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


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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

BankFY 2024-25 (Rs. crores)(Till 30.09.2024)
Bank of Baroda5,925
Bank of India2,316
Bank of Maharashtra487
Canara Bank5,088
Central Bank of India68
Indian Bank2,928
Indian Overseas Bank621
Punjab and Sind Bank944
Punjab National Bank8,061
State Bank of India8,312
UCO Bank941
Union Bank of India6,344
Total42,035

Loans written off by Public Sector Banks in previous years (in Rs. crores)

BankFY 2020-21FY 2021-22FY 2022-23FY 2023-24
Bank of Baroda14,78217,96717,99810,518
Bank of India8,81510,4438,6949,987
Bank of Maharashtra4,9313,1181,491990
Canara Bank7,6428,2104,47211,827
Central Bank of India5,9921,23610,25810,001
Indian Bank8,3718,3477,9528,734
Indian Overseas Bank4,6183,7693,4127,179
Punjab and Sind Bank711,1342,283796
Punjab National Bank15,87718,31216,57818,317
State Bank of India34,40219,66624,06116,161
UCO Bank9,4103,8512,5751,938
Union Bank of India16,98319,48419,17518,264
Total131,894115,537118,949114,712

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.

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