Public sector banks (PSBs) in India have written off loans totaling ₹6.15 lakh crore over the past five financial years, according to Reserve Bank of India data. Despite these write-offs, borrowers remain liable to repay their dues.
Key Highlights
- Year-wise Write-Offs:
- FY 2020-21: ₹1.33 lakh crore
- FY 2021-22: ₹1.16 lakh crore
- FY 2022-23: ₹1.27 lakh crore
- Recoveries: PSBs recovered ₹1.65 lakh crore from written-off loans over five years.
- Capital Mobilisation: With no government capital infusion since FY 2022-23, PSBs raised ₹1.79 lakh crore via equity and bonds between April 2022 and September 2025.
- Regulatory Context: Loan write-offs follow RBI norms and board-approved policies, usually after four years of provisioning. A write-off is not a loan waiver, and banks continue recovery through civil courts, DRTs, SARFAESI Act actions, and NCLT proceedings.
- Benefits: Write-offs clean balance sheets, optimize capital, provide tax benefits, and improve investor confidence without affecting bank liquidity.
Summary
Over the last five years, PSBs have written off ₹6.15 lakh crore in loans while continuing recovery efforts. Write-offs, conducted after full provisioning, improve balance sheet health and capital efficiency, with borrowers still liable for repayment.
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