Indian Banks Write Off ₹9.90 Lakh Crore in Loans Over Five Years Amid Declining NPAs

Banks in India have written off loans totaling ₹9.90 lakh crore in the past five years, Parliament was informed. The highest write-off occurred in 2019-20 at ₹2.34 lakh crore. Despite the write-offs, gross non-performing assets (NPAs) of Scheduled Commercial Banks (SCBs) are on a decline.

Banks in India have written off loans worth ₹9.90 lakh crore over the last five financial years, Parliament was informed on Tuesday. During FY 2023-24, the amount written off was ₹1.70 lakh crore, compared to ₹2.08 lakh crore in the previous fiscal year, according to Minister of State for Finance, Pankaj Chaudhary.

The highest loan write-off in recent years was ₹2.34 lakh crore during FY 2019-20, which decreased to ₹2.02 lakh crore in the subsequent year and to ₹1.74 lakh crore in FY 2021-22. The Reserve Bank of India (RBI) guidelines necessitate banks to clean up their balance sheets by writing off NPAs that have been fully provisioned for four years.

Despite these write-offs, borrowers are still liable for repayments, and banks continue recovery actions. Over a five-year period, recoveries amounted to ₹1.84 lakh crore, just 18% of the total write-offs. Concurrently, gross NPAs in SCBs have reduced progressively, standing at ₹4,80,687 crore in March 2024. The liquidity coverage ratio of Indian banks remains robust, exceeding regulatory requirements, highlighting resilience amidst global financial pressures.