Banking sector writes off bad loans worth Rs 2.09 lakh crore in 2022-23: RBI

Mumbai: In the last five years banks have written off total bad loans of Rs 10.57 lakh crore (around $ 129 billion), says Reserve Bank of India.

The reply to a Right to Information query further said that during the year ended March banking sector absolved bad loans over Rs 2.09 lakh crore (around US $ 25.50 billion), The Indian Express reported.

The process, however, helped banks to reduce their ‘gross non-performing assets (GNPA)’ to ‘a 10-year low of 3.9 per cent of advances in March 2023,’ it is revealed.

Gross NPAs stood at 10.21 lakh crore in FY2018 before it came down to Rs 5.55 lakh crore as of now, thanks to loan write-offs.

The bad loans will still remain in the bank documents as unrecovered loans.

In the last three years banking sector could recover only Rs 109,186 crore of Rs 586,891 crore loans, the RTI reply said.

This points at the fact that banks could amass only 18.60 per cent of the total write-offs over the said period, plus total defaulted loans stood at Rs 10.32 lakh crore.

The RTI by RBI further elucidates that loans write-offs peaked to Rs 209,144 crore during the fiscal ended March 2023.

This outshined the previous total of Rs 174,966 crore in March 2022 and Rs 202,781 crore in March 2021.

Banks usually write off bad loans after convinced that chance of recovery is slim and subsequently it goes out of the asset book of the bank.

Afterwards, it moves the defaulted loan or NPA out of assets; however, even after write-offs banks may continue to recover the amount using various options.