In the last ten years, Indian banks have written off loans worth about ₹10 lakh crore. This helped the banks reduce their NPAs by 50%. But tellingly, they were able to recover only 13% of the loans written off – a very poor rate that raises many questions, for it is generally not easy to get a loan from a bank, and banks have many options for recovering loans.
Another interesting aspect of the write-offs is that the bulk of the NPAs was from big corporate borrowers, with the NPA rates among smaller borrowers such as micro-enterprises being much lower. So, why do banks write off big-ticket loans? Why is the recovery rate so poor? And how does the combination of massive write-offs and poor recovery rate affect tax payers?
Guest: Vivek Kaul, business columnist and author of the Easy Money trilogy.
Host: G. Sampath, Social Affairs editor, The Hindu.
Edited by Sharmada Venkatasubramanian.
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