Summary of this article
Banks wrote off Rs 8.88 lakh crore NPAs
Write-offs follow RBI rules, borrowers still liable legally
Recovery continues through IBC, SARFAESI, tribunals and mechanisms
In response to a question raised in the Lok Sabha, the Minister of State in the Ministry of Finance, Pankaj Chaudhary, said that as per data from the Reserve Bank of India (RBI), public sector banks wrote off aggregate NPAs of Rs 7,10,002 crore between FY14-FY20. Private sector banks wrote off NPAs amounting to Rs 1,78,622 crore during the same period.
The response made it clear that RBI data for FY14 pertained to domestic operations, while figures for other financial years reflect the global operations of banks.
Banks write off NPAs, including those accounts where full provisioning has been made after completion of four years, in line with RBI guidelines and policies approved by banks’ boards. Such write-offs do not result in the waiver of the liabilities of borrowers.
Borrower Liability and Recovery Process
The reply clarified that borrowing clients remain liable to repay even after loan accounts are written off. Banks continue to pursue recovery actions initiated in these accounts under various recovery mechanisms available to them.
The recovery in written-off loan accounts is a continuous process. Amounts recovered from such accounts are recorded as income by banks, and recovery efforts continue alongside write-offs.
Year-Wise Accretion of NPAs
In response to the second part of the question, the reply presented year-wise details of new accretion to NPAs in public and private sector banks during the period under review.
Public sector banks, for instance, reported new NPAs worth Rs 1,70,955 crore in FY15, and Rs 3,98,822 crore in FY16. On the other hand, private sector banks recorded fresh NPAs amounting to Rs 26,099 crore and Rs 47,116 crore in the year under discussion.
In FY17, new NPAs accumulated to Rs 3,38,710 crore in the case of public sector banks, and Rs 79,560 crore in the case of private sector banks. In FY18, public sector banks recorded new NPAs of Rs 4,32,630 crore while their private sector peers recorded Rs 1,02,846 crore.
In FY19, fresh NPAs stood at Rs 2,07,687 crore for public sector banks, and Rs 88,027 crore for private sector banks. In FY20, public sector banks added Rs 2,10,960 crore of new NPAs, while private sector banks recorded Rs 1,25,518 crore. The government also noted that the data for NPA accretion in FY14 is not available with the RBI.
Measures to Reduce and Prevent NPAs
The minister outlined steps taken by the government and RBI to recover, reduce and prevent NPAs in public and private sector banks.
The early warning systems have been instituted in public sector banks under the public sector bank reforms agenda, with about 80 triggers, besides third-party data, to enable timely detection of stress in borrowing accounts and time-bound remedial action.
The Insolvency and Bankruptcy Code, 2016, brought about a paradigm shift from a debtor-in-possession to a creditor-in-control framework. More than 30,000 applications involving underlying defaults of Rs 13.78 lakh crore were disposed of at the pre-admission stage as of March 2025. Amendments to address delays in corporate insolvency resolution processes are at the legislative approval stage.
Strengthening Legal and Institutional Frameworks
The government also referred to amendments to the SARFAESI Act, and the Recovery of Debt and Bankruptcy Act to strengthen the recovery processes. These include empowering RBI to audit and inspect asset reconstruction companies, mandating the registration of security interests with CERSAI, creating additional debt recovery tribunals, and enabling non-institutional investors to invest in security receipts.
The jurisdiction of debt recovery tribunals has been enlarged from Rs 10 lakh to Rs 20 lakh, enabling the tribunals to pay more attention to cases involving larger amounts. The public sector banks have set up specialised stressed asset management verticals and branches for focused monitoring and follow-up of NPA accounts.
Deployment of business correspondents and adoption of feet-on-street models have also been undertaken to support the recovery efforts, stated the reply. A prudential framework for early recognition, reporting and time-bound resolution of stressed assets was issued by RBI in June 2019, which provided incentives to lenders for adopting a resolution plan at an early stage.
