{"id":7078605,"date":"2026-10-06T22:12:15","date_gmt":"2026-10-06T22:12:15","guid":{"rendered":"https:\/\/fivemor.com\/?p=7078605"},"modified":"2026-10-06T22:12:15","modified_gmt":"2026-10-06T22:12:15","slug":"loan-write-off-to-waivers-the-law-of-politics","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=7078605","title":{"rendered":"LOAN WRITE-OFF TO WAIVERS \u2013 THE LAW OF POLITICS"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<head>\n<link href=\"https:\/\/www.blogger.com\/static\/v1\/widgets\/2872013778-css_bundle_v2.css\" rel=\"stylesheet\" type=\"text\/css\"\/>\n<meta content=\"width=1100\" name=\"viewport\"\/><br \/>\n<meta content=\"text\/html; charset=UTF-8\" http-equiv=\"Content-Type\"\/><br \/>\n<meta content=\"blogger\" name=\"generator\"\/>\n<link href=\"https:\/\/clearlaw4all.blogspot.com\/favicon.ico\" rel=\"icon\" type=\"image\/x-icon\"\/>\n<link href=\"https:\/\/clearlaw4all.blogspot.com\/2020\/05\/loan-write-off-to-waivers-law-of.html\" rel=\"canonical\"\/>\n<link rel=\"alternate\" type=\"application\/atom+xml\" title=\"CLEARLAW4ALL - Atom\" href=\"https:\/\/clearlaw4all.blogspot.com\/feeds\/posts\/default\"\/>\n<link rel=\"alternate\" type=\"application\/rss+xml\" title=\"CLEARLAW4ALL - RSS\" href=\"https:\/\/clearlaw4all.blogspot.com\/feeds\/posts\/default?alt=rss\"\/>\n<link rel=\"service.post\" type=\"application\/atom+xml\" title=\"CLEARLAW4ALL - Atom\" href=\"https:\/\/www.blogger.com\/feeds\/1259319595464385843\/posts\/default\"\/>\n<link rel=\"alternate\" type=\"application\/atom+xml\" title=\"CLEARLAW4ALL - Atom\" href=\"https:\/\/clearlaw4all.blogspot.com\/feeds\/615282155817756019\/comments\/default\"\/>\n<!--Can't find substitution for tag [blog.ieCssRetrofitLinks]--><br \/>\n<meta content=\"https:\/\/clearlaw4all.blogspot.com\/2020\/05\/loan-write-off-to-waivers-law-of.html\" property=\"og:url\"\/><br \/>\n<meta content=\"LOAN WRITE-OFF TO WAIVERS \u2013 THE LAW OF POLITICS\" property=\"og:title\"\/><br \/>\n<meta content=\"Economic Laws and Fiscal Laws Reforms\" property=\"og:description\"\/><br \/>\n<title>CLEARLAW4ALL: LOAN WRITE-OFF TO WAIVERS \u2013 THE LAW OF POLITICS<\/title><\/p>\n<link href=\"https:\/\/www.blogger.com\/dyncss\/1259319595464385843\/authorization.css?zx=c4e5c86b-aaad-4f06-9d46-e42d2720f977\" media=\"none\" onload=\"if(media!='all')media='all'\" rel=\"stylesheet\"\/><noscript><link href=\"https:\/\/www.blogger.com\/dyncss\/1259319595464385843\/authorization.css?zx=c4e5c86b-aaad-4f06-9d46-e42d2720f977\" rel=\"stylesheet\"\/><\/noscript><br \/>\n<meta name=\"google-adsense-platform-account\" content=\"ca-host-pub-1556223355139109\"\/><br \/>\n<meta name=\"google-adsense-platform-domain\" content=\"blogspot.com\"\/><\/p>\n<p><!-- data-ad-client=ca-pub-2442500300274316 --><\/p>\n<p><\/head><br \/>\n<body class=\"loading variant-birds\" id=\"wp_automatic_ReadabilityBody\"><\/p>\n<div class=\"content\">\n<div class=\"content-outer\">\n<div class=\"fauxborder-left content-fauxborder-left\">\n<div class=\"content-inner\">\n<header>\n<\/header>\n<div class=\"main-outer\">\n<div class=\"fauxborder-left main-fauxborder-left\">\n<div class=\"region-inner main-inner\">\n<div class=\"columns fauxcolumns\">\n<p><!-- corrects IE6 width calculation --><\/p>\n<div class=\"columns-inner\">\n<div class=\"column-center-outer\">\n<div class=\"column-center-inner\">\n<div class=\"main section\" id=\"main\" name=\"Main\">\n<div class=\"widget Blog\" data-version=\"1\" id=\"Blog1\">\n<div class=\"blog-posts hfeed\">\n<div class=\"date-outer\">\n<div class=\"date-posts\">\n<div class=\"post-outer\">\n<div class=\"post hentry uncustomized-post-template\" itemprop=\"blogPost\" itemscope=\"itemscope\" itemtype=\"http:\/\/schema.org\/BlogPosting\">\n<meta content=\"1259319595464385843\" itemprop=\"blogId\"\/><br \/>\n<meta content=\"615282155817756019\" itemprop=\"postId\"\/><br \/>\n<a name=\"615282155817756019\"\/><\/p>\n<h3 class=\"post-title entry-title\" itemprop=\"name\">\nLOAN WRITE-OFF TO WAIVERS \u2013 THE LAW OF POLITICS<br \/>\n<\/h3>\n<div class=\"post-body entry-content\" id=\"post-body-615282155817756019\" itemprop=\"description articleBody\">\n<div dir=\"ltr\" style=\"text-align: left;\" trbidi=\"on\">\n<\/p>\n<div align=\"center\" class=\"MsoNormal\" style=\"line-height: 150%; text-align: center;\">\n<b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">LOAN WRITE-OFF TO WAIVERS \u2013 THE LAW OF POLITICS<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Recently, on April 24, 2020, when the<br \/>\nReserve Bank of India (\u201cRBI\u201d) replied to Shri Saket Gokhale under the RTI Act providing<br \/>\nthe details of 50 willful defaulters and the amounts owed by them as on<br \/>\nSeptember 30, 2019<b style=\"mso-bidi-font-weight: normal;\">(1)<\/b>, it immediately<br \/>\nsnowballed into a political controversy with the Opposition alleging that the<br \/>\nModi government had favoured its friendly industrialists (some of whom have<br \/>\nalso gone fugitive economic offenders) with the waiver of Rs.68,607 crores.