Research & Opinion
Banks Write Off Rs 12.3Lakh Crore in Loans, Equal to India’s Defence Budget; No Accountability for Bankers ??
Indian commercial banks have written off loans worth Rs 12.3 lakh crore between the financial years 2014-15 and 2023-24, according to government data presented in Parliament. A significant portion of these write-offs, Rs 6.5 lakh crore, came from public sector banks (PSBs) over the last five years (FY20-24), as reported.
Write-offs peaked at Rs 2.4 lakh crore in FY19 following an asset quality review and have since declined to Rs 1.7 lakh crore in FY24, which accounts for 1% of total outstanding bank credit. Meanwhile, public sector banks’ share in new loans dropped from 54% in FY23 to 51% in FY24.
As of September 30, 2024, gross non-performing assets (NPAs) stood at:
- Rs 3,16,331 crore for public sector banks (3.01% of outstanding loans).
- Rs 1,34,339 crore for private sector banks (1.86% of outstanding loans).
Among PSBs, the State Bank of India reported the highest loan write-offs of Rs 2 lakh crore over the decade, followed by Punjab National Bank with Rs 94,702 crore. In the first half of FY24 alone, public sector banks wrote off loans worth Rs 42,000 crore.
Minister of State for Finance Pankaj Chaudhary clarified the write-off process, stating that banks write off NPAs after making full provisions for four years, as per RBI guidelines and board-approved policies. He emphasized that write-offs do not waive the borrowers’ liabilities, and recovery efforts—such as legal action, debt recovery tribunals, and negotiated settlements—continue to be pursued.
Despite these write-offs, public sector banks reported record profits of Rs 1.41 lakh crore in FY24 and Rs 85,520 crore in the first half of FY25. The gross NPA ratio for PSBs has also shown improvement, dropping to 3.12% by September 2024.
