Mumbai- Indian banks have written off loans worth over 10 trillion rupees ($121.05 billion) in the last five financial years in an attempt to clean up their balance sheets, according to the federal government.

State Bank of India, the country's largest lender, leads the list with the biggest write-off of 2.04 trillion rupees, the ministry of finance said in a written reply to a question asked in the lower house of the parliament on Monday.

Punjab National Bank, another state-owned lender, ranked second with a cumulative 923.39 billion rupees in write-offs. Two other public sector banks, Oriental Bank of Commerce and United Bank of India, were amalgamated into PNB in April 2020.

Banks write off the loans in an attempt to clean up their balance sheets after setting aside adequate provisions. Once an account has been written off, it doesn't show as an asset on the bank's balance sheet, but efforts to recover the dues through bankruptcy proceedings or sale of bad loans continue.

The state-owned banks have recovered loans worth 4.80 trillion rupees in the last five financial years, including 1.03 trillion rupees from written-off assets, according to the central bank data, the finance ministry reply pointed out.

Overall, the health of Indian banks has improved with gross non-performing asset ratio of scheduled commercial banks falling to 5.9% in March 2022, the central bank had said in its bi-annual publication earlier this year. The report also highlighted that the ratio could decline further to 5.3% by the end of this March.



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