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The Press also fell prey to surmises and<br \/>\nwrote that the RBI had effected this waiver.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>Twitter tirade soon broke out that a Minister in the Centre schooled an<br \/>\nopposition leader to take tuitions from a former finance minister belonging to<br \/>\nhis party to appreciate the differences between loan \u2018write-offs\u2019 and \u2018waivers\u2019.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The law of politics on this subject had<br \/>\nbecome murkier and we do not know whether tuitions were taken and lessons learnt<br \/>\non the subject, but, we will endeavor to understand the legal nuances<br \/>\nassociated with the issue and before wrapping up <span style=\"mso-spacerun: yes;\">\u00a0<\/span>this piece of work come to a determinative conclusion<br \/>\non the issue.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">A Peep into Bankers\u2019 Policies and Practices<\/span><\/u><\/b><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">:<\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Before we proceed to unravel the above<br \/>\nissue, it would be imperative to understand and underscore the policies and<br \/>\npractices prevalent with the banking industry on this subject.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Banks and lenders have always enjoyed a<br \/>\ndiscretion to either postpone and\/or scale down the recoveries of bad loan<br \/>\naccounts.<span style=\"mso-spacerun: yes;\">\u00a0\u00a0 <\/span>When the loan repayments hit<br \/>\nroadblocks arising out of genuine circumstances, lenders have often permitted<br \/>\nmoratorium against recoveries and even took haircuts and sacrifices on their<br \/>\nprincipal and interest receivables with a view to reviving and rehabilitating<br \/>\nthe borrowers.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Traditionally, under the<br \/>\nvoluntary route, the lenders have acted through the non-statutory mechanisms<br \/>\nsuch as One Time Settlement (\u201cOTS\u201d), Roll Over, Corporate Debt Restructuring<br \/>\n(\u201cCDR\u201d), Strategic Debt Restructuring and Sustainable Structuring of Stressed<br \/>\nAssets schemes. Involuntarily, the banks were also, from time to time, enjoined<br \/>\nby popular governments to enforce agricultural loan and other cooperative loan<br \/>\nwaivers.<span style=\"mso-spacerun: yes;\">\u00a0\u00a0 <\/span>In terms of statutorily<br \/>\nrecognized schemes envisaged by the Sick Industrial Companies Act, Insolvency<br \/>\nlegislations, Companies Act, 1956 and the SARFAESI Act, the lenders were\/are<br \/>\npermitted to legitimately take haircuts and make sacrifices in the loan<br \/>\nrecovery.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In the recent times, under the<br \/>\nInsolvency and Bankruptcy Code, 2016 (\u201cIBC, 2016\u201d), the financial creditors end<br \/>\nup making significant sacrifices of the loans owed by corporate entities when<br \/>\nresolution plan is approved by the NCLT and implemented during the course of<br \/>\nthe Corporate Insolvency Resolution Process (\u201cCIRP\u201d).<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Lenders\u2019 Sacrifices in Some Circumstances:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Re-scheduling or offering<br \/>\nrehabilitation package to the borrowers to genuine and deserving cases of<br \/>\nborrowers has now become well recognized and entrenched in our fiscal policy<br \/>\nand law.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The banks cannot declare<br \/>\nborrowers as \u2018willful defaulters\u2019 without following the due process of law<b style=\"mso-bidi-font-weight: normal;\">(2)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>They have no escape and are obliged to act within the guidelines of RBI in<br \/>\nextending OTS in a non-discriminatory fashion, provided the borrower\u2019s case<br \/>\nfalls within the guidelines issued by RBI<b style=\"mso-bidi-font-weight: normal;\">(3)<\/b>.<br \/>\n<span style=\"mso-spacerun: yes;\">\u00a0<\/span><\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Some of the means and mechanisms through<br \/>\nwhich banks and lenders typically offer certain sacrifices towards their<br \/>\nborrowers are illustrated below:-<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(a)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0 <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Roll-over of Loans and Ever-greening:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Roll-over of loans is a legitimate<br \/>\nprocess when the lender agrees to extend the period of loan repayment of a<br \/>\nborrower\u2019s account for bonafide business difficulties. However, ever-greening<br \/>\nis an invidious practice adopted by some banks to sanction fresh loans so as to<br \/>\nsettle the overdue loan accounts which would otherwise slip into Non-Performing<br \/>\nAssets accounts.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Both these processes,<br \/>\nhowever, have an effect of reduced or doubtful recovery chances which over a<br \/>\nperiod of time may affect the lenders\u2019 ability to collect chronic loan<br \/>\ndefaults.