Opposition accuse govt of writing off loans of wilful defaulters, burdening banks with NPAs

New Delhi: Opposition members in Rajya Sabha on Wednesday accused the government of writing off crores of rupees owed by wilful defaulters who have fled the country while crushing banks under the burden of non-performing assets.

Participating in the discussion on the Banking Laws (Amendment) Bill, 2024 in the Upper House, Shaktisinh Gohil (Congress) said the government has written off Rs 87,000 crore owed by 50 wilful defaulters till 2024 citing official data.

"People, including Mehul Chokshi and Rishi Agarwal are in the list of those wilful defaulters. The government has written off loans to those people who looted this country and fled abroad. But when poor, small traders and farmers default on loans the government auctions their assets," he said.

Expressing similar views, Saket Gokhale (TMC) said by the government's own admission, consumption is down in the economy and people are not taking loans to buy any new products or to consume something new but they are taking loans to service their existing loans.

"The other side of this problem is that Indian banks are being crushed under the burden of non-performing assets (NPAs). In just the last five years Indian banks have a staggering Rs 10 lakh crore in NPAs," he said.

This is not created by ordinary people, Gokhale said, adding "this is created by a bunch of ten-fifteen people who defrauded the system and left the country".

Taking a dig at the government's approach to solve the 'NPA crisis', he said,"Banks have now been told to write off NPAs....these NPAs are taken off the balance sheets of banks, it does not mean they are repaid. It just means that they are taken off to make the balance sheet look healthy...but this money is still not being recovered."

Countering the Opposition's charge, Arun Singh (BJP) said the loans were given during the UPA regime without proper procedure that led to the NPA crisis of banks.

It was Prime Minister Narendra Modi who in 2015 asked banks to do a real asset quality review and disclose in a transparent manner the doubtful debts or NPAs with a view to resolving the crisis, he added.

After that banks have started working on it through recognition of NPA, resolution, recapitalisation and reforms, Singh said.

If a loan is not being repaid, by classifying it as bad debt in the books it is written off but efforts to recover the money continue. It is written off as there is no surety about the recovery but writing off does not amount to waiver.

By bringing in the Insolvency and Bankruptcy Code in 2016, he said the government has been able to recover 122.81 per cent of fair value of assets. Rs 3.4 lakh crore recovery has been made, Singh said.

Participating in the discussion, KRN Rajeshkumar (DMK) said the additional power given to banks for auditor remuneration may lead to favouritism and payment at higher prices. Raghav Chadha (AAP) pointed out the poor customer service of PSU banks, where even getting a passbook updated is a struggle.