Page 33 - Banking Finance April 2021

ARTICLE

: Slide on Movement of NPAs and AUCA = page 24, https:/ aggressive claims by a string of high profile government
/sbi.co.in). This instills a greater transparency in the results spokesperson and economic advisors that a 'technical' write-
and data. The figures for SBI for GNPAs without AUCA and off does not stop the recovery process." They infer this on
with AUCA are as under: basis of the following data, reproduced below from the
article:
Closing Levels of Gross NPAs + AUCA (Rs. Details of Accounts Parked in AUCA and

crores) Recovery Made
Mar 18 Mar 19 Mar 20 Jun 20 (Rs. in Crs.)
3,27,653 3,09,755 3,16,684 3,12,175 Financial Amount technically/ Amount
Year prudentially Written Off Recovered
Closing levels of Gross NPAs (Rs. crores) FY 12-13 1345 4

Mar 18 Mar 19 Mar 20 Jun 20 FY 13-14 3248 12
2,23,427 1,72,750 1,49,092 1,29,661 FY 14-15 5630 18
FY 15-16 8461 261
The difference is stark and self explanatory. The first table FY 16-17 13587 308
gives a truer representation of the immensity of NPAs and
how technical write-offs disguise the problem. It is therefore FY 17-18 17548 815
high time that other banks too, if not currently doing, FY 18-19 27225 2215
emulate this example and declare the GNPA with AUCA FY 19-20 46348 5366
figures in their books. This should be made a standard Grand Total 123432 8969
practice as AUCA is after all only a subset of the GNPAs.
(Source: SBI)
While improving the data points as mentioned above,
another associated issue that has as yet not been The conclusion drawn from this table suffers on two grounds
emphasised enough is the aspect of recovery. Recently - (i) not recognising the fact that recovery takes time and
Moneylife, a weekly online personal finance magazine, may take over 3-5 years; (ii) recoveries are usually not in
published a write up under the heading "SBI Writes Off Rs. lump-sum and partial recoveries may be spread across many
1.23 lakh crore of bad debt, recovers paltry Rs. 8,969 crore years.
in 8 years!" (Moneylife -Yogesh Sapkale, 14 July, 2020). The
In view of this, a year wise one-on-one comparison
exclamation mark and the sensational title speaks for itself
misrepresents the position. Thus the possibility that the
and underscores the point that recoveries at 7% over the
figure of recoveries of Rs. 8,935 crores (excluding recoveries
eight year period are insignificant to the magnitude of write
off. The article further avers, "This makes a mockery of the shown against FY 12-15, assuming them to be recoveries of
previous years write-offs) as depicted in the table could
represent recoveries against the write-offs in FY 12-17,
aggregating Rs. 32,271 crores, cannot be ruled out.
Considering the time lag, there may yet have been no or
only paltry recoveries under the write offs for the later years
FY 18-20. Based on this hypothesis, the recovery percentage
improves dramatically to a healthier 28% and affirms the
continued pursuance of recovery efforts despite the write
offs.

The above inferences are, however, mere conjectures based
on inadequate and insufficient data and precise clarity will
be available only when we have access to year wise and
account wise recovery status. Since technical write off/

BANKING FINANCE | APRIL | 2021 | 33