<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(b)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0 <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Moratorium on Repayments and Recovery Proceedings:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">In the normal course of things, banks<br \/>\nhave discretion to effect a moratorium on the repayments in case borrowers have<br \/>\ngenuine difficulties in servicing the loans.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>The repayment is merely deferred and delayed in the case of moratorium<br \/>\nof repayment for a definite period as in the case of CDR and upon the expiry of<br \/>\nsaid moratorium period, the repayment instalments, with or without interests,<br \/>\nwould commence.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The loss of interests arising<br \/>\nout of such moratorium erodes the lender\u2019s capital.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Suspension of legal proceedings, including<br \/>\nrecovery of loans, as envisaged under section 22 of the Sick Industrial<br \/>\nCompanies Act, 1984 (\u201cSICA\u201d) was greatly abused by the borrowers in our country<br \/>\nresulting in the perpetual deferment of recovery proceedings by lenders.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The successor legislation to the SICA <i style=\"mso-bidi-font-style: normal;\">viz<\/i>. IBC, 2016 which introduced<br \/>\nmoratorium under section 14 of IBC is limited in duration for 180 days<br \/>\nextendable by another 90 days.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>These<br \/>\nmoratorium sometimes have the effect of not only delaying, but also defeating<br \/>\nthe recovery possibilities of the loan account causing losses to the banks.<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(c)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0 <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">One Time Settlement: <\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">RBI guidelines as adopted by the<br \/>\nindividual scheduled commercial banks policies hold the field in relation to<br \/>\nthe entertaining of borrower\u2019s requests for approval of OTS, mostly in relation<br \/>\nto the Micro, Small and Medium Enterprises Sector<b style=\"mso-bidi-font-weight: normal;\">(4)<\/b>, which usually seeks to realise at least the outstanding<br \/>\nprincipal and in most circumstances the banks forgo the interests where the<br \/>\nborrowers have acted genuine and have not resorted to either diversion or<br \/>\nsiphoning of the funds.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In this process,<br \/>\nbanks end up sacrificing the interests, costs and other charges over the<br \/>\noutstanding loans with the haircuts taken by the banks often in the range<br \/>\nof<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>40-60 per cent which in some cases even<br \/>\nextend up to 90% of the loan receivables<b style=\"mso-bidi-font-weight: normal;\">(5)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>RBI only lays down guidelines for such<br \/>\nhaircuts, but, it is the prerogative of each commercial bank to decide on the<br \/>\nquantum of haircut it can take for its borrowers\u2019 loans.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In this process, the only advantage which<br \/>\naccrues to the banks is the immediate liquidity of the principal amount whose<br \/>\nNet Present Value is better than the uncertainties associated with recovery<br \/>\nproceedings.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>OTS results in the<br \/>\ncompromise and settlement of all pending cases and the relinquishment of right to<br \/>\ninitiate any fresh cases against the borrowers.<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(d)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\"> <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Scheme of Arrangements:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">The scheme of compromise with lenders<br \/>\nand scheme of arrangement by companies under section 391 to 394 of the<br \/>\nerstwhile Companies Act, 1956 was one of the most resorted practices which<br \/>\nresulted in the restructuring of companies with huge loan recasts, deferments,<br \/>\nmoratorium and haircuts and sacrifices made by the banks and financial<br \/>\ninstitutions so as to revive the companies under schemes which are approved by<br \/>\nthe High Courts.<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(e)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0 <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Revival Scheme under SICA:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"background: white; font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Most rehabilitation<br \/>\npackages cast an obligation upon the participating banks\/creditors (who might<br \/>\nbe entitled to claim outstanding dues from the sick company) to not only forego<br \/>\nsome part of the interest liabilities or even accept a lumpsum settlement, but<br \/>\nalso to do something positive, i.e. to increase\/enhance or continue with<br \/>\nrecurring funding of a venture which otherwise would be wound-up.