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sskmaestro

SBI wrote of 76k crores of loans

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1 hour ago, sskmaestro said:

220 defaulters each worth 100 Cr.  It given 76k Crores!!! 

SBI wrote off these loans..... common man nettina ruddesinattenaaaaaa???

Villaki matram chestharu adhe common man itey rachie rampana pedatharu Nd Loan ivathaniki kuda Security anie tisukunie kanie ivaru villaki matram illa sollu ghallu 

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But what is a loan write-off? 

A loan write-off is a tool used by banks to clean up their balance-sheets. It is applied in the cases of bad loans or non-performing assets (NPA). If a loan turns bad on the account of the repayment defaults for at least three consecutive quarters, the exposure (loan) can be written off.

A loan write-off sets free the money parked by the banks for the provisioning of any loan. Provision for a loan refers to a certain percentage of loan amount set aside by the banks. The standard rate of provisioning for loans in Indian banks varies from 5-20 per cent depending on the business sector and the repayment capacity of the borrower. In the cases of NPA, 100 per cent provisioning is required in accordance with the Basel-III norms.

Earlier this year in a case of 12 large bankruptcy cases referred to the National Company Law Tribunal, the RBI asked banks to keep aside 50 per cent provision against secured exposure and 100 for unsecured exposure.

 How Write-off Helps Banks 

Suppose a bank disburses a loan of Rs 1 crore to some borrower and is required to make a 10 per cent provision for it. So, the bank sets aside another Rs 10 lakh without waiting for the borrower to default on repayment.

If the borrower makes a bigger default, say Rs 50 lakh, the bank can write off additional Rs 40 lakh mentioning it as an expense in the balance sheet in the year of default. But as the loan is written off, it also frees Rs 10 lakh originally set aside for provisioning. That money is now available to the bank for business.

There is an additional benefit of writing off bad loans. The loan write-off does not take away the bank's right of recovery from the borrower through legal means. After writing off bad loans, any recovery made against them is considered as profit for the bank in the year of recovery. This makes the bank's balance sheet look rosy.

When a nonperforming loan is written off, the lender receives a tax deduction from the loan value. Not only do banks get a deduction, but they are still allowed to pursue the debts and generate revenue from them. Another common option is for banks to sell off bad debts to third-party collection agencies.

Edited by 3mar

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3 hours ago, 3mar said:

But what is a loan write-off? 

A loan write-off is a tool used by banks to clean up their balance-sheets. It is applied in the cases of bad loans or non-performing assets (NPA). If a loan turns bad on the account of the repayment defaults for at least three consecutive quarters, the exposure (loan) can be written off.

A loan write-off sets free the money parked by the banks for the provisioning of any loan. Provision for a loan refers to a certain percentage of loan amount set aside by the banks. The standard rate of provisioning for loans in Indian banks varies from 5-20 per cent depending on the business sector and the repayment capacity of the borrower. In the cases of NPA, 100 per cent provisioning is required in accordance with the Basel-III norms.

Earlier this year in a case of 12 large bankruptcy cases referred to the National Company Law Tribunal, the RBI asked banks to keep aside 50 per cent provision against secured exposure and 100 for unsecured exposure.

 How Write-off Helps Banks 

Suppose a bank disburses a loan of Rs 1 crore to some borrower and is required to make a 10 per cent provision for it. So, the bank sets aside another Rs 10 lakh without waiting for the borrower to default on repayment.

If the borrower makes a bigger default, say Rs 50 lakh, the bank can write off additional Rs 40 lakh mentioning it as an expense in the balance sheet in the year of default. But as the loan is written off, it also frees Rs 10 lakh originally set aside for provisioning. That money is now available to the bank for business.

There is an additional benefit of writing off bad loans. The loan write-off does not take away the bank's right of recovery from the borrower through legal means. After writing off bad loans, any recovery made against them is considered as profit for the bank in the year of recovery. This makes the bank's balance sheet look rosy.

When a nonperforming loan is written off, the lender receives a tax deduction from the loan value. Not only do banks get a deduction, but they are still allowed to pursue the debts and generate revenue from them. Another common option is for banks to sell off bad debts to third-party collection agencies.

ఇదిఏదో భక్తుల write-up గావుందిగా 

అలాఅనుకుంటే common man కి చేసి Govt మేమె చేసాం అని చెప్పుకుని ఓట్లు పొందవచ్చుగా .....

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