Cleaning banks’ books

Apropos of the report “14 lenders write off loans worth R38,643 crore in FY 16” (FE, June 7), the extent of the bad loans written off by the lenders against the provision created in the books have to be recovered from the borrowers. However, the recovery in prudentially written off accounts are not that encouraging. It is easy to forget the written-off loan accounts as there are no more bad assets in the balance-sheet. The recovery policy which is in vogue directs that all sorts of recovery measures, including legal recourse, need to be taken for realising the dues. Before recognising the account as irrecoverable, banks have to ensure that all kinds of recovery measures have been exhausted. The amount written off by the 14 lenders—of R38,643 crore during FY16—is not a paltry sum. Had the provisions not been created and utilised for writing off the bad loans, it would have gone as dividend to the stake-holders. One-time settlement, and writeoffs of bad loans are necessary to cleanse the balance-sheet, but while carrying out the exercise, banks need to take abundant precaution, due diligence and prudence which are absolutely necessary to avoid any questionings in future by the concerned authorities. The government, banking regulator and the Banks Board Bureau must look for error-free measures to avoid possible malfeasance, and ensure that the benefit has been extended only to the deserving borrowers. The Editor,The Financial Express, B1/B, Sector - 10, Noida - 201301. Distt: Gautam Budh Nagar (U.P.).or e-mail at: feletters@expressindia.com or fax at Delhi: 0120-4367933