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Under section 19 of the SICA when any scheme<br \/>\nis sanctioned by BIFR, it had required lenders to provide further financial<br \/>\nassistance to a sick industrial company by way of loans, advances or guarantees<br \/>\nor reliefs or concessions or sacrifices which led to the widespread of<br \/>\nfrittering away of the financial resources of the banks in our country.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><\/span><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">In the case of BIFR scheme, the sick industries were given<br \/>\nfinancial assistance by way of loans, advances or guarantees or reliefs or<br \/>\nconcessions or sacrifices by Government, banks public financial institutions<br \/>\nand other authorities.<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(f)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0\u00a0<br \/>\n<\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Corporate Debt Restructuring:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">CDR was introduced by RBI as a<br \/>\nvoluntary non-statutory arrangement by banks to restructure the accounts of<br \/>\nborrowers who are not classified as willful defaulters and whose accounts do<br \/>\nnot involve any frauds.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Several<br \/>\ncorporates in our country have availed CDR and some of them even availed CDR<br \/>\ntwice.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The CDR cell has approved<br \/>\nrestructuring of stressed loans worth Rs. 4 trillion since its inception in<br \/>\n2001, of which Rs. 84,677 crore worth of loans exited the CDR cell successfully<br \/>\nwhile Rs. 1.84 trillion exited without success and now nearly Rupees 1.32<br \/>\ntrillion worth of bad loans are presently undergoing restructuring in the cell<b style=\"mso-bidi-font-weight: normal;\">(6)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>In a typical case of<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>CDR, the<br \/>\nlenders agree to a moratorium, sacrifice of loan principal and interest<br \/>\nreceivables, recasting the loans, extending the repayment schedule and in some<br \/>\ncases releasing of additional and fresh loans to help revive the borrower<br \/>\ncompanies.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In some cases, the lenders<br \/>\nmay also agree to convert their debt into equity in the borrower company thereby<br \/>\nreducing the quantum of loans and in return may seek a right of recompense which<br \/>\nis very illusory.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In all instances of<br \/>\nCDR, there is a significant write-off and loss to the receivables of a bank, by<br \/>\nway of hair-cuts and sacrifices.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><b style=\"mso-bidi-font-weight: normal;\"><u\/><\/b><\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(g)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0 <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Assignment to Asset Reconstruction Companies:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">With the enactment of the SARFAESI Act,<br \/>\n2002, the banks and financial institutions were permitted to assign and sell<br \/>\ntheir loans to Asset Reconstruction Companies (\u201cARC\u201d) in terms of section 5<br \/>\nthereof, at huge discounts.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>This enabled<br \/>\nthe banks and financial institutions to quickly get rid of their sticky loans<br \/>\nand NPAs to ARCs and realise only a part of the value of the outstanding loan<br \/>\nreceivables of its borrowers.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>ARCs remit<br \/>\nonly a small upfront money and subsequently settle a heavily discounted<br \/>\nconsideration to the banks for such assignment and same was neither considered<br \/>\nto be against public policy nor the receipt of only a meagre portion of their<br \/>\nloan receivables from the ARCs were struck down by our courts<b style=\"mso-bidi-font-weight: normal;\">(7)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>The banks and financial institutions lost heavily on these assignment of<br \/>\nloans, but, in the process managed to clean-up their balance-sheets.<\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(h)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\"> <\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Loan Write-off and Waivers:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; margin-right: 1.3pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">As per the RBI data on global<br \/>\noperations, public sector banks have written off, including compromise, an<br \/>\namount of Rs. 2,41,911 crores from 2014-15 till September 2017 which amount<br \/>\nstood at Rs.