PSU Banks Write Off Rs 6.15 Lakh Crore in Bad Loans in 5.5 Years, Government Tells Lok Sabha
Public sector banks (PSBs) in India have written off loans totaling Rs 6.15 lakh crore over the past five and a half years, as stated in Parliament by Minister of State for Finance, Pankaj Chaudhary. He clarified that this move is part of a strategy to clean up balance sheets and is not intended to absolve borrowers of their debts. The write-offs adhere to Reserve Bank of India (RBI) guidelines and do not eliminate the responsibility of borrowers to repay their loans.
Details of Loan Write-Offs
The write-offs by PSBs amount to Rs 6,15,647 crore for the last five financial years and the current fiscal year up to September 30, 2025, as reported by the RBI. Minister Chaudhary explained that these write-offs mainly involve non-performing assets (NPAs) that have been fully provisioned for a minimum of four years. He reassured that such write-offs do not imply a waiver of borrowers’ liabilities and are key to maintaining the banks’ financial health while ensuring compliance with regulations.
Chaudhary emphasized that the recovery of these written-off loans is ongoing through various legal mechanisms, including civil courts and Debts Recovery Tribunals. The Insolvency and Bankruptcy Code also facilitates the recovery process from borrowers. This structured approach aims to harmonize the banks’ need for financial stability with their duty to recover outstanding debts.
Government Support and Financial Health of PSBs
Since the fiscal year 2022-23, there has been no capital infusion from the government into PSBs. Chaudhary noted that these banks have successfully strengthened their financial positions and turned profitable, securing funds through market avenues and internal accruals to meet their capital requirements. Between April 1, 2022, and September 30, 2025, PSBs raised Rs 1.79 lakh crore from the market through equity and bond issuances.
The minister’s comments reflect a positive trend in the banking sector, illustrating that PSBs are increasingly self-sufficient in managing their capital needs without direct government intervention. This shift is perceived as a sign of resilience and recovery in the public banking sector.
Export Financing and Fraud Cases
Minister Chaudhary further addressed the role of banks and financial institutions in export financing. He highlighted that PSBs, along with the Small Industries Development Bank of India (SIDBI) and the Export-Import Bank of India, have disbursed a total of Rs 21.71 lakh crore in export credit over the last five financial years. This illustrates the vital role public sector banks play in bolstering India’s export sector and overall economic growth.
In addition, the minister reported on 5,83,291 fraud cases involving Rs 3,588.22 crore in the past four and a half years, with recoveries amounting to Rs 238.83 crore. He pointed out that the increase in digital payment transactions has led to more instances of cyber and digital payment fraud, emphasizing the need for enhanced security measures within the banking sector.
Disclaimer: Digihunt is not a financial advisor and this is not investment advice.
