Over the years, public sector banks (PSBs) appear to show little or no real interest in recovering bad loans that have been written off, especially those involving large defaulters. Instead, their focus seems to be on cleaning up their balance sheets and showing lower non-performing assets (NPAs) by writing off such loans. This attitude is, once again, evident in the case of the State Bank of India (SBI) which has outright refused to share information—even with one of its own shareholders—about large defaulters who owed Rs100 crore or more, and the recoveries made from the loans written off for these borrowers. True to its track record of withholding the names of major defaulters, the country’s largest State-run bank did, however, admit that it took a substantial haircut of around 67%—amounting to Rs96,588 crore—while settling 279 loan accounts worth Rs1,44,967 crore through the national company law tribunal (NCLT) over the past seven years.
Mr Velankar, who is also president of Pune-based Sajag Nagrik Manch, has, on 23 May 2025, sent an email before the annual general meeting (AGM) of SBI held on 13 June 2025. As a shareholder, he asked SBI to provide a list of loan takers (borrowers) whose loans above Rs100 crore are technically written off during each financial year (FY) since FY16-17 to FY24-25, along with the written-off amount. He also asked SBI to provide a list of defaulters whose loans were settled through NCLT between FY17-18 and FY24-25.
However, SBI denied providing a list of borrowers whose loans of Rs100 crore and above were written off by the Bank from FY16-17 to FY24-25 as well as loans settled through NCLT during FY17-18 and FY24-25. "As per section 44 of the SBI Act 1955, the bank is not permitted to disclose any information relating to the affairs of its customers. Therefore, the borrower's name, account number and total amount cannot be shared,” SBI says in its response to the shareholder's query.
High-value Loan Accounts Written Off by SBI from FY16-17 to FY24-25
Highest write-off year: FY19-20 recorded the largest amount of technical or prudential write-offs, totalling Rs46,348 crore, with recoveries amounting to Rs5,705 crore in the same year.
Lowest recovery year: In FY16-17, SBI recovered just Rs264 crore from accounts written off worth Rs13,587 crore — the smallest recovery in the nine-year span.
Recent trends: FY24-25 shows a write-off of Rs7,632 crore, with a notably improved recovery of Rs3,930 crore — the second-highest recovery figure in the period under review, after Rs6,371 crore in FY20-21.
Progress on recoveries: Despite significant loan write-offs over the years, SBI has shown fluctuating recovery performance. While some years like FY20-21 (Rs6,371 crore) and FY24-25 (Rs3,930 crore) indicate stronger recoveries, earlier years such as FY16-17 and FY17-18 saw minimal returns.
The data provided by SBI to Mr Velankar, its shareholder, underscores the ongoing challenges in bad loan recoveries for high-value accounts, even as the PSB continues to technically write off significant sums annually as part of its balance sheet management and provisioning strategy.
The Insolvency and Bankruptcy Code (IBC) was touted as a game-changing legislation by a strong government to staunch the haemorrhaging of bank loans. The bankruptcy law now allows the same secured lenders to close these loans with massive write-offs or haircuts.
Here Are the Key Highlights from the Data on the Haircut Taken by SBI
Total number of cases: Increased from just two cases in FY17-18 to 35 cases in FY24-25, peaking at 46 cases in FY23-24.
Principal outstanding: Reached its highest in FY18-19 at Rs38,606 crore. This figure dropped significantly in subsequent years, falling to Rs9,973 crore by FY24-25.
SBI claim amounts: Peaked in FY18-19 at Rs48,425 crore and then trended downward, with FY24-25 recording claims worth Rs14,862 crore.
SBI’s share in resolution plan: Was highest in FY18-19 at Rs26,402 crore. This amount reduced drastically in later years, with only Rs2,311 crore recovered in FY24-25.
Haircut amounts: Representing the loss SBI had to absorb during the resolution, the highest haircut was recorded in FY18-19 at Rs22,023 crore. FY24-25 saw a reduction in haircut value to Rs12,551 crore.
The data suggests a steady decline in both claim amounts and SBI’s recovery share post-FY18-19, indicating shrinking recoveries and persistent high haircuts in NCLT-resolved cases.
An angry Mr Velankar says, "If a bank has practically lost hopes of recovery and has, hence, written off the loan, why should such a loan get the shield of secrecy? When an ordinary borrower defaults, banks are quick to publish their name and details in newspaper advertisements. So why are the identities of large defaulters kept under wraps? Unfortunately, instead of taking firm action, both the Union finance ministry and Reserve Bank of India (RBI) appear to be in a 'wait and watch' mode. Moreover, there is little to no accountability for senior bank officials — including directors — who approved these massive loans despite clear signs that they would eventually become non-performing assets (NPAs)."
Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment.
This practice is frowned upon by experts but is routinely followed by banks as part of their tax management clean-up process. The beneficiaries are invariably some of our biggest industrialist defaulters.
In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it.
Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts.
As per the guidelines issued by RBI and the policy approved by banks' boards, NPAs, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance sheet of the bank concerned by way of a write-off.
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