Bank of Ma­ha­rash­tra writes off Rs70b owed by loan de­fault­ers

The Pak Banker - - FRONT PAGE - MUMBAI -APP

Ac­cord­ing to in­for­ma­tion pro­vided by the bank - ac­cessed by The In­dian Ex­press - from 2011 to 2020, it has writ­ten off a to­tal of Rs 7,400 crore. The ma­jor write­offs have come in the last four years when Rs 7,000 crore has been writ­ten off.

In a state­ment, BoM said the amount has been tech­ni­cally writ­ten off, which means it will be re­cov­ered at a later stage. (File)

The Bank of Ma­ha­rash­tra, a public sec­tor bank, has "tech­ni­cally writ­ten off" a stag­ger­ing over Rs 7,000 crore owed by loan de­fault­ers in the last four years. The bank has said that it would re­cover the amount at a later stage and that it has not been waived per­ma­nently.

Ac­tivist and bank share­holder Vivek Ve­lenkar said that in­for­ma­tion re­gard­ing BoM "writ­ing off" Rs 7,000 crore of de­fault­ers' money has ap­par­ently sur­faced for the first time. "I had sought in­for­ma­tion re­gard­ing the amount writ­ten off by the bank in the last four years. The bank has given me a writ­ten re­ply stat­ing that Rs 7,000 crore de­fault­ers' money has been tech­ni­cally writ­ten off," he said.

Ac­cord­ing to in­for­ma­tion pro­vided by the bank - ac­cessed by The In­dian Ex­press - from 2011 to 2020, it has writ­ten off a to­tal of Rs 7,400 crore. The ma­jor write-offs have come in the last four years when Rs 7,000 crore has been writ­ten off.

Ve­lenkar said the in­for­ma­tion was pro­vided dur­ing the on­line an­nual share­hold­ers meet­ing held on Tues­day. "The an­nual re­port of the bank never men­tioned the tech­ni­cally writ­ten-off amount. This prompted me to seek a re­ply from the bank," he claimed. "…it told me that Rs 7,000 crore is of those who have de­faulted over Rs 100 crore," he said.

"I had sought to know from the bank about de­fault­ers who owe more than Rs 100 crore to the bank. The bank re­fused to pro­vide the in­for­ma­tion. It has writ­ten to me that such in­for­ma­tion can­not be dis­closed as it is of confidenti­al na­ture," Ve­lenkar said.

Stat­ing that the State Bank of In­dia has pro­vided him names of de­fault­ers above Rs 100 crore, Ve­lenkar said, "Both are public sec­tor banks. How can there be two dif­fer­ent rules for banks in the same sec­tor? The share­hold­ers have a right to know who these de­fault­ers are. These are not small de­fault­ers…"

In a state­ment, BoM said the amount has been tech­ni­cally writ­ten off, which means it will be re­cov­ered at a later stage.

"Tech­ni­cal write-off is only ad­just­ing the pro­vi­sions in the bank book at head of­fice level, while the bal­ance with the bank branches will con­tinue for re­cov­ery. As these ac­counts are at dif­fer­ent stages of re­cov­ery and le­gal re­course, bank is await­ing res­o­lu­tion and de­ci­sion. The bank is ex­pect­ing re­cov­ery in tech­ni­cal write-off ac­counts in fu­ture," the bank said in an of­fi­cial state­ment.

As for Ve­lenkar's con­tention that BoM should make public names of de­fault­ers with over Rs 100 crore, bank of­fi­cials said this in­for­ma­tion comes un­der the confidenti­al clause and there­fore can­not be shared. "As for Ve­lenkar's claim that SBI has shared the in­for­ma­tion, that is a claim and we can­not com­ment on it," of­fi­cials said, adding that the bank was de­ter­mined to re­cover the amount and was not pro­tect­ing any­one.

Bank­ing ex­pert Sadashiv Khen­gre said banks re­sort to "tech­ni­cal write-offs" in a bid to show less non-per­form­ing as­sets (NPAs) and show the bal­ancesheet as clean. "The ' tech­ni­cally writ­ten off' amount is deleted by the bank from the bal­ance.

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