A leading English daily, DNA has just revealed that India's largest public sector bank, State Bank of India has waived -off loans worth more than Rs. 7000 crores.
Waiver of loans effectively means that from now on, these loans will not form a part of the bank's financial statements.
In other words: Rs. 7000 crores vanished in thin air!
These are loans given to more than 60 of its top 100 wilful defaulters. And you are right in assuming the man who tops the list; Vijay Mallya.
While 63 accounts in the list have been fully written off, 31 have been partially written off and six have been shown as non-performing assets (NPAs), reveal documents accessed by DNA. As on June 30, 2016, SBI has written off Rs 48,000 crore worth bad loans.
You might be curious as to why a bank would simply make loans of such mammoth amounts disappear. It is simple. Such loans are blotches on any bank's financial statements. And such write-offs are not new in nature. Banks, financial institutions and Micro-finance institutions undertake write-offs on a regular basis, year by year.
The bank has dropped the money, mostly wilfully defaulted, into a specially created dustbin for 'toxic loans' called Advance Under Collection Account (AUCA), technically known as a write-off.
Here's a list of the Top 63 write-offs as of June of this year.
Image Source: DNA
You can check out the full report at the website of DNA.
Title Image Source: MXP