Loan Write-Offs: Banks Lost Rs 12 Lakh Crore In 10 Years. Which Bank Lost The Most?
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In FY 2019, banks recorded the highest loan write-offs of Rs 2.4 lakh crore. This followed the Asset Quality Review initiated in 2015
Rs 1.7 lakh crore was written off in FY 2024, representing only 1% of the total bank credit. (Representative/Shutterstock)
Banks wrote off loans worth Rs 12.3 lakh crore between FY 2015 and FY 2024. Of this, 53%, or Rs 6.5 lakh crore, was written off by public sector banks (PSBs) in the last five years alone (FY20-FY24). The government provided this information in response to questions asked in Parliament.
Minister of State for Finance, Pankaj Chaudhary, stated that as of 30 September 2024, the gross non-performing assets (NPAs) of public sector banks stood at Rs 3,16,331 crore, while for private sector banks, it was Rs 1,34,339 crore. The gross NPA ratio for public sector banks was 3.01% of their total outstanding loans, compared to 1.86% for private sector banks.
The highest level of loan write-off was recorded in FY 2019, when banks wrote off loans worth Rs 2.4 lakh crore. This write-off occurred after the initiation of the Asset Quality Review in 2015. However, only Rs 1.7 lakh crore was written off in FY 2024, representing only 1% of the total bank credit (approximately Rs 165 lakh crore).
The State Bank of India (SBI), which holds approximately 20% of the banking sector’s share, has written off loans amounting to Rs 2 lakh crore during this period. Among nationalised banks, Punjab National Bank (PNB) recorded the highest write-off figure, reaching Rs 94,702 crore. In the current financial year, up to September 2024, public sector banks have waived loans worth Rs 42,000 crore. Chaudhary clarified that writing off a loan does not absolve borrowers of their liability.
“Banks write off NPAs after four years as per the guidelines of RBI and the policy of their board. This does not mean that the liability of the borrower ends. Banks continue recovery action,” Chaudhary said.
To recover outstanding loans, banks employ a multi-pronged approach. This includes initiating legal proceedings in civil courts and Debt Recovery Tribunals (DRTs), taking action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, and utilising the Insolvency and Bankruptcy Code, 2016. Additionally, banks may explore alternative methods such as negotiating compromises or facilitating the sale of non-performing assets (NPAs).
The government also announced that public sector banks registered their highest-ever net profit of Rs 1.41 lakh crore in FY24. The gross non-performing assets (NPA) ratio decreased to 3.12% by September 2024. Furthermore, these banks generated a net profit of Rs 85,520 crore in the first half of 2024-25.
