Massive write-offs, low recovery ailing banking sector: Amit Mitra

Principal chief advisor to West Bengal chief minister Amit Mitra said on Thursday that massive write-offs in the last nine years and low recovery is presently ailing the banking sector of the country.

Speaking at a CII banking session here, Mitra said that in the last nine years from 2014-2023, Rs 14.56 lakh crore has been written off from the books of the banks.

During 2021-22, the written-off amount was Rs 1.75 lakh crore, and subsequently Rs 2.09 lakh crore in the succeeding fiscal.

Mitra, also the former finance minister of the West Bengal government, said that union minister of state for finance Bhagwat Karad had informed Parliament that out of the total written-off amount of Rs 14.56 lakh crore, Rs 7.40 lakh crore are for large industry and services segments.

He said, however, the recovery had been low to the tune of Rs 2.04 lakh crore out of Rs 14.56 lakh crore, which means more than Rs 12 lakh crore is yet to be recovered.

According to him, the amount of write-offs in the preceding last nine years (2005-2014) was Rs 2.20 lakh crore.

"Even if this write-off amount of Rs 2.20 lakh crore is indexed to inflation, the increase in subsequent write-offs is very large", he said.

Regarding wilful defaulters, he said that the top 50 in this list owes Rs 87,295 crore to scheduled banks as on March 31, 2023.

Describing wilful defaulters as those people not willing to pay despite having the capacity to pay, Mitra said it is needed to find out why these defaults and write-offs were happening.

"Are the bankers at fault or the present method of assessment? For whose fault is this happening", he asked.

Referring to West Bengal, he said that the total credit deployed in the state in 2022-23 was Rs 4.68 lakh crore. Only for the MSME sector, the total credit deployed was Rs 1.28 lakh crore during 2022-23.

Mitra said 37 jobs are created for every Rs one crore invested in the MSME sector.

"The MSME sector has a massive impact on GDP growth through the multiplier effect. Rs 1.28 lakh crore will translate into Rs 4 lakh crore additional GDP for West Bengal. In the first five months of the current financial year, the MSME sector has received credit worth Rs 87,029 crore," he added.