Scheduled commercial banks in the country have written off Rs 20,261 crore in bad loans linked to micro and small enterprises (MSEs) in industry and services sectors in the financial year 2023-24, down from Rs 28,392 crore written off in FY23.
According to the data shared by the Minister of State in the Ministry of Finance Pankaj Chaudhary in a written reply to a question in the Rajya Sabha on Tuesday, the five-year data showed Rs 20,055 crore MSE loans by scheduled commercial banks written off in FY20 in comparison to Rs 15,661 crore in FY21 and Rs 24,239 crore in FY22.
Overall, Rs 1,08,608 crore MSE loans were written off by scheduled commercial banks in the last five financial years including Rs 43,789 crore to industrial MSEs and Rs 64,819 to services MSEs.
In FY24, Rs 8,194 crore loans to MSEs in the industry sector and Rs 12,067 crore loans to MSEs in the services sector were written off by scheduled commercial banks.
Among public and private sector banks, public sector banks (PSBs) had the higher share of MSE loans (in industry and services sectors) written off. Between FY20 and FY24, Rs 73,358 MSE loans were written off by PSBs in comparison to Rs 32,098 crore MSE loans written off by private banks during the period.
Foreign banks, on the other hand, had written off Rs 1,013 crore MSE loans from FY20 till FY24.
Year-wise also PSBs had written off more MSE loans. In FY24, Rs 12,853 crore loans were written off by public lenders in comparison to Rs 6,721 crore loans written off by private banks.
Similarly, Rs 16,859 crore MSE loans were written off by PSBs vis-a-vis Rs 10,743 crore MSE loans by private banks in FY23.
Lenders write off a loan when it is unlikely to be collected and removes it from their balance sheet as an asset while a waive-off is when lenders forgive or cancel a portion or all of a borrower’s outstanding debt.
The finance minister Nirmala Sitharaman in this year’s full budget had announced that MSMEs loan accounts, which are under stress or Special Mention Account (SMA) category, will be provided credit support through a guarantee from a government-promoted fund. This was aimed at helping stressed MSMEs continue their business operations and avoid getting into the NPA category.
