Nidhi Razdan is schooled about ‘loan write off’ and the ‘recovery process’ with a simple example

The media has been mixing up loan waiver and loan write off for the longest time. In fact, even Rahul Gandhi has peddled this lie multiple times even after being corrected. So when Nidhi Razdan, who is famous for conducting an entire debate based on fake news, furthered the same lie again, Twitter user and CS Ashutosh Muglikar felt compelled to explain the basics to her with a simple example.

It all started with this tweet where Nidhi Razdan insinuated that if 90% money from Non Performing Assets haven’t been recovered, it means they might never be recovered.

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To this, Ashutosh Muglikar pointed out Nidhi’s flawed logic.

He then proceeded to explain the concept with a simple example. He took the example of two friends, Ramesh and Suresh. He explains how Suresh borrows money from Ramesh at a 10% interest against security of his bike and scooter. They money was then invested in his business.

He then explains a scenario where Suresh is unable to pay the amount. While Ramesh asks for the money back several times. Frustrated, Ramesh, in accordance with RBI rule, provides for the outstanding amount as a loss.

Ramesh then ‘writes off’ the amount in his books and goes to the court to recover his money. After a while, he sells the scooter kept by Suresh as security and recovers Rs 10,000 from the Rs. 60,000 that he is owed.

He postulates that while this entire process is on, a channel like NDTV starts screaming about how only 10,000 has been recovered and in their inimitable style, ask for the resignation of the Prime Minister.

He goes on to explain the court proceedings. Says that a man approached Ramesh with an offer to buy the entire company for Rs 40,000 and eventually, Ramesh decides to forgoe his ‘unapplied interest’ and recover whatever money he can.

He then explains how NDTV and Nidhi Razdan’s logic is hollow and their shrill noise about how the money can never be recovered are nothing but uninformed opinions.

We can only hope that with such a simple illustration, we can only hope that people like Nidhi Razdan and Rahul Gandhi are able to grasp the nuances.

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