Wave off and Write off are generally confused to be one. But in reality , there is lots of difference between both.
Banks are meant for our help. Loans they provide act as a crucial part of our day to day tasks. Home loans, vehicle loans , education loans and many more type of loans are taken by us which we have to return with interest in given period of time. This act as asset to the bank. On other hand, when we make fixed deposits in those banks , every year additional amount is added to our account, which act as main expense of a bank. This system goes hand on hand. When this is disturbed, bank start facing loses.
Losses bank face are then categorized into two: Wave off and Write off
Wave Off: To be simple, if you are not able to pay back your loan and you appeal for relief! And finally you are released from the loan. Its just like a gift from bank.
A loan waiver is the waiving of the real or potential liability of the person or party who has taken out a loan through the voluntary action of the person or party who has made the loan.
This happens but only under some government schemes like
- Agricultural debt wavier : In this scheme, famer unable to pay loan of his land and loan is waived off.
- Debt relief scheme
This was for controlling the suicide rates among farmers. But now the days, this is badly misused by them. Farmers just transfer their money to other banks and show empty back accounts to get the advantage. State has to pay for this. If loan is taken from private money lender then it is nullified.
Write Off: This is you take a loan, you didn’t pay the loan , you are a bad debt and bank has full right to sue you or seal your asset. The loss you made to bank intentionally or non intentionally will be recovered by the bank. If still bank does not get its money back, that is a great loss for bank because in this case state is also not paying the losses and the loan is written off. Many rich people take big loans from banks and then are unable to pay. They just ran off from the country as they are under legal actions and have to face consequences afterwards. But for present this is loss for bank and that loan is written off.
There is difference between waiver and written off. Banks have to follow for recovery of written off loans but chances of recovery of such loans are very poor, rather negligible because no enforceable security is available and the borrowers already put their hands off. Yes it is also true these times the written off loans amount to more than 3 times the written off loans during previous Government.
Banks are for your help but don’t misuse them. Take loans but to that extent up to which you can pay back.
Its our GDP that gets affected. So please be a loyal Indian and don’t misuse the resources.