Banks Write Off Rs 12.3 Lakh Crore NPA Loans Between FY15 and FY24
Between FY15 and FY24, commercial banks in India wrote off a total of Rs 12.3 lakh crore in loans, with public sector banks accounting for 53% of this amount, or Rs 6.5 lakh crore, in the last five years (FY20-24), according to data provided by the government in response to queries in Parliament.
The peak of loan write-offs occurred in FY19, reaching Rs 2.4 lakh crore, following an asset quality review that started in 2015. Since then, the amount has decreased, with the lowest write-off recorded in FY24 at Rs 1.7 lakh crore, which represented just 1% of the total bank credit of around Rs 165 lakh crore at the time. Public sector banks’ share of the banking sector’s incremental credit has also dropped, from 54% in FY23 to 51% currently.
Pankaj Chaudhary, Minister of State for Finance, shared that as of September 30, 2024, the gross non-performing assets (NPAs) of public sector banks stood at Rs 3.16 lakh crore, while private sector banks had Rs 1.34 lakh crore in NPAs. The NPAs as a percentage of total loans were 3.01% for public sector banks and 1.86% for private sector banks.
State Bank of India (SBI), which handles about a fifth of the country’s banking activities, wrote off Rs 2 lakh crore in loans during this period. Among other nationalized banks, Punjab National Bank wrote off Rs 94,702 crore. In the current fiscal year, up to the end of September, public sector banks have written off Rs 42,000 crore, compared to Rs 6.5 lakh crore in the previous five years.
In response to concerns over loan write-offs, Chaudhary explained that banks write off NPAs after making full provisions for them, as per RBI guidelines and policies approved by the banks’ boards. These write-offs do not mean that borrowers’ liabilities are waived. Banks continue to pursue recovery through various methods, including filing suits in civil courts or debt recovery tribunals, actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.
In a separate statement, the government highlighted that public sector banks achieved their highest-ever net profit of Rs 1.41 lakh crore in FY24, supported by improved asset quality. The gross NPAs ratio for PSBs dropped to 3.12% in September 2024, and in the first half of FY24-25, PSBs reported a net profit of Rs 85,520 crore.
