Write-Off And Loan Waiver: Every day we hear about loan write-off and loan waiver. Opposition parties always target the government regarding the loan write-off of the banks. So we hear the demand of loan waiver for farmers from political parties every day. It is very important for you to know what is the difference between loan write-off and loan waiver. Quoting the media, this news has come out that in the last 5 years, loans worth Rs 10 lakh crore of banks have been written off.
What is loan write off?
Loan write-off of banks is also called as the loan is written off. Any person has the ability to repay the loan, yet he is not returning the loan to the banks, then the borrowers who do not repay the loan are called willful defaulters. Even after all the efforts and legal action, if the bank is not able to recover the loan from these people, then according to the rules of RBI, the bank writes off such loan. Means write off. Banks consider such loans as bad.
If any person or company is not able to return the loan taken from the bank, then if there is no recovery in 90 days, the account of that loan is considered as Non Performing Asset (NPA). And if the NPA is not recovered, it is declared right off. This does not mean that the loan has been forgiven. Write off means that it will not be mentioned in the balance sheet of the banks so that the balance sheet can be seen better. Despite the write off, the action of loan recovery continues from the bank. In the last 5 years, loans worth Rs 10,09,510 crore (US$ 123.86 billion) have been written-off, which has helped banks reduce their non-performing assets.
What is Loan Waive Off?
Whenever a person takes a loan from the bank but is unable to return the loan due to financial crisis, in such a situation the loan given to him is waived off. Such a situation has been seen with the farmers. In 2008, the then UPA government had waived the loans of more than 60 thousand crore rupees of farmers across the country. After this, many state governments on their part have waived off the loans of the farmers of their states. Loan waiver of farmers is called Loan Waive Off. These days, in every state where elections are being held, political parties make populist promises of waiving off farmers’ loans to garner votes.
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Therefore, it is very important to note that there is a huge difference between loan waiver and write-off. Waive Off means loan waiver means giving exemption to the person taking the loan from returning the loan. Whereas in the case of write-off, banks or financial institutions constantly try to recover the loan with the help of central agencies.
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