Scheduled commercial banks in India have written off approximately ₹9.75 lakh crore between FY15 and FY25, according to data shared in Parliament by Pankaj Chaudhary. A write-off is an accounting adjustment that allows banks to clean up their balance sheets by removing non-performing assets (NPAs) from active lending portfolios.
Critically, write-offs do not mean the money is lost forever. These accounts remain subject to recovery and legal proceedings even after being removed from the books. Banks continue pursuing debt collection and court cases against defaulters, with recoveries feeding back into income over time.
The scale of write-offs points to systemic weaknesses in credit appraisal and risk management that accumulated over the decade. However, data shows write-offs have moderated in recent years, suggesting the banking system has strengthened its ability to recognize and resolve stress faster than before.
The real challenge now shifts from resolution to prevention. While balance sheet clean-up is necessary, long-term stability depends on early risk detection and stronger governance frameworks. Banks that can identify stress before it crystallizes into NPAs will outperform those playing catch-up with legacy problems.
The next phase of banking sector maturity will be defined by prevention, not just resolution. The Indian banking system has proven it can manage crises; the test ahead is building credit cultures that avoid them.
