Indian Banks Write Off Rs 10.57 Lakh Crore in Bad Loans During last 5 years.

Banks wrote off bad loans exceeding Rs 2.09 lakh crore in the financial year 2022-23, resulting in a total loan write-off of Rs 10.57 lakh crore over the past five years, as per the Reserve Bank of India’s response to an RTI query by the Indian Express.

The loan write-offs aided banks in reducing gross non-performing assets (GNPA) to a 10-year low of 3.9 percent of advances by March 2023.

From FY2012-13, banks have written off a total of Rs 15,31,453 crore, with a meager recovery of only Rs 109,186 crore from the Rs 586,891 crore of loans written off in the last three years, indicating a mere 18.60 percent recovery during this period.

Considering the write-offs, the total defaulted loans (excluding recoveries) stand at Rs 10.32 lakh crore, based on a back-of-the-envelope calculation.

Incorporating the write-offs, the overall NPA ratio would have reached 7.47 percent of advances, contrasting with the 3.9 percent reported by the banks. The RBI’s RTI response indicates that loan write-offs by banks increased to Rs 209,144 crore in the fiscal year ending March 2023, compared to Rs 174,966 crore in March 2022 and Rs 202,781 crore in March 2021.