Lok Sabha Question No. 456 (UNSTARRED), answered on 2026-02-02
Subject: Write-off of loans
Ministry: FINANCE
Asked by: Shri Babu Singh Kushwaha, Shri Neeraj Maurya, Shri Devesh Shakya

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO- 456

ANSWERED ON MONDAY, FEBRUARY 02, 2026/MAGHA 13, 1947 (SAKA)

## Write-Off of Loans

## †456. SHRI BABU SINGH KUSHWAHA: SHRI DEVESH SHAKYA: SHRI NEERAJ MAURYA:

Will the Minister of FINANCE be pleased to state:-

- (a) the reasons for the write-off of loans amounting to Rs. 12.3 lakh crore by public and private sector commercial banks in the country, between Financial Year 2015 and Financial Year 2024;
- (b)  whether  the  Government  has  proposed  specific  reforms  to  enhance  the  effectiveness, efficiency and timeliness of existing recovery mechanisms;
- (c) if so, the details thereof;
- (d) the rationale behind the high write-offs of Rs. 42,000 crore, by Public Sector Banks (PSBs) in the first half of Financial Year 2025, despite improved/better profitability and a decline in Gross Non-performing Assets (GNPAs); and
- (e) the steps being taken by the Government to minimize write-offs in future and strengthen credit appraisal processes and ensure accountability in loan approval and recovery?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a):  As  per  the  Reserve  Bank  of  India  (RBI) -Resolution  of  Stressed  Assets  Directions  2025, issued for commercial banks, write-off (a major portion of which is due to technical/prudential/advances  under  collection)  is  an  accounting  procedure  undertaken  by  a bank to cleanse the balance sheets of bad debts which are either considered unrecoverable or whose recovery is likely to consume disproportionate resources of the lenders.

Banks write-off non-performing assets (NPAs), including, inter-alia, those in respect of which full provisioning has been made on completion of four years, as per RBI guidelines and policy approved by banks' Boards. Such write-off does not result in waiver of liabilities of borrowers and  therefore,  it  does  not  benefit  the  borrower.  The  borrowers  continue  to  be  liable  for repayment and banks continue to pursue recovery actions initiated in these accounts.

Further, recovery in written-off loans is an ongoing process and banks continue pursuing their recovery actions initiated against borrowers under the various recovery mechanism available to them, such as filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation  and  Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  Interest

Act,  filing  of  cases  in  the  National  Company  Law  Tribunal  under  the  Insolvency  and Bankruptcy Code, etc.

(b) and (c): Comprehensive measures have been taken by the Government and RBI to enhance the effectiveness, efficiency and timeliness of existing recovery mechanisms which include, inter alia, the following:

- (i) Change in credit culture has been effected, with the Insolvency and Bankruptcy Code (IBC) fundamentally changing the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners, and debarring wilful defaulters from the  resolution  process.  To  make  the  process  more  stringent,  personal  guarantor  to corporate debtor has also been brought under the ambit of IBC.
- (ii) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debt and Bankruptcy Act have been amended to make it more effective.
- (iii) Pecuniary  jurisdiction  of  Debt  Recovery  Tribunal  (DRTs)  was  increased  from  Rs.  10 lakhs to Rs. 20 lakhs to enable the DRTs to focus on high value cases resulting in higher recovery for the banks and financial institutions.
- (iv) Public  Sector  Banks  have  set-up  specialized  stressed  assets  management  verticals  and branches  for  effective  monitoring  and  focused  follow-up  of  NPA  accounts,  which facilitates  quicker  and  improved  resolution/  recoveries.  Deployment  of  Business correspondents and adoption of Feet-on-street model  have  also boosted  the recovery trajectory of NPAs in banks.
- (v) Prudential Framework for resolution of stressed assets was issued by RBI to provide a framework for early recognition, reporting and time bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan.

(d):  As  per  RBI  data,  public  sector  banks  have  written-off  an  aggregate  loan  amount  of  Rs. 35,096 crore, in the first half of financial year 2025 (provisional data). The occurrence of NPAs is a normal albeit undesirable corollary to the business of banking which may be attributed to a confluence  of  factors,  including  prevailing  macroeconomic  conditions,  sectoral  issues,  global business  environment,  delayed  recognition  of  stress  by  the  banks,  aggressive  lending  during upturns, improper risk pricing and poor credit underwriting, lack of specialized skills in project appraisals, time and cost overruns in project implementation, etc. The Gross Non-Performing Assets as a percentage of Gross Advances have decreased from a high of 14.58% as on March 2018 to 2.30% as on September 2025.

(e):  Reserve  Bank  has  taken  several  initiatives  aimed  at  resolution  of  long-standing  stressed assets  as  well  as  for  timely  identification  and  rectification  of  stress,  with  the  banks'  Boards entrusted with the responsibility of ensuring effective oversight so as to reduce NPAs and write offs  in  future.  Credit  related  matters,  including  the  due  diligence  requirements  of  regulated entities (REs) are largely deregulated and the same are governed by the Board approved loan policies of the lenders framed under the ambit of relevant regulatory and statutory requirements.  The regulatory  provisions  are  broadly  aimed  at  ensuring  that  the  banks  put  in place robust credit risk management systems and processes to address potential risks at various stages, including pre-sanction appraisal and due diligence, post-sanction monitoring and sector concentration.

Further, as per banks' Board-approved staff accountability policy, staff accountability exercise is conducted and action is taken against the erring officials, who are responsible for the lapses of non-compliance with the laid down systems and procedures or misconduct or non-adherence to the due-diligence norms.