Public sector banks’ bad loan write-offs shrink as recoveries rise

The total amount of bad loans written off by public sector banks (PSBs) has been declining each year, while recoveries from these loans have been steadily expanding, according to data shared by the government with Parliament.

An analysis by The Hindu of data shared in two separate answers by the Ministry of Finance to the Lok Sabha and the Rajya Sabha also shows that large industries are no longer the primary beneficiaries of these write-offs, a reversal of the situation prevalent a few years ago. 

Data shared by Minister of State for Finance Pankaj Chaudhary to the Rajya Sabha on Tuesday shows that the amount written off by PSBs stood at ₹1.15 lakh crore in 2021-22, which rose to about ₹1.3 lakh crore in 2022-23, a likely reflection of the impact of the COVID-19 pandemic. 

Thereafter, the annual write-offs have fallen consistently, with the latest figure at ₹70,528 crore in the financial year ended March 31, 2026. This is nearly 40% lower than it was five years earlier. 

State Bank of India (SBI), the country’s largest lender, was responsible for the largest share of the write-offs. It wrote off ₹19,666 crore of bad loans in 2021-22, which increased to ₹24,061 crore the next year, before declining to ₹ 17,803 crore by 2025-26. 

Intensified recoveries

“Debt write-off is an accounting procedure and does not provide any relief to the debtor (whether farmer or corporate),” Mr. Chaudhary said in his written answer. “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,” he added.

The data shows these recovery actions have proven increasingly effective over the recent years. While the total amounts being written off are decreasing, the amount recovered from written-off loans has increased every year, from ₹24,739 crore in 2021-22 to ₹42,889 crore in 2025-26. 

The Ministry specified that the amount recovered could pertain to loans written off in a particular year or in previous years. 

As a result of this, the annual ratio of recoveries to write-offs has also been improving — from 21.4% in 2021-22 to 60.8% in 2025-26.

A separate answer by Mr. Chaudhary to the Lok Sabha on Monday provided data on the quantum of write-offs that pertained to large industries. This data shows that the quantum of large industry loans that were written off stood at ₹69,532 crore in 2021-22, and peaked at about ₹1.1 lakh crore in 2022-23. Since then, the figure has declined each year, to ₹20,485 crore as of March 31, 2026.

While loans to large industries accounted for 90% of total write-offs in 2022–23, their share fell sharply to 29% in 2025–26; indicating that by 2025–26, the bulk of loans written off pertained to individuals, micro, small and medium enterprises (MSMEs), and farmers.