SRINAGAR: Indian banks wrote off non-performing assets worth nearly Rs 8.9 lakh crore between the financial years 2013 14 and 2019 20, with public sector banks accounting for the bulk of the write offs, the Union Finance Ministry informed the Lok Sabha on Monday, reviving concerns over the scale of stressed assets in the banking system and the effectiveness of recovery mechanisms.
In a written reply to an unstarred question, Minister of State for Finance Pankaj Chaudhary said that public sector banks wrote off NPAs amounting to Rs 7,10,002 crore during the period, while private sector banks wrote off Rs 1,78,622 crore, as per data from the Reserve Bank of India. The figures cover domestic operations for 2013 14 and global operations for subsequent years.
The government clarified that write off of NPAs should not be construed as a waiver of loans. According to the reply, banks write off loans only after full provisioning and completion of four years, in line with RBI guidelines and policies approved by bank boards. Borrowers, the ministry said, remain liable for repayment even after write off, and banks continue to pursue recovery through available legal and institutional mechanisms. Recoveries from written off accounts, it added, remain an ongoing process.
Alongside write offs, the data presented to Parliament highlights the sharp rise in fresh accretion of NPAs during the same period, particularly following the asset quality review and recognition of stressed loans. New NPAs in public sector banks stood at Rs 1,70,955 crore in 2014 15 and peaked at Rs 4,32,630 crore in 2017 18 before moderating to Rs 2,10,960 crore in 2019 20. Private sector banks also saw a steady increase, with new NPAs rising from Rs 26,099 crore in 2014 15 to Rs 1,25,518 crore in 2019 20. RBI data for 2013 14 on NPA accretion was not available.
The scale and persistence of bad loans, especially in public sector banks, has long raised questions about credit appraisal, governance and accountability, as well as the social and fiscal cost of repeated balance sheet clean ups. While the government has argued that higher write offs partly reflect better recognition and provisioning, critics note that recovery rates remain uneven and often delayed.
Responding to concerns on curbing bad debt, the ministry outlined a series of measures taken by the government and the RBI to recover, reduce and prevent NPAs. These include the introduction of automated early warning systems in public sector banks under the PSB Reforms Agenda to detect stress early and prevent slippages into NPAs.
The government also highlighted the shift from a debtor in possession to a creditor in control regime through the Insolvency and Bankruptcy Code, 2016. According to the reply, the behavioural impact of the IBC is evident from the settlement of over 30,000 cases involving defaults of Rs 13.78 lakh crore at the pre admission stage as of March 2025. Amendments aimed at addressing delays in insolvency resolution are currently under legislative consideration.
Further steps cited include amendments to the SARFAESI Act and the Recovery of Debt and Bankruptcy Act to strengthen enforcement, enhance oversight of asset reconstruction companies, expand debt recovery tribunal capacity and improve registration of security interests. The pecuniary jurisdiction of DRTs has also been raised to allow focus on higher value cases.
The ministry said public sector banks have set up specialised stressed asset management verticals and recovery branches, along with greater deployment of business correspondents and feet on street models, to improve follow up and recoveries. In addition, the RBI’s prudential framework for resolution of stressed assets, issued in June 2019, seeks to ensure early recognition and time bound resolution of stress.
Despite these measures, the magnitude of write offs disclosed in Parliament underscores the continuing challenge of bad loans in India’s banking system, particularly in public sector banks, and keeps alive the debate over whether structural reforms have gone far enough to prevent a repeat of past credit excesses.
