Rs16.35 Lakh Crore Bad Loans Written Off by Banks in Past 10 Years:

 Rs16.35 Lakh Crore Bad Loans Written Off by Banks in Past 10 Years: BY Indian banks

In a startling revelation, the Union government disclosed that scheduled commercial banks (SCBs) in the country have written off bad loans (non-performing assets—NPAs) worth a staggering Rs16.35 lakh crore worth of over the past decade. This information was presented in the Lok Sabha by finance minister (FM) Nirmala Sitharaman in response to a question raised by member of Parliament (MP) Amra Ram.

 

The data presented in the House revealed that the bulk of these write-offs pertained to large industries and services which alone accounted for about Rs9.26 lakh crore of the total NPAs written off during this period. The move to write off these NPAs follows the guidelines issued by the Reserve Bank of India (RBI) which mandate the write-off of bad loans that have undergone full provisioning. after four years.

 

 Breakdown of Write-off

According to the data tabled in the Parliament, the following amounts were written 

 These figures highlight a consistent pattern of massive write-offs, especially in the industrial and services sectors, over the past 10 years.

 

While the government clarified that writing off bad loans does not mean waiving the borrower's liabilities, recovery efforts are ongoing. Banks continue to pursue the recovery of dues through legal mechanisms such as civil courts, debt recovery tribunals (DRTs), and the national company law tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC), the FM says.

 

Ms Sitharaman also pointed out that RBI does not maintain a company-wise list of written-off loans and the disclosure of borrower-specific information is restricted under Section 45E of the RBI Act, 1934. 

 

As of 31 December 2024, 29 corporate entities had outstanding NPAs exceeding Rs1,000 crore each, with the total amount adding up to Rs61,027 crore.

 

Opposition leaders have criticised the Union government for the enormous sum of write-offs, calling it a reflection of poor governance and laxity in holding corporate defaulters accountable. Critics argue that while the government claims to be pursuing recovery, the actual realisation of written-off amounts has been minimal.

 

Experts argue that merely writing off bad loans without effective recovery mechanisms risks encouraging financial indiscipline among borrowers. Strengthening corporate governance and imposing stricter due diligence practices in lending are essential to prevent the recurrence of such colossal NPAs in the future.

 

As the debate continues, questions remain about the efficacy of the government's recovery strategy and the accountability of large corporate defaulters who continue to evade financial responsibility.