Banks write off ₹16.35 lakh crore in bad loans in last 10 years; govt says 'does not benefit borrower'

Banks have written off bad loans amounting to ₹16.35 lakh crore over the last ten financial years, the Parliament was informed on Monday.

In a written reply to Lok Sabha, Finance Minister Nirmala Sitharaman said the scheduled commercial banks (SCBs) wrote off ₹2,16,324 crore in non-performing assets (NPAs) in 2022-23 and ₹1,70,270 crore in 2023-24.

The total NPAs written off by banks peaked at ₹2,36,265 crore in 2018-19, while ₹2,34,170 crore was written off in 2019-20, and ₹2,04,272 crore in 2020-21.

The minister said that such write-offs do not mean a waiver of liabilities for borrowers, as banks continue recovery efforts through various mechanisms, including the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, Debt Recovery Tribunals, and proceedings under the Insolvency and Bankruptcy Code (IBC).

"Such write-off does not result in waiver of liabilities of borrowers and therefore, it does not benefit the borrower," Sitharaman said.

Out of the total written-off NPAs, bad loans pertaining to large industries and services amounted to ₹8.26 lakh crore during the period, the data showed. In 2023-24 alone, NPAs written off in this category stood at ₹68,366 crore, while the highest write-off in this segment was ₹1,59,139 crore in 2019-20.

The Reserve Bank of India (RBI) informed that as of December 31, 2024, there were 29 borrower companies classified as NPAs, each with outstanding loans of ₹1,000 crore or more, with a total outstanding amount of ₹61,027 crore.

However, the RBI does not maintain company-wise details of loans written off, and disclosure of borrower-specific credit information is restricted under Section 45E of the RBI Act, 1934, the minister said.

With regard to recovery of overdue amount from borrowers, banks make calls and issue emails/letters to borrowers regarding payment of the overdue amounts, and depending on the default amount, banks may also approach the National Company Law Tribunal for initiation of corporate insolvency resolution process in case of corporate borrowers.

Further, if a loan account is classified as NPA, banks initiate recovery actions, as per their Board-approved policies, which include filing of a suit in civil courts or in debts recovery tribunals, and, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, she added.