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Over the past 11 financial years, banks in India have written off loans totaling nearly INR 9.75 lakh crore, with the highest write-off recorded in FY20 at INR 1.59 lakh crore. The figures have gradually decreased, reaching INR 47,568 crore in FY25. While these write-offs follow RBI guidelines and bank board approvals, they do not absolve borrowers of their liabilities. Recovery efforts continue on these accounts through multiple legal and recovery mechanisms, and banks remain active in pursuing repayment from borrowers despite the write-offs.
Banks in India have written off loans amounting to nearly INR 9.75 lakh crore over the last 11 financial years, the Minister of State for Finance, Pankaj Chaudhary, informed the Lok Sabha earlier this week. Advertisement
The write-offs peaked in FY20 at INR 1.59 lakh crore but have gradually declined to INR 47,568 crore in FY25. In previous years, banks wrote off INR 31,723 crore in FY15, INR 40,416 crore in FY16, INR 68,308 crore in FY17, and INR 99,132 crore in FY18. During FY18-19, the write-off again crossed INR 1 lakh crore, reaching INR 1.59 lakh crore.
The Finance Minister explained that banks write off non-performing assets (NPAs) following RBI guidelines, including accounts that are fully provisioned after four years. He clarified that such write-offs do not waive the borrowers liabilities, meaning borrowers remain responsible for repayment. Banks continue to take necessary recovery actions on these accounts despite the write-offs.
Recovery of written-off loans remains an ongoing process. Banks actively pursue repayment using various mechanisms, including legal and recovery actions, to recover amounts from borrowers. The government and banking institutions have maintained that the write-off is an accounting measure and does not absolve borrowers of their obligations.
Source PTI
FAQ
Q1: How much have banks in India written off in loans over the last 11 years?
A1: Banks have written off loans totaling nearly INR 9.75 lakh crore over the past 11 financial years, according to the Minister of State for Finance, Pankaj Chaudhary.
Q2: When was the highest loan write-off recorded?
A2: The highest write-off occurred in FY20, when banks wrote off INR 1.59 lakh crore. The write-offs have gradually declined in subsequent years, reaching INR 47,568 crore in FY25.
Q3: Does a write-off mean the borrower is no longer liable?
A3: No. A loan write-off is an accounting measure and does not absolve borrowers of their repayment obligations. Borrowers are still legally responsible, and banks can continue recovery actions even after the account is written off.
Q4: Why do banks write off loans?
A4: Banks follow RBI guidelines and internal board approvals when writing off loans. Typically, this applies to non-performing assets (NPAs) that are fully provisioned after four years, allowing banks to clean up their balance sheets while continuing recovery efforts.
Q5: How do banks recover written-off loans?
A5: Recovery is an ongoing process. Banks actively pursue repayment through legal actions, debt recovery tribunals, and other recovery mechanisms. The government emphasizes that write-offs are not forgiveness but an accounting process to maintain financial clarity.
Q6: How have write-offs trended over the years?
A6: Write-offs peaked in FY20 and have generally declined since. Earlier years saw amounts like INR 31,723 crore in FY15, INR 40,416 crore in FY16, and INR 68,308 crore in FY17, indicating fluctuations based on NPA levels and banking provisions.
Q7: What is the significance of these write-offs for banks and the economy?
A7: Loan write-offs help banks clean their books of non-performing assets, maintain financial health, and comply with regulatory norms. At the same time, ongoing recovery efforts ensure that borrowers remain accountable, protecting the banking system's overall stability.
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