Banks have written off agricultural loans worth ₹21,882 crore in financial year 2024-25 amid increasing defaults over the past decade, data cited in Parliament showed on Wednesday.
Defaults in servicing agricultural credit were far less compared to those in other sectors of the economy, but the gaps appear to be closing faster, according to data cited in a written reply by minister of state for finance, Pankaj Chaudhury.
“The Reserve Bank of India (RBI) has apprised that the State/UT-wise and sector-wise details regarding total debt waived off or written off in respect of corporates and farmers is not maintained by it,” the minister said.
But yearly details of write-offs since 2014-15 in industrial, services and the farm sectors provided in the reply show defaults in farm loans rising at a faster clip. Access to timely credit is critical for the farm economy, as millions of cultivators depend on subsidised loans to purchase inputs, such as seeds and fertilisers.
The total amount struck off books for “large industries” stood at ₹27,284 crore in the last financial year (compared to ₹21,882 crore in the agriculture sector in the same year), the data showed.
In 2014-15, total agricultural loans written off stood at just ₹3,420 crore, which grew to ₹12,969 crore in 2019-20. In the next fiscal, such loans jumped 11% to ₹14,483 crore. In 2023-24, they touched ₹24,426 crore, the highest in nearly 11 years.
{{/usCountry}}In 2014-15, total agricultural loans written off stood at just ₹3,420 crore, which grew to ₹12,969 crore in 2019-20. In the next fiscal, such loans jumped 11% to ₹14,483 crore. In 2023-24, they touched ₹24,426 crore, the highest in nearly 11 years.
{{/usCountry}}A loan is said to be written off when a creditor removes it from its balance sheet after a borrower stops servicing it. Banks write off bad loans as per the central bank’s guidelines but they do not result in waiver of liabilities for borrowers, against whom recovery actions are initiated, the minister said.
Total bad loans written off for large industries show a declining trend from a decadal peak of ₹1.25 lakh crore in 2018-19. In 2021-22, they fell to ₹97,304 crore, then to ₹73,272 crore in 2022-23 and finally shrinking to ₹27,284 crore in the last fiscal.
In the aftermath of the 2008 recession, Asia’s third largest economy battled rising bad loans amid an overleveraged corporate sector, a crisis known as the twin balance sheet problem. To be sure, the country’s gross non-performing assets have since fallen and bank finances improved significantly after a series of measures and a new bankruptcy law.