Write off of banks Loans.

There are three kinds of write off of loans in Banks.1) Technical write offs: The loans are  not written off in the books of Branches but written off  in the Banks Balance sheets. This is to claim Income Tax benefits and to manipulate recoveries to suit the management.2) The write offs due to total failure of the business and the loans are not backed by any tangible assets.3) The write offs often done with the full knowledge of the Management in collision with borrowers , Auditors and with the support of Boards of Directors. Here the intervention of politicians, bureaucrats and all sorts of pressures are brought in to write offs. Availability of securities is often ignored. Some times one time settlements are also offered meaning write off s ignoring the availability of securities, high networth of the borrowers etc. Several One time settlements have taken past in the last several years. RBI in its limited scope of Inspection due to shortage of staff, more delegation of powers to banks under liberalised approach, switch over to risk based supervision etc does not give much of importance to the write offs and banks  and borrowers are aware of RBI's approach to take full advantage. The fact of the matter remains that Borrowers Outsmart banks in fooling them by not repaying the loans, banks outsmart Reserve Bank in covering up all their lapses in conducting the loan portfolio effectively and the Reserve Bank Outsmarts all in keeping the banks' health under suspense.  This game has been going on and there is no intention to have a professional approach to run the banks commercially with all the discipline  and loan principles. Favouritism plays havoc and the loot goes on unquestioned. Unfortunately when the banks are better of the NPAs become non issues but it becomes noticed when the economy itself fails.  

Dr T V Gopalakrishnan