There have been countless occasions when Bollywood actors have made a fool of themselves by weighing in on topics completely out of their intellectual grasp. Recently, actor Richa Chadha enlisted herself in the list of Bollywood celebrities who have displayed shocking disregard and brazen antipathy for logic and rationality. As the country reels under the economic shadow of coronavirus lockdown, Ms Chadha today asked the Premier Bank of the country, RBI, why it can’t “write-off” everyone’s EMI.
Taking to Twitter, Ms Chadha asked, “Why can’t the RBI also write off everyone’s EMIs?” The tweet by the Fukrey actor was in reference to the RBI list of top 50 wilful defaulters who are accused of cheating Indian banks. However, the Masaan actress seemed to have conflated the two disparate concepts of “waive off” and “write off” to wonder why the RBI cannot write off everyone’s EMIs.
It is also pertinent to note here that the Reserve Bank of India doesn’t write off loans. It is the banks that write off the loans that are granted by them. In this case, the apex bank of the country had simply provided with the list of top 50 defaulters to an RTI query. Therefore, Ms Chadha’s demand that the RBI should write off everyone’s EMIs is patently wrong and impossible to be fulfilled.
Difference between a Waive off and Write off
‘Write-off’ is a process of balance sheet cleaning up exercise undertaken by concerned banks to depict the real status of the bank’s assets and liabilities. The write-offs are not loan waivers as implied by Ms Chadha in her above tweet.
The banks usually write off loans (an asset to the bank) given to borrowers, which have now shown signs of weakness. The borrower is still liable for repayment. If banks fail to write-off these loans, it is reflected as a high-quality asset and the returns-on-assets should be classified as an income to the bank. However, the quality of a defaulted loan has deteriorated for some time now, which results in giving the wrong picture of the true assets of the bank. It is just a normal practise to clean balance sheets and achieve tax efficiency.
Write-offs are a purely technical, accounting entry. Loans, which may not be repaid by the borrower in the normal course of business are written off. Even when these loans are written off, various recovery procedures like recovery suits filed before the Debt Recovery Tribunal and action initiated under SARFAESI Act continue. Hence, the writing-off a loan is not simply a ‘waive-off’.
Waive off, on the other hand, means that the banks have no means for recovery. For example, loans of farmers who face crop failures are waived off which means they don’t have to repay the loans.
India’s FM Nirmala Sitharaman slammed Congress leader Rahul Gandhi over misinformation
Earlier yesterday, the Reserve Bank of India had released the list of top 50 loan defaulters which included names of Mehul Choksi, Nirav Modi among others. The former Congress President lapped on to the list to mount an attack against the government, accusing them of waiving off their loans. However, the Finance Minister of the country, Nirmala Sitharaman rubbished the unfounded claims made by the Gandhi scion, stating that the Wayanad MP is spreading misinformation again by terming ‘bad loan write off’ by banks as ‘loan waiver’.