Every time loans in the banking sector are written off in a massive scale, if the same is questioned by some quarters, the Finance Ministry and RBI come out with statements that writing off loans is not waiving them, but it is only a balance sheet cleansing technical process and recovery efforts would be pursued. However, there is no system of making any public disclosures regarding periodic post-write off recoveries, if that ever becomes a reality.
The public perception that the write-off of loans frequently resorted to is nothing but permanent waiver of their repayment would continue until and unless a formal periodic public disclosure mechanism as mentioned above is put in place. The public perception is justified by the conviction that the written-off loans are those of wilful defaulters whose names would make a very long list.
That the investments made by honest depositors of the banks, tax payers' money and national resources form a major chunk of the written-off loans makes such write-offs a very painful and serious matter.
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