Question

Many times we read in newspapers that some bank(s) has/have to write off a certain amount given/advanced by them. In banking terminology, what does 'write off' mean?

• A. Loans sanctioned on paper but bank has yet to make provision for the same so that borrower can withdraw the money
• B. Big corporate loans for which bank has/have to take approval from RBI.
• C. Loans for which documentation work is yet to be completed
• D. Those loans which can never become bad or uncollectable loans as they are given under some social assistance scheme by the Govt of India

Answer 1

The correct option is D Those loans which can never become bad or uncollectable loans as they are given under some social assistance scheme by the Govt of India

Some banks write off bad debts of a certain amount given or advanced by them. This means the banks generally write off those loans which can never become bad or uncollectable loans as they are given under some social assistance scheme by the Government of India.