PSU Banks Write Off Rs 5.82 Lakh Crore in Bad Loans (FY21–FY25) Amid Ongoing Recovery Efforts

In a recent parliamentary disclosure, Minister of State for Finance Pankaj Chaudhary revealed that Public Sector Banks (PSBs) in India wrote off a staggering ₹5.82 lakh crore in bad loans over the five-year period from FY 2020‑21 to FY 2024‑25, while still actively pursuing recovery. This update is especially significant for competitive exam aspirants, given its relevance to banking sector performance, NPA management, and the broader economic and regulatory landscape.

Loan Write‑Off Trends (FY 2020‑21 to FY 2024‑25)

The year‑wise breakdown of write‑offs is as follows,

• FY 2020‑21: ₹1.33 lakh crore — the highest during this span
• FY 2021‑22: ₹1.16 lakh crore
• FY 2022‑23: ₹1.27 lakh crore
• FY 2023‑24: ₹1.15 lakh crore
• FY 2024‑25: ₹91,260 crore — showing a downward trend by the end of the five‑year period

Recovery Efforts and Progress

• Despite the substantial write‑offs, PSBs managed to recover approximately ₹1.65 lakh crore over the same five‑year timeframe, translating to a recovery rate of around 28% relative to total write‑offs.

These recovery actions are ongoing and include legal and institutional mechanisms such as,

1. Civil court proceedings
2. Debt Recovery Tribunals (DRTs)
3. Insolvency and Bankruptcy Code (IBC) cases at the National Company Law Tribunal (NCLT)

Regulatory Context and Borrower Liability

According to RBI guidelines, banks are permitted to write off loans only after full provisioning is completed and four years have passed since a loan became non‑performing. This process requires approval from the bank’s board.

Importantly, such write‑offs are merely accounting exercises and do not absolve borrowers of their repayment liabilities. Borrowers remain liable, and lending institutions retain the right to recover dues using available legal avenues.