Banks write off ₹10.6 lakh crore in 5 years, 50% linked to Large CorporatesBanks write off ₹10.6 lakh crore in 5 years, 50% linked to Large Corporates
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banks write off ₹10.6 lakh crore in 5 years, 50% linked to large corporates

A staggering amount of ₹10.6 lakh crore has been written off by Indian banks in the last five years, according to information shared by the government in the Lok Sabha on December 4, 2023. This means that these banks have given up hope of ever recovering this money, which is a huge loss for the Indian banking system.

What are loan write-offs?

When a borrower fails to repay a loan, and the bank has exhausted all efforts to collect it, the bank can write it off as a bad debt. This means that the bank removes the loan from its books and no longer expects to be repaid.

Why are loan write-offs happening?

There are several reasons why banks may write off loans. Some of the common reasons include:

  • Borrower default: This is the most common reason for loan write-offs. Borrowers may default on their loans due to financial difficulties, such as a business failure or job loss.
  • Fraud: In some cases, borrowers may deliberately default on their loans by committing fraud.
  • Economic downturn: An economic downturn can lead to a rise in loan defaults, as businesses and individuals struggle to repay their debts.

What are the implications of loan write-offs?

Loan write-offs have a number of negative consequences, including:

  • Reduced profitability: Banks make money by charging interest on loans. When they write off loans, they lose this income.
  • Increased risk: Loan write-offs can make banks more risky, as they have less capital to absorb losses.
  • Higher borrowing costs: Banks may raise interest rates to compensate for the losses they incur from loan write-offs. This can make it more expensive for businesses and individuals to borrow money.

Who are the big defaulters?

Of the total ₹10.6 lakh crore that has been written off, nearly 50% is linked to large corporates. This means that a small number of big borrowers are responsible for a significant portion of the losses incurred by banks.

The government has not yet released a list of the top defaulters, but some reports suggest that they include companies from sectors such as infrastructure, steel, and power.

What can be done?

The Indian government and the Reserve Bank of India (RBI) are taking steps to address the issue of loan write-offs. Some of the measures being taken include:

  • Strengthening the bankruptcy code: The government is working to make it easier and faster for companies to go bankrupt and restructure their debts.
  • Improving corporate governance: The RBI is also working to improve corporate governance standards in India, which could help to prevent fraud and defaults.
  • Increasing bank capital: The RBI is also requiring banks to hold more capital, which will make them more resilient to losses.

It is important to note that loan write-offs are a normal part of the banking business. However, the scale of the write-offs in India is a cause for concern. The government and the RBI need to take action to address the root causes of the problem and to protect the Indian banking system.


The Indian banking system is facing a significant challenge from loan write-offs. The government and the RBI need to take steps to address the issue and to protect the banking system.

I hope this blog post has been informative. Please let me know if you have any questions.

Disclaimer: This is not financial advice. Please consult with a financial advisor before making any investment decisions.

Additional information:

I would also like to add that the issue of loan write-offs is complex and there are a variety of perspectives on it. I have tried to present a balanced view in this blog post, but I encourage readers to do their own research and form their own opinions.

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