Bank loans worth Rs 25 lakh crore were written off during Modi’s 9-year rule – RTI

The information has been obtained from the Reserve Bank of India through Right to Information (RTI) by Sanjay Ezhava, a social activist from Surat city of Gujarat. In this regard, on October 17-18, two media groups, The Free Press Journal and The Blunt Times, broke the news that during the two terms of the NDA government (2014-2023), Rs 10.41 lakh crore was deposited by them through public banks in India. Permission granted to write-off additional loans worth Rs 14.53 lakh crore through scheduled commercial banks. The total sum of these two written off loans comes to a staggering Rs 24.95 lakh crore. The most surprising thing is that no information is coming about this from established national media houses or financial news outlets.

The information, obtained under a Right to Information (RTI) application filed by RTI activist Sanjay Ezhava, has revealed large-scale financial misappropriation. Till now the matter of write-off of Rs 10 to 14 lakh crore was in the public domain, but this revelation makes it clear that during the last nine years under the leadership of Prime Minister Narendra Modi, the BJP government has made a surprise write-off of about Rs 25 lakh crore. The loan given by the borrower has been waived off. This information is very surprising and a round of debates and discussions has started regarding it.

The news of write-off of such a huge amount has shaken the Indian economic landscape, raising important questions and concerns. It would be important to keep in mind here that only statistical information has been included in the RBI disclosure, whereas the names of its defaulters have not been disclosed. Despite this, it is being said to be the largest loan waiver amount so far in the financial history of India.

NDA vs UPA era

The amount that has been written off during the two terms of the NDA under the leadership of Prime Minister Narendra Modi from May 2014 till now is more than the amount written off during the combined tenure of former PM Manmohan Singh’s UPA-1 and UPA-2 (2004-2014). This is about 810% more than the amount written off during the period.

The details of loans waived off during the UPA government compared to the 9 years of the NDA are as follows – Rs 1.58 lakh crore waived off by the UPA government through public banks during its 10 years of rule from 2004 to 2014 and schedule Approval was given to write-off Rs 2.17 lakh crore, i.e. a total of Rs 3.76 lakh crore, through commercial banks.

What makes this comparative study even more surprising is the amount of money written off annually. The UPA government had waived off an average of Rs 37,600 crore annually during its 10-year tenure, while the NDA Government-1 and NDA Government-2 have waived off an average of Rs 2.77 lakh crore annually. This shows how fast the Indian economy and banking system has moved towards collapse.

It is natural that the burden of Rs 25 lakh crore written off would fall largely on common citizens and farmers, as they take less loans compared to the corporate world. Most of the middle class and rural population not only take loans from banks, but also invest most of their savings in banks. The major beneficiaries of this write-off are those capitalists and corporate houses who embezzled money by borrowing huge amounts from banks, diverting the money to off-shore accounts and subsequently leaving the country for safe-havens.

The Reserve Bank of India has set up the Central Repository of Information on Large Credits (CRILC) to collect, store and disseminate data on lenders. As of June 2023, CRILC has reported that 3,973 accounts with loans of more than Rs 5 crore have been written off by scheduled commercial banks. The magnitude of the issue being written off in such a large number of accounts involving huge sums of money is indicative of the magnitude of the issue.

There has also been some recovery in the nine years of NDA rule. Of the Rs 25 lakh crore written off by scheduled commercial banks, only Rs 2.5 lakh crore (10% of the total amount) has been recovered. In such a situation, an important question arises that why has the Indian Government been able to recover only 10% of the loan so far? BJP has got full majority in both its terms, hence it did not have any pressure from corporate houses through regional parties, yet why have its efforts not proved to be effective?

These figures paint a worrying picture – that large-scale wealth has been transferred abroad by industrialists, and government efforts to recover these loans have largely been unsuccessful. In such a situation, the question arises whether the country will have to suffer such a huge loss due to the government’s support? Unless everyone in the country is fully aware and proactive, India will have to live with the compulsion of facing such financial shocks one after the other.

Commenting on The Free Press Journal’s news release on social media platform X, Sandeep Manudhane says:

“How much total debt was written off by the Modi government?

Rs 250,00,00,00,00,000 (Rs 25 lakh crore)

The Free Press Journal reported today:

1) A total of Rs 25 trillion were written off by public sector banks and scheduled commercial banks from 2014 to date.

2) This amount is 810% more than the combined UPA 1+2.

3) Most of the loans written off are of large amounts.

4) Loans worth more than Rs 5 crore waived off in about 4000 accounts.

5) What was the recovery? Only 10 percent i.e. Rs 2.5 trillion.

So keep paying the minimum balance fee as the big fish run away with the loot and the Government of India and the RBI silently watch the show. After all, elections have become quite expensive now.)

Let us get some information about write off here. Debts written off are those which cannot be recovered from the debtor and are called bad debts. Under accounting provisions, businesses place bad debt amounts in the “accounts receivable” category in the balance sheet. A debit entry of the same amount is then entered in the “Allowance for Doubtful Accounts” column to balance the balance sheet. This process is called writing off bad debts.

Banks never prefer to write off bad debts as their loan portfolios are their primary assets and main sources of future revenue. However, debts that are irrecoverable or completely impossible to collect – such debts have an extremely adverse impact on the financial statements of banks and can divert resources from more productive activities.

Write-offs are used by banks to remove loans from their balance sheets and reduce their overall tax liability.

Thus, in conclusion, it can be said that by writing off NPAs on such a large scale in banks, the external image of Indian banks has been improved. The central government has tried to save credit through capital infusion of Rs 2 lakh crore in recent years and merger of banks, and now once again profits are being recorded on the balance sheets of banks, thereby It may seem that the financial condition of banks has become much better than before.

But at the same time, many economic experts are warning that the reason behind this is once again disbursing loans to corporate houses on a large scale and in the event of them refusing to repay the loans after a few years, there will be an even bigger increase in bad debt. Debts) may leave banks in trouble.