In what could be a possible hitjob the ‘Times of India’ indulges in trickery to misguide its readers. An article appears in the backdrop of a fierce twitter batter between BJP Karnataka Twitter ID and Karnataka CM Siddaramaih. The Twitter fight started after Congress President Rahul Gandhi brazenly accused that “BJP government has ‘waived off’ loans worth Rs. 2.5 Lac crores of 15 rich people in the country.”
Aside from the fact that the amount of this lie has been increasing exponentially with every election from 1,10,000 crores in Bhiwandi, to 1,30,000 crores in Gujarat to now, 2,50,000 crores in Karnataka, Rahul Gandhi, the ‘yuva neta’ seemingly doesn’t even know the basic difference between a Write off and a Loan Waiver. Perhaps, this would help.
What is a Write off V/s Loan Waiver?
As per RBI guidelines and the policy approved by Bank Board(s), non performing loans including those where full provisioning has been made in the Bank Balance Sheet on completion of four years, are removed from the Balance Sheet of the bank concerned. This is, inter-alia, done for tax benefits and capital optimization. The borrowers of such loans continue to be liable for repayment. This mere accounting entry is called as “Loan Write off”
In simpler terms Balance Sheet shows the position of asset and liabilities of an entity. Loan given out by a bank is an asset for the bank and liability for the borrower. When the loan becomes a ‘Non Performing asset’ and the bank does not “write off” the same, then asset side of the bank continues to show the wrong position of the state of affairs. Further, the bank will also have to book interest on the loan as an income and even pay Income tax on that amount meanwhile the loan is not being recovered as of that moment. Hence to avoid these issues the loan is ‘written off’ and for all practical purposes, the recovery procedure continues. Loan write off does not mean it is not recovered or that the person liable to repay his loan is let off the hook.
Whereas Loan Waivers are cases where governments pay the amount owed by say farmers on their behalf to the bank. It is pertinent to note that the Banks have no right to waive off any loan. It is the government which decides to pay on behalf of farmers. Banks get the full amount back from the government treasury. Only farmer loans are waived off. No corporate loans have been waived off.
Fake News by Times of India
The Fake news by Times of India begins with the headline itself. It says that Siddaramaiah makes BJP “admit that loans to industrialists were written off”, giving the impression to the reader that somehow, the distortion being peddled by Congress and the muddying of definition between loan waiver and loan write off is true.
The BJP Karnataka handle made a pertinent point differentiating between loan write off and loan waiver. It even mentioned that the loans were “written off” which means that they will be recovered.
Banks have not waived off corporate loans, they have written off, meaning they will recover it.
From someone who doesn’t understand difference b/w bhrastachaar & balatkaar, it is unfair to expect understanding of difference between loan waiver & loan write off. https://t.co/wkDTsvisTF
— BJP Karnataka (@BJP4Karnataka) March 20, 2018
This was of course spun all over against by the Chief Minister of Karnataka, Siddaramaiah to conflate the meaning of the two terms and reiterate the lie that farmers loans should be ‘waived off’ just like Industrialists loans have been waived off, implying, that the industrialists don’t have to repay the waived off loan, which we now understand is a lie.
The Times of India article uses this tweet as a basis for their headline saying “Siddaramaiah made BJP admit that loan to industrialists was written off”.
Good! At least you admit the loans of large industrialists have been written off.
Now, please join us in requesting PM @narendramodi to write off the loans of our farmers if they can’t be waived.
— Siddaramaiah (@siddaramaiah) March 20, 2018
Even though this is fairly clear and established fact, many commentators and politicians alike keep repeating this same lie to every few months to gain political mileage. The Times of India article also plugs tweet by Salman Anees Soz which is a complete distortion.
No wonder Modi & team have damaged India’s economy. It is a result of ignorance of basic economics. A bank loan write off occurs when a loan is unrecoverable. If write-off meant recoverable, banks would love NPAs?@INCKarnatakahttps://t.co/cExV6bXRjq
— Salman Anees Soz (@SalmanSoz) March 20, 2018
I had explained this fallacy earlier. For example, for SBI Financial Year 2014-2015, the recovery of written off loans was about 12% and for FY 2015-2016 it was about 14%. This doesn’t mean that the rest of the loans couldn’t be recovered or the banks had stopped trying to recover those loans. Therefore, Salman Soz is wrong and worse, Times of India is way off the mark for taking his lies and distortions as the gospel truth.
The write off and recovery for FY 14-15 was nearly 12% and for 15-16 was about 14%
This doesn’t mean the remaining isn’t recoverable or won’t be recovered. It’s under litigation or Insolvency proceedings at NCLT.
Ppl have no clue how things work so ignore them.
— Ashu? (@muglikar_) March 20, 2018
While the opposition has turned lying into a habit, one wonders what editorial standards are being followed by Times of India to further such blatant distortions as the gospel truth to its readers. One wonders on whose behest is this being done and how far will the media go with their lies.