The present disclosure relates to a process for the production of bio-oil which involves heating a mixture of a biomass slurry and a first catalyst composition at a temperature ranging from 200 to 350° C. and at a pressure ranging from 70 to 250 bars to obtain a mass containing crude bio oil, a residue and the catalyst; separating the crude bio oil from said mass to obtain a separated crude bio oil; extracting said separated crude bio oil with at least one solvent and evaporating said solvent to obtain a solvent free crude bio oil; subjecting said solvent free crude bio oil to reduction in the presence of a second catalyst composition and hydrogen source at temperature and pressure conditions similar to those employed for the conversion of bio mass into crude bio oil to obtain bio-oil. The second catalyst composition is the same as that of the first catalyst composition. The process also comprises a method step of recovering the first catalyst and reusing it either for preparing crude bio oil or bio oil or both.