Public Sector Banks Write Off Over ₹12 Lakh Crore In last 9 Years

In a significant financial disclosure, the Ministry of Finance recently informed the Rajya Sabha that Public Sector Banks (PSBs) have written off more than ₹12 lakh crore in non-performing assets (NPAs) between FY2016 and FY2025. Despite the massive write-offs, efforts to recover the loans continue under various legal mechanisms. Simultaneously, a large-scale recruitment drive for 48,570 positions is in progress across PSBs, marking an important development in the banking sector. This development holds relevance for competitive exams under economy, banking, and governance sections.

Background: Why Banks Write Off Loans

As per RBI guidelines, banks are allowed to write off NPAs after four years if full provisioning has been made. However, write-offs do not waive off borrower liabilities; banks continue to pursue recovery through legal channels such as,

• Debt Recovery Tribunals (DRT)
• SARFAESI Act
• National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code (IBC)
• Between FY16 and FY25, the total amount written off by PSBs reached ₹12,08,828 crore. Notably, ₹5.82 lakh crore was written off between FY21 and FY25 alone.

Trends in Write-offs

Out of 12 PSBs, 10 banks witnessed a decline in write-offs over the last five years. However, major players like the State Bank of India (SBI) and Canara Bank saw an increase, particularly in FY25. This divergence shows a mixed trend in asset quality management across PSBs.

Recovery & Legal Action

Recovery from these written-off accounts is ongoing. The Ministry highlighted that,

• 1,629 unique borrowers (loan amount over ₹1.62 lakh crore) were declared wilful defaulters as of March 31, 2025.
• Under PMLA and FEOA, assets worth over ₹15,000 crore and ₹750 crore, respectively, have been confiscated.
• Over ₹25,000 crore has been restituted to victim banks in bank fraud cases.
• Nine fugitives have been declared Fugitive Economic Offenders, and nine have been convicted under PMLA.

Employment and Recruitment in PSBs

Employment data shows that as of March 31, 2025,

• 96% of staffing requirements in PSBs are fulfilled.
• From FY20 to FY25, 1.48 lakh employees were recruited.
• For FY25–26, recruitment of 48,570 employees is underway.

Attrition due to retirement, unplanned exits, and superannuation contributes to staffing gaps.