Public Sector Banks: Navigating Write-Offs and Recovery
Public Sector Banks in India have written off Rs 5.82 lakh crore in bad loans over the past five years, though they have recovered Rs 1.65 lakh crore, constituting 28% of the total write-off. Despite write-offs being part of financial housekeeping, borrowers remain responsible for repayment.
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In the last five years, India's Public Sector Banks have written off bad loans amounting to an astonishing Rs 5.82 lakh crore. The drive to clean up balance sheets was highlighted in the 2024-25 fiscal period with Rs 91,260 crore in write-offs, Parliament was informed on Tuesday.
While the trend of write-offs peaked at a record Rs 1.33 lakh crore during 2020-21, it marginally decreased to Rs 1.16 lakh crore the following year. Yet, the banks have been resolute in recovery, reclaiming Rs 1.65 lakh crore—28% of total write-offs—demonstrating a robust effort to manage debts.
The write-offs do not imply loan waivers, as borrowers are still liable for repayment. Recovery strategies range from civil suits to actions under the Insolvency and Bankruptcy Code, reflecting a comprehensive approach to tackling non-performing assets, with the substantial disbursals under the Pradhan Mantri Mudra Yojana also playing a pivotal role in financial structuring.
(With inputs from agencies.)
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