Indian Commercial Banks Write Off ₹12.3 Lakh Crore in Loans
According to government data presented in Parliament, Indian commercial banks have written off a staggering ₹12.3 lakh crore in loans between the financial years 2014-15 and 2023-24. Of this amount, public sector banks accounted for ₹6.5 lakh crore in write-offs during the last five years (FY20-24), as reported by a Tol report on December 16.
The write-offs peaked at ₹2.4 lakh crore in FY19, following an asset quality review. In FY24, the write-offs decreased to ₹1.7 lakh crore, which represents 1% of the total outstanding bank credit. Notably, public sector banks maintain a 51% share of new loans, down from 54% in FY23.
As of September 30, 2024, gross non-performing assets (NPAs) for public sector banks stood at ₹3,16,331 crore, which is 3.01% of outstanding loans. For private sector banks, NPAs amounted to ₹1,34,339 crore, or 1.86% of outstanding loans. The State Bank of India (SBI) alone wrote off ₹2 lakh crore during this ten-year period, while Punjab National Bank (PNB) recorded write-offs of ₹94,702 crore. In the first half of the current fiscal year, public sector banks collectively wrote off ₹42,000 crore.
Minister of State for Finance Pankaj Chaudhary clarified the write-off process, stating, “Banks write off NPAs in respect of which full provisioning has been made on completion of four years, according to RBI guidelines and policy approved by banks’ boards. Such write-off does not result in waiver of liabilities of borrowers and therefore, it does not benefit the borrower, and banks continue to pursue recovery actions initiated in these accounts.”
Recovery methods utilized by banks include legal action, debt recovery tribunals, and negotiated settlements. Despite the substantial write-offs, public sector banks reported record profits of ₹1.41 lakh crore in FY24, along with ₹85,520 crore in profits during the first half of FY25. Furthermore, their gross NPA ratio improved to 3.12% by September 2024, reflecting a positive trend in managing non-performing assets.
