New Delhi: Public Sector Banks (PSBs) have written off bad loans amounting to approximately Rs 5.82 lakh crore over the last five financial years, Parliament was informed on Tuesday by Minister of State for Finance Pankaj Chaudhary. Despite these write-offs, banks have successfully recovered around Rs 1.65 lakh crore during the same period.
Loan Write-Off Trends Over Five Years
According to the written reply submitted to the Rajya Sabha, the highest loan write-off occurred in the financial year 2020-21, with Rs 1.33 lakh crore being written off. This figure slightly decreased to Rs 1.16 lakh crore in 2021-22 and marginally rose to Rs 1.27 lakh crore in 2022-23. The write-off amount further declined to Rs 1.15 lakh crore in 2023-24 and stood at Rs 91,260 crore in the current fiscal year 2024-25.
Recovery Efforts and Ongoing Pursuit
Minister Chaudhary emphasized that despite the large-scale write-offs, recovery efforts remain robust. PSBs have recovered about 28 percent of the total written-off amount in the past five years. Recovery actions continue through multiple mechanisms including civil suits, Debts Recovery Tribunals, and proceedings under the Insolvency and Bankruptcy Code (IBC) at the National Company Law Tribunal (NCLT).
He clarified that writing off a loan does not absolve borrowers of their repayment liabilities. “The write-off does not result in waiver of liabilities of borrowers and therefore, it does not benefit the borrower. Borrowers continue to be liable for repayment, and banks continue to pursue recovery actions initiated in these accounts,” Chaudhary said.
Regulatory Framework Governing Write-Offs
Loan write-offs are carried out following guidelines from the Reserve Bank of India (RBI) and are approved by banks’ boards. Typically, loans are written off after full provisioning is made and four years have elapsed since the loan became non-performing.
Other Financial Highlights
In the same session, Chaudhary also highlighted that more than Rs 21.68 lakh crore has been disbursed under the Pradhan Mantri Mudra Yojana (PMMY) in the last five years, showcasing the government’s push towards financial inclusion and support for micro, small, and medium enterprises.
Additionally, according to provisional RBI data for 2024-25, Scheduled Commercial Banks have recovered Rs 32,466 crore through actions initiated under the SARFAESI Act, based on 2,15,709 cases.
