Write-Off

The accounting process by which a bank removes an NPA from its books by treating it as a loss. A write-off does not mean the bank has waived the debt — it is purely an accounting entry. The bank continues to have the legal right to recover the written-off amount. Technical write-offs are used to clean bank balance sheets while recoveries from these accounts are treated as income when received.

In practice, a write-off is widely misread by borrowers as the bank giving up, when it is only an accounting entry recording a loss. The bank removes the non-performing asset from its books but does not waive the debt; its legal right to recover the written-off amount continues intact, and recoveries that later arrive — through settlement, SARFAESI sale, or DRT execution — are treated as income when received. Technical write-offs in particular are used to present a cleaner balance sheet while enforcement quietly continues off the books. The practical risk for a lender is allowing the limitation period to lapse after the write-off, since a perfectly valid recovery right is useless once the claim is time-barred; acknowledgements and timely action keep it alive. For borrowers and guarantors, a write-off is not a discharge and should never be treated as a settlement or a no-objection. Well-advised creditors confirm the claim remains within limitation before pursuing a written-off account.