₹6.15 lakh crore! The number is certainly spectacular enough to make headlines, trigger outrage and provide ready-made ammunition for those who want to portray the Modi government as the great benefactor of corporate defaulters.
But there is just one small problem with the screaming headline: ₹6.15 lakh crore of loans written off by Public Sector Banks does not mean ₹6.15 lakh crore was waived or gifted away.
Yes, write-off. Not waiver.
But why spoil a perfectly good political narrative with inconvenient facts?
The distinction is fundamental. A loan write-off is primarily an accounting exercise. It allows a bank to clean up its balance sheet by removing a non-performing asset from its books after making the necessary provisions. It does not extinguish the borrower’s liability. The borrower does not receive a congratulatory letter saying, “Congratulations, your debt has vanished. Please enjoy.”
The bank can—and does—continue pursuing recovery.
Since FY2021-22, Public Sector Banks have written off around ₹6.15 lakh crore in loans. Yet they have also recovered substantial amounts from written-off accounts, including about ₹1.65 lakh crore cited in the latest figures. Recovery action does not automatically stop merely because an account has been written off.
That is precisely where the political rhetoric becomes economical with the truth.
The ₹6.15 lakh crore figure is shouted from the rooftops. The recovery figure, rather mysteriously, tends to be whispered from the basement.
So, what actually happened to India’s banking system?
Before 2014, the problem of stressed corporate lending had been allowed to grow for years. Loans were repeatedly restructured, doubtful assets remained buried, and the practice of evergreening—effectively extending or restructuring loans to keep troubled accounts looking healthier—helped postpone recognition of the real problem.
The result? The banking system could look healthier on paper while the rot accumulated underneath.
The Modi government chose a different route: recognise the problem, provision for the losses, clean up the balance sheets and pursue recovery.
It was hardly a glamorous exercise. Cleaning up a banking mess is considerably less exciting than announcing a new loan. But it was necessary.
The logic is straightforward.
Recognise the bad loan.
Provide for it.
Write it off when required.
Then continue pursuing recovery.
And recovery mechanisms are not decorative furniture. Banks can pursue defaulters through the Debt Recovery Tribunals, SARFAESI proceedings, the Insolvency and Bankruptcy Code, the National Company Law Tribunal and courts.
Therefore, saying that the government “waived ₹6.15 lakh crore” is either a fundamental misunderstanding of banking terminology or a politically convenient distortion.
A genuine loan waiver extinguishes the borrower’s obligation. A technical write-off does not.
In fact, the more important story is what happened to the banking system after the recognition of the accumulated mess. Gross non-performing assets of Public Sector Banks, which had ballooned dramatically during the earlier period, subsequently declined substantially as recognition, provisioning, recoveries and recapitalisation cleaned up bank balance sheets.
That transformation deserves scrutiny—but so does the rhetoric surrounding it.
There is certainly nothing wrong with questioning the government over recoveries, large corporate defaults or whether every possible rupee of public money is being pursued. Governments and banks should be held accountable. But accountability cannot be built on deliberately confusing an accounting write-off with a loan waiver.
The ₹6.15 lakh crore number is real.
But the interpretation attached to it can be profoundly misleading.
A write-off does not mean the taxpayer has handed over a cheque to a defaulter and waved goodbye.
Write-off cleans the books. Recovery attempts to recover the money.
And that is the inconvenient second half of the story.
Perhaps the next time someone triumphantly announces that “Modi waived ₹6.15 lakh crore of bank loans,” the obvious question should be:
“Waived—or written off and still being recovered?”
Because in banking, as in journalism, words matter. And sometimes the difference between two words is ₹6.15 lakh crore worth of political misinformation.
