Now Reading: PSB bad loan write-offs drop 40% in five years, recoveries rise
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PSB bad loan write-offs drop 40% in five years, recoveries rise
Public sector banks wrote off ₹70,528 crore in bad loans in FY26, down nearly 40% from ₹1.15 lakh crore five years ago, data shared by the Finance Ministry with Parliament shows. Recoveries…
The Story in Brief
Public sector banks wrote off ₹70,528 crore in bad loans in FY26, down nearly 40% from ₹1.15 lakh crore five years ago, data shared by the Finance Ministry with Parliament shows. Recoveries from written-off loans rose to ₹42,889 crore, lifting the recovery-to-write-off ratio from 21.4% to 60.8% over the same period.
Large industries' share of write-offs fell sharply from 90% in FY23 to 29% in FY26, shifting the burden to individuals, MSMEs and farmers. The government stressed that write-offs are accounting entries, not waivers, and recovery proceedings continue. A brokerage report noted the stock of written-off accounts remains large at 6-7% of loan books for most PSBs, implying years to run down.
The Indian Opinion
Some paint write-offs as a sign of banking weakness or as crony capitalism favouring large corporates. The data challenges both: write-offs are shrinking, recoveries are rising, and the large-industry share has collapsed from 90% to 29%. Yet the outstanding stock of written-off loans remains at 6-7% of loan books for most PSBs, and the recovery pace is modest. The real test will be whether PSBs can sustain this improvement without a fresh spike in bad loans, especially as pandemic-era restructured assets mature.
Sources (2): thehindu.com, businesstoday.in
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
