Banks wrote off agricultural loans worth ₹21,882 crore in the financial year 2024-25 amid rising defaults over the past decade, data presented in Parliament shows. Minister of state for finance Pankaj Chaudhary stated in a written reply that defaults in farm loans are lower than in other sectors but the gap is narrowing rapidly.
Data cited in a written reply by minister of state for finance Pankaj Chaudhary in Parliament on Wednesday reveals that defaults in agricultural loans have been rising over the past decade. In financial year 2014-15, agricultural loan write-offs stood at just ₹3,420 crore, climbing to ₹12,969 crore in 2019-20. It jumped 11% to ₹14,483 crore the next year and reached ₹24,426 crore in 2023-24, the highest in nearly 11 years.
The Reserve Bank of India (RBI) has informed that it does not maintain state/UT-wise and sector-wise details of total debt waived off or written off for corporates and farmers. However, the minister provided yearly details of write-offs since 2014-15 in industrial, services, and farm sectors.
Write-offs in the agriculture sector amounted to ₹21,882 crore, compared to ₹27,284 crore for large industries. Total bad loans written off for large industries showed a declining trend from a decadal peak of ₹1.25 lakh crore in 2018-19, falling to ₹27,284 crore in the last fiscal year.
A loan is written off when a creditor removes it from its balance sheet after the borrower stops servicing it. Banks write off bad loans as per the central bank's guidelines, but this does not waive liabilities for borrowers, against whom recovery actions are initiated, the minister said.
In the aftermath of the 2008 recession, India's economy grappled with rising bad loans from an overleveraged corporate sector, known as the twin balance sheet problem. Gross non-performing assets have since fallen, and bank finances have improved significantly following a series of measures and a new bankruptcy law.
Access to timely credit is critical for the farm economy, as millions of cultivators rely on subsidised loans to purchase inputs such as seeds and fertilisers.