore in Past 8 Years)
 
Similarly, from FY12-13 to FY19-20, SBI, the country's largest lender, wrote off bad loans worth Rs1.23 lakh crore of bad debt but recovered a paltry Rs8,969 crore. (Read: SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!)
 
Comments
Ramesh Popat
11 months ago
covid+hiv+ 3rd stage cancer = psu banks?!
rajoluramam
11 months ago
Many other public sector banks including S B I will follow soon. These banks distributed money to high society, so called industrialists, with out any prudential norms. The monitoring system of the banks is a total failure. We have to blame the bank itself, RBI for its poor supervisory role, telephone calls from New Delhi. What is the position of banks in other countries? We are in dark on this issue.
vram2311
11 months ago
who are the defaulters
Newme
11 months ago
Please stop publishing these facts. It only increases the blood pressure of common man.
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