<span style=\"letter-spacing: -.3pt;\"> 3,16,500 crore as on April 2018.<span style=\"mso-spacerun: yes;\">\u00a0\u00a0 <\/span><\/span>Government of India has clarified<br \/>\nthat \u201c<i style=\"mso-bidi-font-style: normal;\">w<\/i><\/span><i style=\"mso-bidi-font-style: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-fareast-font-family: &quot;Times New Roman&quot;;\">riting off of loans is done, inter alia, for tax benefit and<br \/>\ncapital optimization. Borrowers of such written off loans continue to be liable<br \/>\nfor repayment. Recovery of dues take place on ongoing basis under applicable<br \/>\nlegal mechanisms. Therefore, write-off does not benefit borrowers<b style=\"mso-bidi-font-weight: normal;\">(8)<\/b><\/span><\/i><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-fareast-font-family: &quot;Times New Roman&quot;;\">.\u201d<\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; margin-right: 1.3pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Our judiciary holds that a bank may<br \/>\nexercise its &#8220;right of waiver&#8221; unilaterally to absolve the debtor<br \/>\nfrom its liability to repay and upon such exercise, the debtor is deemed to be<br \/>\nabsolved from the liability of repayment of loan subject to the conditions of<br \/>\nwaiver<b style=\"mso-bidi-font-weight: normal;\">(9)<\/b>. <span style=\"mso-spacerun: yes;\">\u00a0<\/span><\/span><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-fareast-font-family: &quot;Times New Roman&quot;;\">The last debt waiver<br \/>\nscheme <i style=\"mso-bidi-font-style: normal;\">viz<\/i>.\u00a0Agricultural Debt<br \/>\nWaiver and Debt Relief Scheme, 2008 (&#8220;ADWDRS, 2008&#8221;)\u00a0announced by the Union<br \/>\nGovernment was implemented\u00a0in the year 2008, whereunder the debt waiver<br \/>\nportion of the ADWDRS, 2008 was closed by its due date i.e. 30.6.2008, while<br \/>\nthe debt relief portion of the Scheme was closed on 30.6.2010, with its benefits<br \/>\nhaving been extended to 3.73 crore farmers to an extent of Rs. 52,259.86 crore<b style=\"mso-bidi-font-weight: normal;\">(10)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>This was followed up by several state governments extending their own<br \/>\nloan waiver schemes as part of their election manifestos, despite objections by<br \/>\nRBI<b style=\"mso-bidi-font-weight: normal;\">(11)<\/b> and it is estimated that if<br \/>\nevery state were to waive even 50% of their agricultural debt, it would cost 1%<br \/>\nof India\u2019s GDP in terms of 2016-17 price<b style=\"mso-bidi-font-weight: normal;\">(12)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><\/span><\/div>\n<div class=\"MsoListParagraph\" style=\"line-height: 150%; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;\">\n<!--[if !supportLists]--><b style=\"mso-bidi-font-weight: normal;\"><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Bookman Old Style&quot;; mso-fareast-font-family: &quot;Bookman Old Style&quot;;\"><span style=\"mso-list: Ignore;\">(i)<span style=\"font: 7.0pt &quot;Times New Roman&quot;;\">\u00a0\u00a0<br \/>\n<\/span><\/span><\/span><\/b><!--[endif]--><b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Lenders\u2019 Sacrifices under IBC, 2016:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">In terms of IBC, 2016, financial<br \/>\ncreditors are entitled to initiate CIRP against corporate debtors under section<br \/>\n7 which when admitted by NCLT under section 13 will result in a declaration of<br \/>\na moratorium under section 14 and the appointment of an interim resolution<br \/>\nprofessional.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Unlike SICA, the<br \/>\nmoratorium period and the CIRP period is also limited in duration and cannot<br \/>\nextend indefinitely and therefore resolution of insolvency of corporate debtors<br \/>\nis time-bound.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Under IBC, 2016, the<br \/>\nfinancial creditors will constitute a Committee of Creditors which will evaluate<br \/>\nand recommend a resolution plan submitted by a resolution applicant for its<br \/>\napproval by NCLT.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Once the resolution<br \/>\nplan is approved by NCLT under section 31, it will be binding on the corporate<br \/>\ndebtor, its employees, members, creditors, guarantors and other stakeholders<br \/>\ninvolved in the resolution plan.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In case<br \/>\nthere is no approval of any resolution plan, then, the corporate debtor<br \/>\nproceeds for liquidation in which case the right of the financial creditor to<br \/>\nreceive the distribution of the assets of the company is regulated by section<br \/>\n54 of IBC, which ranks secured creditors ahead of the unsecured creditors.