Indian Banks Write Off ₹16.35 Lakh Crore in Bad Loans Over the Past Decade

Indian banks have written off a staggering ₹16.35 lakh crore in bad loans over the last ten financial years, according to government data presented in Parliament. While these write-offs are in line with regulatory norms, they do not absolve defaulters, and recovery efforts remain a priority. The trend highlights both the challenges and improvements in the country’s banking sector.

Record Loan Write-offs and Recovery Efforts

Government data reveals that FY19 saw the highest-ever loan write-offs at ₹2.36 lakh crore, while FY15 recorded the lowest at ₹58,786 crore. In FY24, banks wrote off ₹1.70 lakh crore, showing a decline from ₹2.16 lakh crore in the previous fiscal.

The Reserve Bank of India (RBI) clarified that banks must fully provision non-performing assets (NPAs) after four years, ensuring financial stability. However, the Finance Ministry stressed that write-offs do not mean a waiver for defaulters, and banks continue pursuing recoveries through legal mechanisms.

As of December 31, 2024, RBI data indicates that 29 large corporate borrowers, each with outstanding dues above ₹1,000 crore, remain classified as NPAs, amounting to ₹61,027 crore. Borrower identities remain undisclosed under Section 45E of the RBI Act, 1934. Recovery efforts are being carried out through civil courts, Debt Recovery Tribunals, the SARFAESI Act, and insolvency proceedings via the National Company Law Tribunal (NCLT).

Public Sector Banks Resurgence

Despite significant write-offs, Public Sector Banks (PSBs) have shown a strong recovery. The RBI’s Report on Trend and Progress of Banking in India 2023-24 noted that gross NPAs fell to a 13-year low of 2.5% by September 2024, down from 2.7% in March. Net NPAs also declined from 0.62% to 0.57%, reflecting better provisioning and improved asset quality.

For PSBs, gross NPAs dropped to 3.12% in September 2024, a remarkable improvement from the 14.58% peak recorded in March 2018. While asset quality has significantly improved, concerns persist over recoveries from large corporate defaulters. The Finance Ministry reaffirmed that banks are actively following up on overdue amounts through legal proceedings and direct negotiations.

Conclusion

Indian banks have taken significant steps to strengthen their financial health by reducing NPAs and improving asset quality. While large-scale loan write-offs remain a concern, active recovery efforts and regulatory measures are ensuring stability in the banking sector.

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