Mumbai: Loan write-offs by public sector banks (PSBs) fell to multi-year lows in financial year 2025-26, driven by lower slippages, improved recoveries and stronger asset quality.

An analysis of bank earnings showed that several state-owned lenders, including Bank of Baroda, Union Bank of India, Punjab National Bank, Central Bank of India, Indian Overseas Bank and Indian Bank recorded their lowest write-offs in up to eight years.

Bank of Baroda reported write-offs of Rs 6,330 crore in FY26, the lowest since FY18. Bank of India's write-offs stood at Rs 5,735 crore, the lowest since FY16, while Indian Bank reported Rs 6,695 crore, the lowest since FY19. Indian Overseas Bank's write-offs came in at Rs 1,189 crore, also a multi-year low.

Central Bank of India reported regular and technical write-offs of Rs 1,718 crore in FY26, the lowest since FY22.

Banks generally write off loans when recovery through regular channels appears unlikely and full provisioning has been made against such debt. While write-offs help clean up balance sheets and reduce non-performing assets (NPAs), lenders continue recovery efforts even after writing off loans.

Sachin Sachdeva, vice president and sector head for financial sector ratings at ICRA, said declining write-offs reflected lower fresh slippages, shrinking legacy stressed assets and healthier recoveries.

He said PSBs had significantly strengthened their provision coverage ratios, reducing the need for write-offs while increasingly focusing on resolution-led asset quality management.