Banks in India wrote off bad loans totaling more than Rs 2.09 lakh crore during the FY 2022-23, The Indian Express has reported.

This brings the total loan write-offs by the banking sector to a significant Rs 10.57 lakh crore in the last five years, the Reserve Bank of India (RBI) said in a Right to Information (RTI) reply.

Loan write-offs by banks increased to Rs 209,144 crore during FY 2022-23, compared to Rs 174,966 crore in FY 2021-22 and Rs 202,781 crore in FY2020-21, as per the RTI data. Banks have been utilising loan write-offs as a strategy to reduce the burden of non-performing assets on their books.

The recoveries from these written-off loans have been quite dismal, with only Rs 30,104 crore recovered in FY2020-21, Rs 33,534 crore in FY 2021-22, and Rs 45,548 crore in FY 2022-23.

The RBI’s RTI response reveals that out of the Rs 586,891 crore loans written off in the last three years, banks were able to recover only Rs 109,186 crore, indicating a recovery rate of 18.60% during this period.

This loan write-off aided banks to bring down gross non-performing assets (GNPA) – or loans defaulted by borrowers — to a 10-year low of 3.9% of advances in March 2023. Gross NPAs of banks had fallen from Rs 10.21 lakh crore in FY2018-19 to Rs 5.55 lakh crore by March 2023, mainly on the back of loan write-offs by banks.

Banks have written off Rs 15,31,453 crore (US $ 187 billion) since FY 2012-13, as per RBI data.