PSU Banks Write Off Rs 6.15 Lakh Crore in Bad Loans Over 5.5 Years, Government Reports to 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, according to a statement made in Parliament. The Minister of State for Finance, Pankaj Chaudhary, clarified that this action is part of a strategy to clean up balance sheets rather than absolving borrowers of their debts. He emphasized that the write-offs are in line with Reserve Bank of India (RBI) guidelines and do not eliminate the obligation for borrowers to repay their loans.
Details of Loan Write-Offs
The significant loan write-offs by PSBs amount to Rs 6,15,647 crore, as reported by the RBI. This figure covers the last five financial years and the current financial year up to September 30, 2025. Minister Chaudhary explained that these write-offs primarily involve non-performing assets (NPAs) that have been fully provisioned for at least four years. He reassured that such write-offs do not equate to a waiver of the borrowers’ liabilities. Instead, they are a necessary step in maintaining the financial health of the banks and ensuring compliance with regulatory standards.
Chaudhary highlighted that the recovery of these written-off loans continues through various legal mechanisms, including civil courts and Debts Recovery Tribunals. The Insolvency and Bankruptcy Code also plays a role in recovering dues from borrowers. This structured approach aims to balance the banks’ need for financial stability with their obligations 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. They have relied on market funding 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 remarks indicate a positive trend in the banking sector, where PSBs are increasingly self-sufficient and capable of managing their capital needs without direct government intervention. This shift is seen as a sign of resilience and recovery within the public banking sector.
Export Financing and Fraud Cases
In addition to discussing loan write-offs, Minister Chaudhary addressed the role of banks and financial institutions in export financing. He stated 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 underscores the critical role that public sector banks play in supporting India’s export sector and overall economic growth.
Furthermore, the minister reported that there have been 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 noted that the rise in digital payment transactions has led to an increase in incidents of cyber and digital payment fraud, highlighting the need for enhanced security measures in the banking sector.
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