During the last five years, banks have written-off loans �farm, retail and corporate -- amounting to over Rs 60,000 crore to clean up their balance sheet.

According to data culled out from Reserve Bank of India [Get Quote] reports, public sector banks, which account for over 70 per cent of banking assets in India, wrote-off bad assets of around to Rs 48,000 crore (Rs 480 billion), while private banks took a hit of Rs 10,000 crore (Rs 100 billion).

Besides write-offs, banks and financial institutions have used the debt restructuring mechanism to deal with stressed assets. The CDR mechanism, that was put in place in 2002-03, has restructured loans worth Rs 78,609 crore (Rs 786.09 billion) till October 2006. The major benefit of the revamp has reached to corporates from sectors like steel, power, textiles sectors, helping many turn the corner.

Banks have worked on improving (cleaning) balance sheet to provide improved look of books. This was done to meet stringent regulatory norms as well as get better valuation when raising capital and funds from the market, Indian Bank's [Get Quote] Association deputy chief executive officer K Unnikrishnan said.

The ambit of write-off covers sector ranging from steel to power, refinery, retail, small scale industry as well as agricultural loans. Bankers said, cases where the recovery prospects were bleak typically see the amount written-off.

This exercise has partly meant carving out portion of profits for provisions of such NPA accounts. However, this does not mean borrowers were freed from the obligation of paying dues. Any future repayment by borrowers who had failed to pay installments on time would help banks improve their bottomline, a banking analyst with foreign broking house said.

Unnikrishnan said, the extent of write-off has been large in the past. "But with better loan appraisal, improved risk management systems and proactive account monitoring, the extent of write-offs could be limited in the future," he added.