Public sector banks (PSBs) in India have written off non-performing assets (NPAs) worth over Rs 4.48 lakh crore in the last four financial years, according to a statement by Minister of State for Finance Pankaj Chaudhary in the Rajya Sabha. The State Bank of India, the country’s largest public sector bank, leads the list with total write-offs worth Rs 80,197 crore from FY22-25. Other major banks, including Union Bank of India, Punjab National Bank, Bank of Baroda, and Canara Bank, have also written off significant amounts, totaling Rs 4.48 lakh crore among 12 banks.
NPAs refer to debt instruments where the borrower has defaulted on interest or principal repayments, putting the loan at risk of default. The government maintains that loan write-offs are “technical” in nature and carried out in accordance with RBI guidelines after provisioning for four years. Write-offs do not mean waiving the borrower’s obligation, and recovery actions continue through various mechanisms, including the Insolvency and Bankruptcy Code, the SARFAESI Act, Debt Recovery Tribunals, and civil courts.
The government has reported a reduction in gross NPAs from 9.11% to 2.58% from March 2021 to March 2025. However, the government did not provide any update on the recoveries made after the write-offs. The revelation has raised serious questions about the functioning of the public banking system. The write-offs have sparked concerns about the efficiency of the banking system and the potential losses to the exchequer.
The banks that have written off significant amounts include Union Bank of India (Rs 68,557 crore), Punjab National Bank (Rs 65,366 crore), Bank of Baroda (Rs 55,279 crore), and Canara Bank (Rs 47,359 crore). Indian Bank also wrote off Rs 29,949 crore during the same period. The government’s response to the write-offs has been that they are a normal part of the banking process and do not necessarily mean that the loans are uncollectible. However, the lack of transparency on recoveries made after write-offs has raised concerns among experts and lawmakers. The issue highlights the need for greater oversight and accountability in the public banking system to prevent such large-scale write-offs in the future.