Banks write off Rs 16.35 lakh crore bad loans over decade: Centre

Banks have written off non-performing assets (NPAs) worth approximately Rs 16.35 lakh crore over the past 10 financial years, Finance Minister Nirmala Sitharaman informed Parliament on Monday, as per news agency PTI. 

The highest write-off was recorded in the financial year 2018-19 at Rs 2,36,265 crore, while the lowest was in 2014-15 at Rs 58,786 crore. In 2023-24, banks wrote off bad loans worth Rs 1,70,270 crore, which is lower than the Rs 2,16,324 crore written off in the previous year.

In her written response in the Lok Sabha, Sitharaman clarified that writing off bad loans does not mean borrowers are exempt from repayment. Banks still try to recover the money through legal methods such as filing cases in civil courts, approaching Debts Recovery Tribunals, using the SARFAESI Act, or taking the matter to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code.

As of December 31, 2024, scheduled commercial banks had classified 29 borrower companies as NPAs, each with an outstanding loan of Rs 1,000 crore or more, amounting to a total of Rs 61,027 crore, Sitharaman stated.  To recover dues, banks reach out to borrowers through calls, emails, and legal notices. Depending on the default amount, they may also initiate corporate insolvency resolution processes at the NCLT.  

Separately, responding to another query, the finance minister confirmed that the government has decided to constitute the 8th Central Pay Commission (CPC). The financial implications of its recommendations will be determined once they are submitted and approved by the government, she added.

What is a bad loan?

Bad loans are those where borrowers are unable to repay. A loan is classified as a non-performing loan (NPL) if payments are not made for a set period, usually 90 or 180 days.

(WIth inputs from PTI)