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RTI: Banks Wrote Off ₹16.61 Lakh Cr In Loans During NDA Rule

Did you Know? A bank can write off a loan amount that is considered completely unrecoverable. Well, this means they believe there is no chance of getting the money back from the borrower, and all possible recovery efforts have been exhausted. The highest write-off amount by an Indian Bank in a single year was around ₹2.4 lakh crore in FY19

But surprisingly, 16.6 lakh crore worth of loans have been written off by the Indian banks from March 2014- to September 2024. This humongous number came to light from an RTI report replied to by the Reserve Bank of India.

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The Right to Information report was filed by Civil Rights Activist Prafful Sarda. According to this report “only 16% amount has been recovered on the given 16.6 Lakh Crore Rs. Now 16% means only Rs 2.69 lakh crore has been recovered by September 30, 2024. This is estimated to be a 1.6% recovery per annum.

According to reports, the loan write-offs in 2004-2014, during the Congress government, accounted for approximately Rs1,58,994 crore by the PSBs. During this period, the amount written off by the private banks was Rs41,391 crore. Meanwhile, for foreign banks, it was Rs19,945 crore, with no write-offs by Scheduled Banks.

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However, the numbers provided by the report show a massive increase during the NDA rule, between 2015 to 2019. The PSBs accounted for Rs6,24,370 crore in loan write-offs. The private banks wrote off Rs1,51,989 crore, and the foreign banks shared the remaining 17,995 crore. Scheduled banks also wrote off Rs1,295 crore. The total is a shocking Rs 7,95,649 crore.

To understand everything in detail, HW News spoke to Pune-based Businessman and RTI Activist Prafful Saarda. Have a look at what he said.

As we saw earlier, the banking sector’s loan write-offs peaked at Rs 2.4 lakh crore in FY19. The lowest was in FY24, at Rs 1.7 lakh crore. This was only 1% of the total outstanding bank credit of around Rs 165 lakh crore at the time.

In the past, public-sector banks (PSBs) accounted for a large portion of the write-offs and also reported record profits in FY24.

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According to The Wire, Public sector banks (PSBs) accounted for the lion’s share of write-offs, with Rs 12.08 lakh crore, and recovered Rs 2.16 lakh crore. Urban cooperative banks contributed Rs 6,020 crore, but the recovery data for urban cooperative banks was not available.

The private sector banks accounted for a write-off at Rs 4.46 lakh crore while managing Rs 53,248 crore. However, recovery figures remained modest across the board.

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Reports Suggest, Punjab National Bank, Union Bank of India, and State Bank of India topped the write-off list among private sector banks. Meanwhile, HDFC Bank, Axis Bank, and ICICI Bank led among private sector banks.

In November 2024, Union Minister of State for Finance Pankaj Chaudhary presented data. According to this data, write-offs for the financial year 2023-24 (FY24) were Rs 1.7 lakh crore. Write-offs peaked at Rs 2.34 lakh crore in FY20.

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Most banks in India saw a decrease in the amount of loans they wrote off in the fiscal year 2024. A significant portion, over 20% of banks, actually wrote off more loans compared to the previous year.

However the Reserve Bank of India (RBI) clarified that these increased write-offs are mainly due to technical accounting practices or necessary steps to manage credit risk. It further stated that write-off does not mean that borrowers are no longer required to repay the written-off loans.

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The Leader of the opposition, Rahul Gandhi, has spoken on the matter. He said, “Narendra Modi has waived off the loans of billionaires worth Rs 16 lakh crore but has not waived off the money of the farmers, labourers, and students of the country. You people pay GST, you do the hard work, and Adani-Ambani sells Chinese goods in India.”

Furthermore, AAP Supremo Arvind Kejriwal also launched a scathing attack on the Saffron Party. During a rally ahead of the Delhi Assembly elections, Kejriwal said, “Today, I wrote a letter to the prime minister on a very important issue. In the letter, I told the prime minister that the BJP-led central government is spending money from the government treasury on the country’s billionaires. In the last five years, the central government has waived loans of 400-500 such billionaires worth Rs 10 lakh crore.”

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The RBI attributed a major part of the write-off to technical, prudential, or collection-related reasons. Recovery methods include contacting the borrower to restructure the loan terms, engaging recovery agents to collect payments, or selling the loan to asset reconstruction companies. In worse conditions, legal action can be taken, or negotiating settlements can be made.

Despite these major write-offs by Indian Banks, the public sector banks reported record profits of ₹1.41 lakh crore in FY24. In the first half of FY25, a profit of ₹85,520 crore was recorded. The gross NPA ratio improved to 3.12% by September 2024.

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The Banking experts urged that the new RBI Governor, Sanjay Malhotra should recommend to the government to make alterations in the laws. Or to make the bank officials, executives or directors and/or external forces who pressurize the banks.

The Reserve Bank of India (RBI) has warned that banks’ gross non-performing assets (GNPA) ratio could rise to 5.3% by March 2026. This is due to several factors, including write-offs, asset quality, and underwriting standards.

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Write-offs and retail loans are factors that could contribute to a rise in the GNPA ratio. The RBI has noted a sharp increase in write-offs, particularly in the private sector. This could be a sign of worsening asset quality and dilution in underwriting standards.

RBI in response To address these risks, the RBI has Tightened rules on personal loans and credit cards. Restricted non-compliant lenders. Made borrowing costlier for non-banking finance companies

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The RBI’s Financial Stability Report (FSR) in December 2024 showed better asset quality in the banking sector. In September 2024, the gross non-performing assets (GNPA) ratio dropped to 2.6% of total advances, the lowest level in the past 12 years.

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