Banks wrote off Rs 62,000 cr loans of top 100 wilful defaulters as of March 20: RBI tells RTI activist

KOLKATA: Banks have written off almost Rs 62,000 crore of loans of top 100 wilful defaulters as of March 2020, with Jatin Mehta’s Winsome Diamonds & Jewellery topping the list, helping them to show lower non-performing assets.

Data the Reserve Bank of India shared with Right to Information Act activist Biswanath Goswami showed that Mehul Choksi-owned Gitanjali Gems was the top wilful defaulter, accounting for Rs 5,071 crore of non-performing assets (NPA). Banks wrote off Rs 622 crore of the firm’s loans

.Banks wrote off Rs 3,098 crore of loans of Winsome Diamonds, Rs 2,789 crore of basmati rice maker REI Agro, Rs 1,979 crore of chemicals firm Kudos Chemie, Rs 1,927 crore of construction firm Zoom Developers, and Rs 1,875 crore of shipbuilding company ABG Shipyard. Loans written off for Vijay Mallya’s Kingfisher Airlines was Rs 1,314 crore, the data showed.

RBI did not disclose information on overseas borrowers, citing a Supreme Court judgement in 2015.

Write-off does not mean that the loan is waived. This helps banks clean the balance-sheets and avail tax benefits.

Borrowers of written-off loans remain liable for repayment.

Curiously, the central bank had in August last year denied having details of 100 top wilful defaults in response the RTI petition filed by Goswami, who then challenged it to the appellate authority of RBI.

“Our response in compliance to the First Appellate Authority’s order is furnished,” RBI said in its letter to the RTI activist who is also a socio-legal researcher. ET has seen a copy of the letter.

The central bank did not respond to ET’s query on the matter as of press time Thursday.

The latest set of data showed that banks have written off Rs 61,949 crore of loans of the top 100 wilful defaulters as of March 31, 2020 against Rs 58,375 crore write-offs as of March 2019.

Total default by these 100 borrowers is Rs 84,000 crore, a person familiar with the matter said. RBI mandates banks to provide fully against NPAs older than four years and, therefore, allows them to write them off.

Banks wrote off total loans worth Rs 2.38 lakh crore in FY20, which helped their total gross NPA reduce to 8.2% at the end of March 2020 from 9.1% a year back.