In FY 2019, banks waived the highest loan of Rs 2.4 lakh crore. This follows an asset quality review launched in 2015.
1.7 lakh crore was written off in FY 2024, which is only 1% of total bank credit. (Rep/Shutterstock)
Banks waived loans worth Rs 12.3 lakh crore between FY 2015 and FY 2024. Of this, 53%, or Rs 6.5 lakh crore, were written off by public sector banks (PSBs) in the last five years (FY20-FY24) alone. The government provided this information in response to questions asked in Parliament.
Minister of State for Finance Pankaj Chaudhary said that as on September 30, 2024, the gross non-performing assets (NPAs) of public sector banks stood at Rs 3,16,331 crore, while for private sector banks, it was Rs 1,34,339 crore. . The gross NPA ratio for crore public sector banks was 3.01% of their total outstanding loans, compared to 1.86% for private sector banks.
The highest level of loan write-offs was recorded in FY 2019, when banks wrote off loans worth Rs 2.4 lakh crore. This write-off follows the initiation of an asset quality review in 2015. However, only Rs 1.7 lakh crore were written off in FY 2024, which is only 1 percent of total bank credit (around Rs 165 lakh crore).
State Bank of India (SBI), which has about 20% of the banking sector, wrote off loans worth Rs 2 lakh crore during the period. Among nationalized banks, Punjab National Bank (PNB) recorded the highest write-off figure, reaching Rs 94,702 crore. In the current financial year, till September 2024, public sector banks have written off loans worth Rs 42,000 crore. Chowdhury clarified that loan waiver does not waive the borrowers’ liability.
“Banks write off NPAs after four years as per RBI guidelines and their board policy. This does not mean that the borrower’s liability is extinguished. Bank recovery proceedings continue. are being held,” Chaudhary said.
To recover outstanding loans, banks use a multi-pronged approach. This includes initiating legal proceedings in Civil Courts and Debt Recovery Tribunals (DRTs), taking proceedings under the Protection and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, and additionally the Insolvency and Bankruptcy Code. , including the use of 2016. Banks may explore alternative approaches such as compromising or facilitating the sale of negotiated non-performing assets (NPAs).
The government also announced that public sector banks registered their highest ever net profit of Rs 1.41 lakh crore in FY24. The gross non-performing assets (NPA) ratio has come down to 3.12 percent by September 2024. Moreover, these banks earned a net profit of Rs 85,520 crore in the first half of 2024-25.