Cap loan write-offs, FinMin tells PSBs

The finance ministry has asked public sector banks (PSBs) to limit the amount of loan write-offs and sought details of recoveries made by them in the six years ending 2011-12 with an aim to improve the finances of state-owned banks.

The finance ministry has asked public sector banks (PSBs) to limit the amount of loan write-offs and sought details of recoveries made by them in the six years ending 2011-12 with an aim to improve the finances of state-owned banks.

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It has also asked the banks to ensure that bad loans does not exceed the cash recovery made during the year.

“In case there is more write off than the recovery made by the bank in a given year, the reasons for the same may also be provided (to the ministry),” the finance ministry said in a recent communication to the heads of all public sector banks.