Banks Write Off Rs 9.9 Lakh Crore in Five Years, Recover Only 18.7%, Check Bank Wise Data

Indian banks have written off a staggering ₹9.9 lakh crore in loans over the last five financial years, helping them reduce non-performing assets (NPAs) significantly. By March 2024, aided by these write-offs, banks reported a 12-year low NPA ratio of 2.8% of total advances, according to Reserve Bank of India (RBI) data. However, the recovery from these write-offs has been dismal. Banks managed to recover only ₹1.85 lakh crore, or 18.7% of the written-off loans, leaving over ₹8 lakh crore unrecovered despite various recovery measures.
Majority of Write-Offs Linked to Wilful Defaulters
Many of these written-off accounts were wilful defaults, with some promoters and directors fleeing the country. As of March 2024, commercial banks reported gross NPAs of ₹4.8 lakh crore. When combined with the written-off loans, the total NPAs exceed ₹12.8 lakh crore. The Finance Ministry highlighted a steady decline in gross NPAs, from 11.18% in March 2018 to 2.67% in June 2024. This reduction is attributed to aggressive provisioning and technical write-offs.
Year-Wise Loan Write-Offs and Recoveries
In the financial year 2023-24, banks recovered ₹46,036 crore from previously written-off loans, slightly higher than ₹45,551 crore recovered in the previous year. The annual loan write-offs during the past five years were:
- ₹1.70 lakh crore in FY24
- ₹2.08 lakh crore in FY23
- ₹1.74 lakh crore in FY22
- ₹2.02 lakh crore in FY21
- ₹2.34 lakh crore in FY20
Bank Wise Loan Write-Off Amount
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Loans written off by Public Sector Banks in 2024-25
Bank | FY 2024-25 (Rs. crores)(Till 30.09.2024) |
---|---|
Bank of Baroda | 5,925 |
Bank of India | 2,316 |
Bank of Maharashtra | 487 |
Canara Bank | 5,088 |
Central Bank of India | 68 |
Indian Bank | 2,928 |
Indian Overseas Bank | 621 |
Punjab and Sind Bank | 944 |
Punjab National Bank | 8,061 |
State Bank of India | 8,312 |
UCO Bank | 941 |
Union Bank of India | 6,344 |
Total | 42,035 |
Loans written off by Public Sector Banks in previous years (in Rs. crores)
Bank | FY 2020-21 | FY 2021-22 | FY 2022-23 | FY 2023-24 |
---|---|---|---|---|
Bank of Baroda | 14,782 | 17,967 | 17,998 | 10,518 |
Bank of India | 8,815 | 10,443 | 8,694 | 9,987 |
Bank of Maharashtra | 4,931 | 3,118 | 1,491 | 990 |
Canara Bank | 7,642 | 8,210 | 4,472 | 11,827 |
Central Bank of India | 5,992 | 1,236 | 10,258 | 10,001 |
Indian Bank | 8,371 | 8,347 | 7,952 | 8,734 |
Indian Overseas Bank | 4,618 | 3,769 | 3,412 | 7,179 |
Punjab and Sind Bank | 71 | 1,134 | 2,283 | 796 |
Punjab National Bank | 15,877 | 18,312 | 16,578 | 18,317 |
State Bank of India | 34,402 | 19,666 | 24,061 | 16,161 |
UCO Bank | 9,410 | 3,851 | 2,575 | 1,938 |
Union Bank of India | 16,983 | 19,484 | 19,175 | 18,264 |
Total | 131,894 | 115,537 | 118,949 | 114,712 |
Government and RBI’s Stand
Minister of State for Finance Pankaj Chaudhary clarified in Parliament that loan write-offs do not waive borrowers’ liabilities. Banks continue to pursue recovery actions even after the loans are written off. “Such write-offs are accounting entries to clean up the balance sheet and improve tax efficiency,” he said. The RBI echoed this view, explaining that write-offs are part of balance sheet management. “Banks retain the right to recover from borrowers. These accounts are transferred to off-balance sheet items and monitored for recovery,” the RBI stated.
Reasons Behind Write-Offs
A loan becomes an NPA when repayments are overdue for more than 90 days. Public sector banks account for 63% of the write-offs. The RBI noted that once an account becomes fully provisioned, banks often resort to technical write-offs to manage their balance sheets. Despite these measures, the recovery process remains lengthy and challenging. The RBI emphasized that recoveries depend on factors like the age of the NPA and the availability of collateral.
Lack of Transparency
Over the years, banks have refrained from revealing the identities of borrowers whose loans were written off, raising questions about accountability. An official from a nationalized bank acknowledged that recovery efforts often span several years, complicating the process.
Conclusion
While loan write-offs have helped banks reduce their NPA ratios and strengthen their balance sheets, the low recovery rate remains a cause for concern. Strengthening recovery mechanisms and ensuring greater transparency in handling default cases could improve outcomes for the banking sector.