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Published: December 6, 2023
Updated: December 6, 2023

Finance Ministry Discloses: Banks Write Off Rs 10.5 Trillion, Recover Rs 7.1 Trillion in 5 Years

In a significant revelation, the banking sector in India has undergone substantial financial shifts in the past five years. Minister of State for Finance, Bhagwat Karad, recently disclosed striking figures, showcasing a complex interplay between massive write-offs and commendable recoveries within scheduled commercial banks (SCBs).

Write-Offs Unveiled:

A staggering Rs 10.57 lakh crore has been written off by SCBs during the last five financial years, with a substantial Rs 5.52 lakh crore attributed to loans associated with large industries. This unveils the challenges faced by the banking sector, prompting a closer examination of their lending practices and risk management.

Recovery Triumphs:

Despite the daunting write-off figures, there's a positive aspect to the narrative. SCBs have effectively recovered Rs 7.15 lakh crore of non-performing assets (NPAs) during the same period. This achievement underscores the resilience of recovery mechanisms and proactive steps taken by financial institutions to address the issue of bad loans.

Industry-Specific Write-Offs:

In response to a separate query, Minister Karad provided insight into the granularity of write- offs. An aggregate amount of Rs 5.52 lakh crore has been written off concerning loans related to large industries and services during the last five financial years (FYs), including Rs 93,874 crore marked off due to fraud.

Evaluation and Impact:

Karad emphasized that banks regularly evaluate the impact of write-offs as part of their efforts to clean up balance sheets, avail tax benefits, and optimize capital. Importantly, the minister clarified that write-offs do not equate to a waiver of liabilities for borrowers, who remain obligated to repay. This sheds light on the strategic considerations made by banks in alignment with regulatory guidelines and internal policies.

The disclosed figures paint a comprehensive picture of the challenges and triumphs within the Indian banking sector. As banks navigate the complexities of NPAs, write-offs, and recoveries, their strategies reflect a commitment to financial stability and adherence to established guidelines. The pursuit of recovery actions signifies an ongoing effort to mitigate risks and uphold the financial health of the banking industry.