Finance Minister Arun Jaitley, on Wednesday accepted that State Bank of India (SBI) made changes in the account of 63 wilfill defaulters list, including Vijaya Mallya but clarified that Rs 7,000 crore loan 'write-off' is not a loan waiver.
Finance Minister Arun Jaitley asked opposition members in the Rajya Sabha not to go by the literal meaning of write-off. "So there is a little bit of malapropism involved in this. Don't go by literal meaning write-off. Write-off does not mean loan waiver. Loan still remains. You still continue to pursue," he said.
Jaitley was replying to CPM leader Sitaram Yechury who referred to a newspaper report hich said SBI wrote off loans of wilful defaulters including Rs 1,200 crore of Kingfisher airlines. Congress leader Anand Sharma had also raised the issue in his speech. The minister said, "It (write-off) does not mean that the loan ceases to be a loan. We will still chase the loan. The entry in the book changes that is from being performing assets, it become a non-performing (asset)."
The controversy started when a daily newspaper DNA reported that SBI began clean-up of their balance sheets by writing off loan worth RS 7,016 crore owned by more than 60 wilful defaulter in the list of top 100 wilful defaulter, including the loan of t Rs 1,201 crore against Vijaya Mallya. The report further mentioned that out of these 63 list, 31 have been partially written off and six have been shown as non-performing assets (NPAs).
However, reacting to the reports of write-off SBI Chairperson and Managing Director, Arundharti Bhattacharya while giving interview to Firstpost,has denied such 'write-off' and said it is only accounting entry.
She further emphasised that they are not write-off and the bank has made an entry into an account called Accounts Under Collection (AUC), which is a very robust process for following up bad loans and their recovery. This AUC also includes monthly review by Management and quarterly review by Board.
She also hits back saying that the words "write-off" are technical terms and used in the layman's way of understanding these words is completely misleading. She also said that bad loans hit balance sheet by consuming precious capital though fully provided. On the other hand by taking them off you release capital as also can avail tax benefits.