Public sector banks’ write-offs touch ₹6.15 lakh crore in five years; Qalam Times explains why write-offs happen, how much has been recovered, and what it means for the banking system.
By Qalam Times News Network
New Delhi | 10 December 2025
Massive Write-Offs Across Public Sector Banks
Write-offs have once again taken centre stage in India’s banking story. New data from the Reserve Bank of India shows that public sector banks cleared ₹6.15 lakh crore from their books over the last five financial years, along with the current fiscal up to September 30, 2025. And here’s the thing—despite the scale, a write-off does not erase a borrower’s obligation; the dues remain, and banks are expected to keep pursuing recovery.
The cycle of write-offs has not been smooth. The total peaked at ₹1.33 lakh crore in 2020–21, dipped to ₹1.16 lakh crore the next year, and climbed again to ₹1.27 lakh crore in 2022–23. Yet, the recovery from written-off accounts has been modest—₹1.65 lakh crore in five years against the much larger sum removed from balance sheets.
What this really means is that PSBs are increasingly relying on the market instead of New Delhi. The government hasn’t infused capital since 2022–23, citing healthier profits and stronger capital buffers. As a result, banks have turned to equity and bond markets, raising ₹1.79 lakh crore between April 2022 and September 2025.
According to Minister of State for Finance Pankaj Chaudhary, banks typically resort to write-offs after making full provisioning for non-performing assets, usually after four years, in line with RBI rules and board-approved norms. The move is mostly technical—an accounting decision, not a favour to borrowers.
Even after a loan is written off, banks keep chasing repayment through civil courts, Debt Recovery Tribunals, SARFAESI actions, and insolvency proceedings at the National Company Law Tribunal. Any money recovered later is recorded as income.
The government maintains that write-offs do not strain liquidity, since provisioning is already set aside. In fact, clearing toxic assets helps clean up balance sheets, allows tax benefits, improves capital use, and often reassures investors.
