Technical Write-Off

RBI Guidelines on Compromise Settlement and Technical Write-off (2023)

A specific type of write-off where a bank removes an NPA from its books at the branch level (for balance sheet presentation) but retains the legal right to recover the debt, which is tracked off-balance-sheet. Distinguished from a full write-off where recovery rights may be more limited. RBI guidelines permit technical write-offs subject to provisions being made. Recoveries from technically written-off accounts are recognised as income.

In practice, a technical write-off is an accounting cleanup, not a forgiveness of debt — and borrowers who assume otherwise are mistaken. Under RBI's guidelines on compromise settlement and technical write-off, a bank removes a non-performing asset from the branch-level books for balance-sheet presentation while preserving and tracking the legal right to recover off-balance-sheet. This is why a borrower who receives no demand for years can still be sued, served a fresh SARFAESI notice, or have a guarantor pursued: the write-off changed the accounting, not the liability. Recoveries that later come in from a technically written-off account are recognised as income when received. For lenders the practical task is to keep the limitation clock alive through acknowledgements or timely action even after the write-off, because the recovery right is worthless if the claim becomes time-barred. For borrowers, a write-off is not a clean slate and should not be treated as settlement. Well-advised creditors track these accounts for live limitation before acting.