Public Sector Banks Write Off ₹12 Lakh Crore in Bad Loans Over 10 Years: Government

India’s public sector banks (PSBs) have written off bad loans amounting to ₹12.08 lakh crore from FY16 to FY25. The government clarified that these are not waivers and efforts to recover the dues from defaulting borrowers are still ongoing through legal channels.

₹12 Lakh Crore Loan Write-Offs Over a Decade

Addressing Parliament on July 22, 2025, Minister of State for Finance Pankaj Chaudhary revealed that PSBs wrote off ₹12.08 lakh crore in non-performing assets (NPAs) over the last 10 financial years. This figure is based on Reserve Bank of India (RBI) data and reflects write-offs made to clean up bank balance sheets. The process follows regulatory provisions and involves fully provisioned accounts that remain unrecovered even after four years of default.

Key Banks and Their Write-Off Figures

The top contributors to the total write-offs include State Bank of India with ₹1.14 lakh crore over the last 5 years, followed by Union Bank of India at ₹85,540 crore, and Punjab National Bank at ₹81,243 crore. Canara Bank and Bank of Baroda also had significant write-offs of ₹56,491 crore and ₹70,061 crore, respectively. Many of these defaults emerged from large corporate accounts and prolonged legal disputes.

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Write-Offs Are Not Loan Waivers

The government clarified that write-offs are accounting actions used to reflect a more accurate financial position for banks. This does not eliminate the borrower’s liability. Recovery continues through channels such as Debt Recovery Tribunals (DRTs), Insolvency and Bankruptcy Code (IBC), civil suits and the SARFAESI Act. This ensures ongoing enforcement of repayment obligations, despite the accounting classification of the debt.

Conclusion

The ₹12.08 lakh crore in loan write-offs by PSBs over 10 years signifies a strategic accounting measure, not forgiveness. Borrowers remain liable, and banks continue pursuing recoveries through legal frameworks, ensuring financial accountability and regulatory compliance.

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