Banks clear unsecured e-book with aggressive write-offs in FY25

ICICI Financial institution’s write-offs rose to ₹9,271 crore in FY25 from ₹6,091 crore in FY24
| Picture Credit score:
DHIRAJ SINGH

Banks, particularly non-public sector lenders, have cleaned up their unsecured mortgage e-book aggressively in FY25, writing off sharply greater quantity of dangerous loans as towards the earlier fiscal.

Nation’s largest lender, State Financial institution of India’s (SBI) write-offs rose to ₹26,542 crore in FY25 as towards ₹17,645 crore in FY24. ICICI Financial institution’s write-offs rose to ₹9,271 crore in FY25 from ₹6,091 crore in FY24, whereas Axis Financial institution’s general write-offs rose to ₹11,833 crore versus ₹8,865 crore in FY24. Comparable developments have been seen throughout a number of mid-sized non-public lenders, whereas public sector lenders fared higher.

“Write-offs are primarily for the small-value loans. We often take inventory. If provision protection improves to 100%, we usually take them off the books and put them below advances below the gathering account and hand the account to the restoration crew. That’s an ongoing course of, broadly write-offs are coming from small worth loans in SME and agriculture,” mentioned CS Setty, Chairman, SBI.

Puneet Sharma, Axis Financial institution CFO, says the financial institution’s write-off strategy is rule-based and it doesn’t train any discretion on write-offs. “This system that we observe is after an account is offered absolutely, with elapsation of time, the account will get written off on our books…broadly given the setting, the write-off for the present quarter would have been on the retail, unsecured facet.”

In response to Hari Hara Mishra, CEO at Affiliation of ARCs in India, restoration in written off accounts has been round 20 per cent in final three years as per a reply in Parliament. In retail, nevertheless, he says it is going to be a lot lesser as there are shopper and private loans with none safety. General restoration is dependent upon buyer profile, ageing of NPAs and availability of enforceable safety, if any.

“On credit score administration, banks have 4 key levels. First, sturdy high quality of underwriting on the stage of origination. Then, efficient monitoring and follow-up guaranteeing no slippage from performing to non-performing. Third, as soon as a mortgage turns NPA, efforts are made to improve it to straightforward to reverse incremental provisioning. And at last, when regardless of all efforts if it has come to a stage the place it needed to been written off, one has to select in persevering with engagement with the accounts with additional prices and efforts or exit by means of say ARC route for accessible liquidity and redeployment of the monetisation proceeds for potential greater returns,” he mentioned.

To make certain, the RBI’s FSR report in December had highlighted that the sharp rise in write-offs, particularly by non-public sector banks, may very well be partly masking worsening asset high quality and dilution in underwriting requirements and is rising as an space of concern.

Revealed on Might 27, 2025