MUMBAI: Commercial banks in India wrote off loans amounting to Rs 12.3 lakh crore between FY15 and FY24, with public sector banks (PSBs) contributing 53% of this total, or Rs 6.5 lakh crore, in the last five years (FY20-24), as per government data provided in response to Parliamentary questions.

The highest loan write-offs occurred in FY19, reaching Rs 2.4 lakh crore, following an asset quality review that began in 2015. However, the write-offs significantly dropped to Rs 1.7 lakh crore in FY24, representing just 1% of the total bank credit, which stood at approximately Rs 165 lakh crore at the time. The share of public sector banks in the banking sector’s incremental credit has declined to 51% in FY24 from 54% in FY23.

Pankaj Chaudhary, Minister of State for Finance, shared the latest figures showing gross NPAs (non-performing assets) as of September 30, 2024. Public sector banks reported Rs 3.16 lakh crore in NPAs, while private sector banks had Rs 1.34 lakh crore. The NPA ratio was 3.01% for public sector banks and 1.86% for private banks.

State Bank of India (SBI), which handles around 20% of India’s banking activity, wrote off Rs 2 lakh crore in this period. Among nationalized banks, Punjab National Bank wrote off Rs 94,702 crore in loans. For the fiscal year 2024-25 (up to September), public sector banks have written off Rs 42,000 crore, compared to the Rs 6.5 lakh crore written off in the previous five years.

In response to questions about loan write-offs, Chaudhary clarified that banks follow RBI guidelines, which state that NPAs are written off after full provisioning is made for accounts that have been non-performing for over four years. These write-offs do not benefit borrowers as liabilities remain, and banks continue their recovery actions through various methods. These include filing cases in civil courts, debt recovery tribunals, and the National Company Law Tribunal, or through negotiated settlements and sales of NPAs.

In a separate statement, the government highlighted that public sector banks recorded their highest-ever net profit of Rs 1.41 lakh crore in FY24, supported by improved asset quality. The gross NPA ratio declined to 3.12% by September 2024. Additionally, PSBs reported a net profit of Rs 85,520 crore in the first half of FY2024-25.