SC TO HEAR PETITION TO END WRITE-OFFS
20, Apr 2019
Prelims level : Economics Mains level : GS-III Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in News
- The Supreme Court will hear a petition to restrain banks from writing off non- performing assets.
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- The petition gains significance because of the large number of non-performing assets, worth crores of rupee, in the names of such businessmen as Vijay
- Mallya, Nirav Modi and Mehul Choksi. The petition said write-offs should end so that the “true and exact financial conditions of banks cannot be camouflaged.” “The banks should not be given any benefit of allowable provision or other in percentage to their Non- Performing Assets, which reduces their tax liabilities,” it said. The system of waiving of loans should be stopped, it said. “The Centre and State governments should not be permitted to reduce or waive loans.
- Political parties should not be permitted to offer loan waiver or any other monetary scheme in their election manifestos,” the petition said
- It said the Centre, States should formulate a policy to make agriculture profitable, help farmers become prosperous and increase their interest in farming. 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.
- 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.
- Any asset which stops giving returns to its investors for a specified period of time is known as Non-Performing Asset (NPA). Generally, that specified period of time is 90 days in most of the countries and across the various lending institutions. However, it is not a thumb rule and it may vary with the terms and conditions agreed upon by the financial institution and the borrower.