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Although the provisions of IBC, 2016<br \/>\nare much more effective and time-bound than those in SICA, yet, its actual<br \/>\nimplementation remains dogged with the resolution plans approved by NCLT<br \/>\ninvolving huge haircuts and sacrifices by the banks<b style=\"mso-bidi-font-weight: normal;\">(13)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>It has been held by<br \/>\nour Supreme Court that initiation of CIRP is not a recovery proceedings against<br \/>\nborrowers and is aimed at only resolving the corporate insolvency of a<br \/>\ncorporate debtor<b style=\"mso-bidi-font-weight: normal;\">(14)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The RBI had issued a circular in February<br \/>\n2018 disbanding all CDR schemes and urging banks to evolve a resolution plan<br \/>\nwithin 180 days for those borrowers who have cumulative exposure of more than<br \/>\nRs.2000 crores borrowings<b style=\"mso-bidi-font-weight: normal;\">(15)<\/b> and<br \/>\nupon its failure to initiate proceedings against such borrowers under the<br \/>\nprovisions of IBC, 2016.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>In the wake of<br \/>\nthe Supreme Court striking down the said RBI circular as unconstitutional<b style=\"mso-bidi-font-weight: normal;\">(16)<\/b>, upon carrying out the changes<br \/>\nnecessitated by the verdict, the RBI had once again issued a revised statutory<br \/>\ndirections on initiating resolution plan for big ticket stressed assets<b style=\"mso-bidi-font-weight: normal;\">(17)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>Consequently, this process had also result in huge sacrifices and<br \/>\nhair-cuts to the lenders when the resolution plans for big ticket borrowers are<br \/>\napproved and implemented.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"line-height: 150%; text-align: justify;\">\n<b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Loan Waiver Practices &amp; Criticism:<\/span><\/u><\/b><\/div>\n<div style=\"border-bottom: solid windowtext 1.0pt; border: none; mso-border-bottom-alt: solid windowtext .75pt; mso-element: para-border-div; padding: 0cm 0cm 1.0pt 0cm;\">\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">However, at the same time, both the<br \/>\nGovernment and the regulators like the RBI have been engaged in a turf war on<br \/>\nthe advisability of loan waivers.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><em><span style=\"background: white; border: none windowtext 1.0pt; font-family: &quot;Bookman Old Style&quot;,serif; mso-border-alt: none windowtext 0cm; padding: 0cm;\"><span style=\"mso-spacerun: yes;\">\u00a0<\/span><\/span><\/em>When our apex court was approached<br \/>\nto regulate the matter of waivers, write-offs, rescheduling of repayments,<br \/>\nmoratoriums and one-time settlements by banks which result in loss of<br \/>\nsubstantial amount of public funds, it merely proceeded to flag the issue for<br \/>\nconsideration by the Committee of Experts under the Chairmanship of Shri Vepa<br \/>\nKamesan, Ex-Deputy Governor of Reserve Bank of India<b style=\"mso-bidi-font-weight: normal;\">(18)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><span style=\"mso-spacerun: yes;\">\u00a0<\/span>There is criticism from successive RBI<br \/>\nGovernors that loan waivers breed a dishonest culture amongst borrowers and it<br \/>\nhas only a temporary poverty alleviation results on the small farmers and<br \/>\ntherefore agricultural and crop loan waivers should not be encouraged<b style=\"mso-bidi-font-weight: normal;\">(19)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span>A World Bank study on India\u2019s debt waiver scheme also suggests that although<br \/>\ntemporarily it provides for alleviating the conditions of the rural agriculturists,<br \/>\nit does not provide a long term solution to their economic conditions<b>(20).\u00a0 <\/b>But, it is always the legal prerogative of elected governments to honour their electoral promises contained in the manifesto promising loan waivers, subject to balancing the overall economic impact on the GDP and the economy and the targeted results of providing reliefs.<span style=\"font-weight: bold;\">\u00a0<\/span><b\/><\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<b style=\"mso-bidi-font-weight: normal;\"><u><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Finally, the Write-off <i style=\"mso-bidi-font-style: normal;\">vs.<\/i><br \/>\nWaiver Conclusion:<\/span><\/u><\/b><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">We have traced in reasonable detail on<br \/>\nthe ways and means by which banks in their normal course of business end up<br \/>\nsuffering haircuts and sacrifices, either through voluntary mechanisms or<br \/>\nthrough statutory binding processes which may entail writing-off.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>However, we need to distinguish between<br \/>\nwrite-offs and waivers as <span style=\"mso-spacerun: yes;\">\u00a0<\/span>discerning<br \/>\nindividuals.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>A write-off of a loan by a<br \/>\nbank is merely an accounting treatment which results in provisioning for usually<br \/>\nunrecoverable (but, not impossible to recover) bad debts and aims at securing a<br \/>\ntax deduction to the bank.