Finance Ministry data presented in Lok Sabha reveals the scale of India’s bad loans problem.

The Finance Ministry has revealed that public sector banks (PSUs) have written off loans worth ₹5.82 lakh crore between the financial years 2020–21 and 2024–25. Minister of State for Finance Bhagwat Karad confirmed these figures in a written reply to the Lok Sabha on 4 August 2025.

The data provides a detailed year-wise and sector-wise breakdown, highlighting the burden of large corporate defaults and the ongoing challenge of recovering bad loans.

PSU Banks Loan Write-Off Data Year-Wise

The official statement presented in Parliament outlines the total bad loans written off by PSU banks over the past five financial years. The year 2020–21 recorded the highest amount, after which the figures declined gradually but remained substantial.

Financial Year	Loan Write-Offs (₹ crore)
2020–21	1,33,067
2021–22	1,16,985
2022–23	1,27,432
2023–24	1,15,482
2024–25	91,260

Year-wise PSU bank loan write-offs (₹ crore): While the write-off amount in 2024–25 fell to ₹91,260 crore, the cumulative total for the five years crossed ₹5.8 lakh crore. According to the Ministry, recoveries during this period amounted to about ₹1.65 lakh crore, roughly 28 per cent of the total written-off amount.

A loan write-off does not erase the borrower’s obligation to repay. It is an accounting action to clean the bank’s balance sheet while continuing recovery through legal means.

Read More – Public vs Private Banks: Compare the Cheapest Home Loan Offers Following RBI’s 50 bps Rate Cut

Indian Banks NPA Write-Off 5 Years – Sector-Wise Split

The Finance Ministry also released the sector-wise distribution of loan write-offs between 2020–21 and 2024–25. The data shows that large industries and services were responsible. for the majority of bad loan amounts, followed by MSMEs, agriculture and allied activities, and retail loans.

Sector-wise loan write-offs 2020–21 to 2024–25 (₹ crore):

Borrower Category	Loan Write-Offs 2020–21 to 2024–25 (₹ crore)
Large Industry & Services	3,94,317
MSME	1,10,567
Agriculture & Allied	42,185
Retail Loans	35,141

This indicates that large-ticket corporate loans continue to be the primary source of non-performing assets (NPAs) for public sector banks. Officials stated that more corporate accounts are being sent for resolution under the Insolvency and Bankruptcy Code to improve recovery rates.

Finance Ministry Data on Wilful Defaulters in India

The Finance Ministry’s reply also included statistics on wilful defaulters. These are borrowers who have the financial capacity to repay their loans but intentionally avoid payment. The data shows a steady increase in both the number of wilful defaulters and the value of unpaid loans between 2021-2024.

Wilful defaulters – Number and outstanding amount (₹ crore):

Year	Number Of Wilful Defaulters	Outstanding Amount (₹ crore)
2021–22	11,302	1,41,547
2022–23	12,439	1,45,365
2023–24	13,212	1,50,897

This upward trend highlights continuing issues in loan discipline despite tighter scrutiny and stricter lending norms.

₹5.82 Lakh Crore Bank Write-Offs And NPA Ratios

The written reply also tracked the gross non-performing asset (GNPA) position of PSU banks over the same five-year period. The GNPA ratio has shown a steady decline even as large amounts have been written off.

Gross NPA and GNPA ratio – PSU banks (2020–21 to 2024–25):

Year	Gross NPA (₹ crore)	GNPA Ratio (%)
2020–21	6,16,616	9.11
2021–22	5,48,125	7.36
2022–23	4,45,237	5.53
2023–24	3,38,548	4.97
2024–25	2,83,000	2.58

The Ministry attributed this improvement to stricter monitoring of stressed assets, better credit appraisal systems, and the clean-up of old default accounts.

Also Read - Finance Ministry to Review Q1 Performance with State-Owned Bank CEOs on August 20

Why PSU Banks Loan Write-Off Data Matters?

The figures shared in Parliament give a clear and official picture of India’s bad loan situation. The scale of corporate loan write-offs, especially from large industries, raises questions about risk assessment and credit monitoring in big-ticket lending.

While smaller borrowers often face quick recovery actions, corporate loans sometimes undergo multiple restructuring attempts before turning into NPAs and eventually being written off. This difference in treatment continues to draw public scrutiny.

The rising number of wilful defaulters adds further strain on the banking system. Such cases point towards a behavioural and enforcement challenge that financial regulations alone may not fully resolve.

Recovery Efforts by Public Sector Banks

The Finance Ministry emphasised that a loan write-off does not end recovery efforts. PSU banks are actively pursuing borrowers through various channels:

SARFAESI Act: Seizure and sale of secured assets.
Debt Recovery Tribunals: Legal process for recovering dues.
Insolvency and Bankruptcy Code: Resolution of stressed accounts through court-approved plans.
One-time settlements: Negotiated repayment agreements with defaulters.

According to officials, recovery efforts are closely monitored at both the bank and ministry levels. Reviews are conducted regularly to ensure that high-value cases move forward without delay.

Conclusion

Between 2020–21 and 2024–25, PSU banks have written off loans worth ₹5.82 lakh crore. The number is large, but the story is not over. Recovery work is still going on in courts, tribunals, and through asset sales.

The bigger task ahead is to stop bad loans from growing in the first place. That means lending carefully, checking risks early, and acting quickly when repayments stop. If banks can do this, they can protect both their balance sheets and the trust of the people who depend on them.

Other News Pages
Morgan Stanley: Consumer Loan Growth Bottomed Out, Recovery Ahead	PSU Banks Wrote Off ₹5.82 Lakh Crore Loans in 5 Years: MoS Finance	GST Revamp: Most Items at 5% or 18%, Luxury Goods May Face 40%
Govt Plans Two-Tier GST Structure; Council Meet in September	8th Pay Commission May Trigger Rate Hike Cycle in FY27	S&P Upgrades Ratings of 10 Indian Financial Institutions
Tamil Nadu’s Microfinance Loan Portfolio Falls 23.5% by June-End	Finance Ministry to Review Q1 Performance with PSU Bank CEOs on Aug 20	Economists Split on RBI’s Next Move: No Cut, One Cut, or Two
Paytm Gets RBI Nod for Online Payment Aggregator Licence	RBI Rolls Out New Rules for Faster Cheque Clearance	Report: Trump Tariffs Could Slow Loan Growth in Indian Banks
Gold Loan NPAs: 2.14% for NBFCs, 0.22% for Banks	MTNL Defaults on Loan Repayment Worth $8.7 Billion	Indian NBFCs Raise $3.67 Billion Overseas Loans, Double 2024 Levels