Loan write-offs keep mounting

The Telegraph
March 05, 2018

Public sector banks have written off loans worth Rs 516 crore owed by wilful defaulters in the first half of the current fiscal, according to data collated by the finance ministry.
As part of this exercise, 38 loan accounts of wilful defaulters were written off the books of banks during the April-September period of 2017-18, the ministry said.
Write-off in banking parlance means that the bank has made 100 per cent provision from its earning against that account. Following this, the non-performing asset (NPA) is no longer part of its balance sheet. However, the write-off puts pressure on banks as it erodes their operating profit.
As recovery in the case of wilful default is very remote, so the possibility of write-back in the future is also very little, said a senior bank official.
A wilful defaulter is somebody who has essentially not used the fund for the purpose it has been borrowed or he has not repaid when he can do so; he has siphoned off the funds or he disposed of the assets pledged for loan without the bank's knowledge.
If there is wilful default, where is the possibility of recovery when the entire exercise was undertaken with a clear intention of default, the official said.
https://www.telegraphindia.com/business/loan-write-offs-keep-mounting 213194#.Wp0Vu_UwvuU.whatsapp

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