Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty has said banks have written off a whopping Rs 1 lakh crore in the past 13 years and criticised the lenders because as much as 95 per cent of these write-offs were for large borrowers.
"During the past 13 years what we see is that banking system as a whole has written-off more than Rs 1 lakh crore in advances," he said, while addressing bankers at an industry conference over the weekend.
He said that over 95 per cent of such write-offs have been observed in the case of big accounts and expressed anguish that public discourse focuses only on the government's agriculture debt waiver scheme of 2008.
"We only talk about the debt waiver of the agricultural borrowers, we don't say big players and of this (Rs 1 lakh crore) 95 per cent are all big borrowers and it has been written off," he said.
The government had announced a waiver of over Rs 60,000 crore in advances to farm sector as a one-time measure in the budget of 2008 following stress in the rural sector.
Notably, allegations of non-deserving borrowers benefitting have been leveled in case of the scheme and was looked into by the apex bank.
In his over hour-long interaction with the bankers, Mr Chakrabarty used hard data to support his observation and blamed complacency on credit appraisal and credit management for the present situation of high non-performing assets and high incidence of loan recasts.
Mr Chakrabarty, who joined the RBI after a long career as a commercial banker, was particularly critical of the system of a "technical write-off" by the lenders, saying he does not understand the system.
In his speech, he also asked the bankers to be economical with restructuring, if not abolish the system in full.