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>It does not<br \/>\nlegally relinquish or extinguish its statutory claims against the<br \/>\nborrowers.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>A mere act of cleaning up its<br \/>\nbalance sheet cannot result in the legal extinguishment of a bank\u2019s right to<br \/>\nrecovery.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>RBI had also clarified that in<br \/>\ncase of such \u2018technically written-off\u2019 accounts, the loan is written-off in the<br \/>\naccounts maintained at the head office of the banks without forgoing the right<br \/>\nof recovery and that they are generally carried out from the accumulated provisioning<br \/>\nmaintained for bad loans; it has also reminded that once the recoveries are<br \/>\nmade, then, the money flows back into the profit and loss account of the banks<br \/>\nconcerned<b style=\"mso-bidi-font-weight: normal;\">(21)<\/b>.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Thus, viewed, in the case of write-offs there<br \/>\nis neither a forgoing or relinquishment or extinguishment of the right to<br \/>\nrecover the loans.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><span style=\"mso-spacerun: yes;\">\u00a0<\/span>Incidentally, it will also be evident that<br \/>\neven in relation to the written-off dues of Rs.4,32,584 crores made by the PSU<br \/>\nbanks for the period between 2015-16 to 2018-19, when the banks were able to<br \/>\nrecover an amount of Rs.8,033 crores in relation to such written-off accounts<b style=\"mso-bidi-font-weight: normal;\">(22)<\/b>, it will prove beyond doubt that<br \/>\nin case of written-off accounts, the banks\u2019 right to recovery dues are not<br \/>\nwaived or relinquished.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>On the other<br \/>\nhand, a loan waiver is an express and irrevocable relinquishment of the right<br \/>\nof recovery agreed to by a bank or lender in pursuance to a debt relief scheme<br \/>\nannounced by the competent government (Union or the State Government) and<br \/>\nsubject to compliance with the eligibility and other conditions stipulated<br \/>\nunder the scheme.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Once a borrower\u2019s application<br \/>\nfor waiver is accepted in terms of the scheme, then, the bank irrevocably looses<br \/>\nits right to recovery any monies from the borrower thereafter.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Therefore, loan write-off and waiver is<br \/>\nneither synonymous nor supplanting the other and it is only the sensational<br \/>\npress and the opportunist political lobby which seeks to thrive in a<br \/>\nnon-existing confusion, when the facts and law on the subject remain beyond any<br \/>\npale of doubt.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span><\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Thus viewed, the RBI reply under the<br \/>\nRTI Act dated April 24, 2020 referred to in the beginning of this work<br \/>\nabundantly makes it clear that it has been only a matter of write-off and not<br \/>\nwaiver of the loan dues.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>The language employed<br \/>\ntherein that \u201c\u2026 <i>amount outstanding &amp; amount technically\/prudentially<br \/>\nwritten-off as on September 30, 2019 reported in CRILC by the Banks<\/i>\u2026\u201d clarifies<br \/>\nthat it is the concerned banks and not the RBI which has written-off and that<br \/>\nit is nothing by a technical\/prudential writing-off of the outstanding loan<br \/>\namount.<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>It is also for this reason that<br \/>\nnone of the proceedings, including, those initiated under the Fugitive Economic<br \/>\nOffenders Act, 2018 against some of the individuals who feature in the list of<br \/>\nthe 50 willful defaulters have either been abandoned or relinquished by the<br \/>\nCBI\/Enforcement Directorate, which would otherwise have been an inescapable corollary if<br \/>\nthe loans have been irrevocably waived <i style=\"mso-bidi-font-style: normal;\">vis-\u00e0-vis<\/i><br \/>\nthem.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%;\">(1)<span style=\"mso-spacerun: yes;\">\u00a0 <\/span>Letter no.DOS.CO.RIA Cell\/AM(14)\/09.39.003\/2019-20<br \/>\ndated April 24, 2020 issued by the Reserve Bank of India to Shri Saket Gokhale.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%;\">(2)<br \/>\n<\/span><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">See <\/span><i style=\"mso-bidi-font-style: normal;\"><span style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-IN; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-font-weight: bold; mso-fareast-language: EN-IN;\">Subhiksha<br \/>\nTrading Services Limited, Chennai, Company Secretary, M. Rathinakumar vs. Kotak<br \/>\nMahindra Bank Limited, and Ors. <\/span><\/i><span style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-IN; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-font-weight: bold; mso-fareast-language: EN-IN;\"><span style=\"mso-spacerun: yes;\">\u00a0<\/span><\/span><span style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-IN; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-IN;\">2009 INDLAW MAD 1694 and <i style=\"mso-bidi-font-style: normal;\"><span style=\"mso-bidi-font-weight: bold;\">Sudarshan Overseas Limited vs. Reserve Bank<br \/>\nof India and Another<\/span><\/i> 2009 INDLAW DEL 626.