SBI chairman, Arundharti Bhattacharya, on Wednesday said there has been no write offs and no let off of wilful defaulters will happen.
“It is only accounting entry. That does not change anything. To impute otherwise is to unnecessarily malign the banks,”
Further, Bhattacharya explained this in the following points:
First, “These are not write offs. They are old entries done over time. We have fully provided for these loans so they are put into an account called Accounts Under Collection. There is a very robust process for following up all these loans for recovery including monthly review by Management and quarterly review by Board. No let off of borrowers happen and all processes are focused for full recovery. The words “write off” are technical terms and used in the layman’s way of understanding these words is completely misleading,” Bhattacharya told Firstpost.
Second: “This is nothing innovative as alleged. These are fully accepted accounting practices done under current accounting standards. If you leave them on balance sheet they consume precious capital though fully provided. On the other hand by taking them off you release capital as also can avail tax benefits. This is prudent accounting. As long as follow up process is robust – which it is in our bank – there should not be any concern as total Management & Board oversight is maintained.”
Bhattacharya’s explanation shows that the bank didn’t write off the loans but did a smart technical accounting adjustment to avoid further capital burden, though it has fully provided for the loan.
