Banks' Rs 9.75 Lakh Crore Write-Off Over a Decade: Implications and Recovery Efforts

In the past 11 financial years, Indian banks have written off loans totaling a staggering Rs 9.75 lakh crore, according to Minister of State for Finance, Pankaj Chaudhary. The peak write-off year was FY20, with a massive Rs 1.59 lakh crore, though this amount has seen a declining trend, reaching Rs 47,568 crore forecasted for FY25.

These write-offs, conducted as per Reserve Bank of India guidelines, typically occur when full provisioning is completed after four years, ensuring that borrowers’ liabilities remain. Consequently, borrowers are still mandated to repay their debts, and banks continue to press for loan recoveries through various mechanisms.

Chaudhary emphasized that loan write-offs do not equate to waivers for borrowers as banks maintain vigorous recovery processes. The pursuit of these repayments is continuous, reflecting banks' ongoing commitment to mitigating losses and ensuring financial discipline.