The statistics submitted by the finance ministry before Parliament disclosed that government-owned banks wrote off bad debts to the extent of Rs. 25,000 crore in last three years, since 2007.

The figures are huge when compared to the net recoveries of these public sector banks. Some of these write-offs are one time settlements (OTS) that the banks entered with the customers to accept a token amount in lieu of the amount outstanding and close the case.

The government data points out that in 2007, against a recovery of Rs. 9200 crore, these PSBs had written off more than 9,400 crore. The situation was similar in 2008 when against a recovery of Rs. 9,300 crore the banks had written off Rs. 8000 crore. The net recovery in 2009 was Rs.11000 crore while write offs were 7400 crore.

The government's claim that it has managed to bring down the NPA levels from 18 percent in 1997 to 2 % at the end of March 2009 does not seem to be true. Though in the previous year, a part of write offs included agricultural loans , the net NPAs of these state-owned banks at Rs. 44,000 crore at the fiscals end is likely to increase because of banks' exposure to real estate.

Total outstanding advances to the commercial real estate of Indian banks, both public and private, at the end of March 2009 was Rs 91,500 crore as against Rs 63,000 crore till March 2008.

In its quarterly review in October, RBI directed banks to increase the provisioning requirements for NPAs (oct 29) to 70 percent which include floating provisions.