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(3)<span style=\"mso-spacerun: yes;\">\u00a0<br \/>\n<\/span><i style=\"mso-bidi-font-style: normal;\">Sardar Associates and Ors. vs.<br \/>\nPunjab and Sind Bank and Ors<\/i>. (31.07.2009 &#8211; SC) : MANU\/SC\/1351\/2009<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(4) <\/span><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%;\">See<br \/>\nRBI Circular No.<span style=\"color: black;\">RBI\/2008-09\/467<br \/>RPCD. SME&amp;NFS. BC.No.102\/06.04.01\/2008-09 dated May 4, 2009<\/span><\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(7) See <i style=\"mso-bidi-font-style: normal;\">ICICI Bank vs. Official Liquidator of APS Star Ltd<\/i>. AIR 2011 SC<br \/>\n1521<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(8) The Press Release dated March 28,<br \/>\n2018 of the Ministry of Finance, Government of India.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(9) <i style=\"mso-bidi-font-style: normal;\">The<br \/>\nCommissioner vs. Mahindra and Mahindra Ltd.<\/i> (24.04.2018 &#8211; SC) :<br \/>\nMANU\/SC\/0513\/2018<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(10) The Press Release dated March 28,<br \/>\n2018 of the Ministry of Finance, Government of India.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%;\">(12)<br \/>\n<\/span><span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">Nilanjan<br \/>\nBanik, <i style=\"mso-bidi-font-style: normal;\">Are Loan Waivers a Panacea for<br \/>\nRural Distress?<\/i>, Economic &amp; Political Weekly, Vol. LIII No.47, December<br \/>\n1, 2018<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(14) <i style=\"mso-bidi-font-style: normal;\">B.K. Educational Services Private Limited vs. Parag Gupta and<br \/>\nAssociates<\/i> MANU\/SC\/1160\/2018<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(15) RBI\/2017-18\/131<br \/>\nDBR.No.BP.BC.101\/21.04.048\/2017-18 dated February 12, 2018 <\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(16) <i style=\"mso-bidi-font-style: normal;\">Dharani Sugar &amp; Chemicals Limited vs. Union of India<\/i> Supreme<br \/>\nCourt of India order dated April 2, 2019.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(17) The Reserve Bank of India<br \/>\n(Prudential Framework for Resolution of Stressed Assets) Directions, 2019<br \/>\nissued by RBI vide reference no.RBI\/2018-19\/2003 DBR<br \/>\nNo.BP.BC.45\/21.04.048\/2018-19 dated June 7, 2019.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(18) <i style=\"mso-bidi-font-style: normal;\">Common Cause (A Regd. Society) vs. Union of India (UOI) and Ors.<\/i><br \/>\n(18.08.2010 &#8211; SC) : MANU\/SC\/0615\/2010<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(19) Opening remarks of Mr. Urjit<br \/>\nPatel, RBI Governor in the Seminar on \u2018Agricultural Debt Waiver \u2013 Efficacy and<br \/>\nLimitations\u2019 held on August 31, 2017 and the views of Mr. Sakthikanth Das, RBI<br \/>\nGovernor that \u2018generalised farm loan waiver will affect credit culture\u2019 expressed<br \/>\nin his interview to the press given on January 7, 2019. <span style=\"mso-spacerun: yes;\">\u00a0<\/span>See also, the case study by Deepa S. Raj &amp;<br \/>\nEdwin Prabu.A \u201c<i style=\"mso-bidi-font-style: normal;\">Agricultural Loan Waiver: A<br \/>\nCase Study of Tamil Nadu\u2019s Scheme<\/i>\u201d, RBI Occasional Papers, Vol.39,<br \/>\nNo.1&amp;2, 2018. <\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(20) Martin Kanz, \u201c<i style=\"mso-bidi-font-style: normal;\">What Does Debt Relief Do for Development? Evidence from India\u2019s Bailout<br \/>\nProgram for Highly-indebted Rural Households\u2019<\/i>, World Bank Policy Research<br \/>\nWorking Paper 6258, November 2012.<\/span><\/div>\n<div class=\"MsoNormal\" style=\"border: none; line-height: 150%; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0cm 0cm 1.0pt 0cm; padding: 0cm; text-align: justify;\">\n<span lang=\"EN-US\" style=\"font-family: &quot;Bookman Old Style&quot;,serif; font-size: 12.0pt; line-height: 150%; mso-bidi-font-family: &quot;Times New Roman&quot;;\">(21) Reserve Bank of India\u2019s<br \/>\nclarification dated February 9, 2016 titled \u201c<i style=\"mso-bidi-font-style: normal;\">Banks Write-offs: Clarification<\/i>\u2019.<\/span><\/div>\n<\/div>\n<p><\/div>\n<\/div>\n<\/div>\n<\/div><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><!-- columns -->\n<\/div>\n<p><!-- main -->\n<\/div>\n<\/div>\n<\/div>\n<footer>\n<\/footer>\n<p><!-- content -->\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><!--It is your responsibility to notify your visitors about cookies used and data collected on your blog. 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