Between 2014-15 and 2023-24, banks have cancelled a whopping ₹16.35 trillion worth of non-performing assets (NPAs)
In the Indian financial landscape, the writing off of loans has emerged as a pressing concern, sparking debates about accountability and credit discipline. This practice, while aimed at revitalising the system, raises questions about the long-term implications.
Over the past decade, from 2014-15 to 2023-24, banks in India collectively wrote off approximately ₹16.35 lakh crore in Non-Performing Assets (NPAs). This staggering figure underscores the scale of stressed assets in the Indian financial system.
A closer look reveals that public sector banks (PSBs) have shouldered a significant portion of this burden. Between 2019-20 and 2023-24, PSBs accounted for about 60% of total NPA write-offs. Prominent among these are the State Bank of India (SBI), which wrote off ₹1.15 lakh crore between 2014-15 and 2023-24, and Punjab National Bank (PNB) with ₹81,000 crore written off during the same period. Other notable contributors include Bank of Baroda, which wrote off ₹70,000 crore between 2020-21 and 2024-25, and Union Bank, which wrote off ₹85,000 crore during the same period.
The writing off of loans does not absolve borrowers of their repayment responsibilities. However, the practice does weaken our banks, limits fresh lending, and questions borrower accountability. When such huge sums are written off, it signals deeper problems and shakes people's trust in the system.
On average, banks in India wrote off ₹1.6 lakh crore in NPAs annually between 2014-15 and 2023-24. This trend is particularly concerning as large industries and services accounted for 56% of the total NPAs written off during this period.
The Reserve Bank of India compiles data on bank-wise, year-wise, and category-wise loans written off in India. This data, along with data on banks and the period from 2014-15 to 2023-24, can be accessed on platforms like Dataful. The writing off of loans also highlights the scale of stressed assets in the Indian financial system, a fact that cannot be overlooked.
In conclusion, while the writing off of loans is a necessary measure in certain situations, it is crucial to address the underlying issues that lead to such write-offs. Strengthening credit discipline, promoting transparency, and fostering a culture of accountability are key to ensuring the stability and growth of India's financial system.
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