₹9.95 Lakh Crore in Loans to Large Corporate and Service Sector Borrowers Written Off; Annual Write-Offs Fall Sharply From Peak in FY2019
New Delhi (Economy India): Indian banks have written off loans worth nearly ₹10 lakh crore extended to large corporate and service sector companies over the past 12 financial years, the government informed Parliament on Monday.
According to Minister of State for Finance Pankaj Chaudhary, banks wrote off a total of approximately ₹9,95,000 crore in loans to large corporate and service sector borrowers during the period.
The figures were provided by the minister in a written reply to a question in the Lok Sabha.
Loan Write-Offs Peaked in FY2019
The data showed that loan write-offs reached their highest level in 2018-19, when banks wrote off ₹1,48,753 crore.
Since then, the annual amount of loans written off has declined substantially.
In 2025-26, banks wrote off ₹20,485 crore, marking a significant reduction compared with the peak recorded in FY2019.
The decline indicates a substantial change in the pace of loan write-offs by banks over the period, although the cumulative amount remains significant.
Nearly ₹10 Lakh Crore Written Off
The total figure of ₹9.95 lakh crore highlights the scale of bad-loan management undertaken by the Indian banking sector over the last 12 years.
Loan write-offs are generally undertaken by banks after exhausting various recovery measures and determining that certain loans are difficult to recover. A write-off, however, does not necessarily mean that the bank has completely abandoned its efforts to recover the outstanding amount.
Banks can continue recovery proceedings against borrowers even after a loan has been technically written off, subject to applicable regulations and legal processes.
Sharp Decline in Annual Write-Offs
The data presented by the government shows a major decline in annual loan write-offs from the levels seen several years ago.
The ₹1,48,753 crore recorded in FY2018-19 represented the highest annual amount during the period cited by the government.
By FY2025-26, the figure had fallen to ₹20,485 crore.
This represents a substantial reduction in the volume of loans being written off annually compared with the peak period.
Corporate Loans Remain a Key Focus
Large corporate and service sector borrowers have historically accounted for a significant portion of stressed assets in India’s banking system.
The government and the Reserve Bank of India have taken several measures over the years to strengthen banks’ balance sheets, improve recognition of stressed assets and accelerate recovery.
These measures have included stronger monitoring of large borrowers, insolvency proceedings and efforts to improve recovery mechanisms.
The Insolvency and Bankruptcy Code (IBC) has also played an important role in the resolution of stressed corporate assets.
What Loan Write-Offs Mean for Banks
A loan write-off is primarily an accounting and balance-sheet exercise. It allows a bank to remove a non-performing asset from its books after making appropriate provisions, but it does not automatically extinguish the borrower’s liability.
Banks can continue pursuing recovery through legal and other available mechanisms.
Therefore, the amount written off should not automatically be interpreted as the final amount of money that banks have lost.
The actual financial impact depends on the amount subsequently recovered from written-off accounts.
Banking Sector Balance Sheets Have Improved
The sharp fall in annual loan write-offs comes at a time when the overall asset quality of India’s banking sector has improved compared with the period of heightened stress witnessed in the previous decade.
Banks have strengthened their capital positions and increased their focus on risk assessment, loan monitoring and recovery.
The decline in stressed assets has also helped banks improve their ability to extend fresh credit to businesses and individuals.
However, maintaining asset quality remains important as credit growth expands and banks increase lending across different sectors.
Recovery Remains Crucial
While the decline in annual write-offs is a positive development, recovery from written-off loans remains an important issue for the banking system.
Successful recovery can reduce the eventual financial burden on banks and improve their overall financial position.
The government and regulators have continued to focus on strengthening recovery mechanisms and improving the efficiency of insolvency and debt-resolution processes.
Government Data Highlights Changing Banking Landscape
The latest figures presented in Parliament provide an insight into the changing nature of India’s banking sector over the past 12 years.
From a peak of ₹1,48,753 crore in loan write-offs in FY2018-19, the annual figure has declined to ₹20,485 crore in FY2025-26.
At the same time, the cumulative value of loans written off for large corporate and service sector borrowers has reached approximately ₹9.95 lakh crore.
The government data underscores both the scale of the banking sector’s earlier bad-loan problem and the significant reduction in annual write-offs in recent years.
Going forward, effective monitoring of large borrowers, timely recognition of stress and stronger recovery mechanisms will remain critical to ensuring that the banking sector maintains healthy balance sheets while supporting India’s economic growth.
(Economy India)
