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Public sector banks write off Rs 61 billion as bad debts, SBI worst hit

Twenty-seven public sector banks have written off Rs 61.71 billion as bad debts during the last three years with the State Bank of India topping the list with Rs 10.56 billion.

The total amount which was written off during 1994-95 was Rs 22.67 billion, Rs 17.42 billion in 1995-96 and Rs 21.62 billion in 1996-97.

SBI is followed by the Bank of India with Rs 7.85 billion, the United Commercial Bank with Rs 4.97 billion and the Indian Overseas Bank with Rs 4.57 billion.

SBI topped the list in the first two years and IOB last year. In 1994-95, SBI with Rs 3.64 billion was followed by the Bank of Baroda with Rs 2.70 billion and the Bank of India with Rs 2.60 billion.

In 1995-96, SBI with Rs 3.98 billion was followed by BoI with Rs 3.07 billion and the Canara Bank with Rs 1.69 billion.

The following year, 1996-97, IOB with Rs 3.75 billion was followed by SBI with Rs 2.94 billion and UCO Bank with Rs 2.21 billion.

According to the list prepared by the finance ministry, the lowest debt which was written off in 1996-97 was Rs 9.4 million by the Corporation Bank. The lowest in the previous year was Rs 8.2 million by the Oriental Bank of Commerce and that in 1994-95 was Rs 17 million by the Punjab and Sind Bank.

The introduction of financial sector reforms and revised guidelines have necessitated banks to desist from the practice of taking unrealised income in their books and also to provide against possible loan losses.

According to the criteria prescribed by the Reserve Bank of India, the authority approving the write-off proposal should not have sanctioned the advance in question in his individual capacity. There should not be any laxity in the conduct and post-disbursement supervision of the advances.

The RBI guidelines also stipulate there should not be any act of omission or commission on the part of the staff leading to the debt proving irrecoverable. The banks should expeditiously examine the aspect of staff accountability.

Banks have also been advised that in their attempts to reduce non-performing assets or bad debts through negotiated settlement, they should ensure recovery of the dues to the maximum extent possible at minimum expense.

The RBI has also started taking action to strengthen the system of Debts Recovery Tribunals. The boards of banks normally review the top 100 accounts of each of the three categories of non-performing assets -- substandard, doubtful and loss categories -- to fix staff accountability.

UNI