Public Sector Banks Write Off Rs 6.15 Lakh Crore In Loans Over 5 Years

Public sector banks wrote off loans worth Rs 6.15 lakh crore in the last five financial years and the current fiscal year up to September 30, 2025, according to data shared by the Reserve Bank of India. 

On their part, despite the magnitude of write-offs, the Centre has not infused capital into PSBs since FY 2022-23, citing improved financial performance and stronger capital positions.

The cumulative amount written off peaked at Rs 1.33 lakh crore for the financial year 2020-21, before coming down to Rs 1.16 lakh crore in 2021-22 and rising again to Rs 1.27 lakh crore in 2022-23.

PSBs have recovered only Rs 1.65 lakh crore from written-off loans in the last five years against the total amount written off.

With no capital support from the government in recent years, PSBs have been increasingly raising capital from the market to meet their requirements. The state-run banks mobilised Rs 1.79 lakh crore through equity and bond issuances between April 2022 and September 2025. The government said PSBs are now depending on market financing and internal accruals as their profitability has increased.

According to the State Finance Minister, Pankaj Chaudhary, loan write-offs are done after banks make full provisioning for NPAs, generally after four years, as per RBI norms and board-approved policies. A write-off does not amount to a loan waiver, the minister explained, and borrowers remain liable to repay their dues.

Banks continue the recovery efforts through various mechanisms, including civil courts, Debts Recovery Tribunals (DRTs), action under the SARFAESI Act, and insolvency proceedings before the National Company Law Tribunal (NCLT). 

Recoveries from written-off accounts are recorded as income when realised. Provisioning is already done, and there is no fresh cash outflow due to write-offs, the government said, ruling out any impact on banks' liquidity. Cleaning balance sheets, availing tax benefits, optimising capital and improving investor sentiments are some of the other benefits of write-offs, it added.