With reference to the report, "Banks deny allegation that technical write-offs are a scam" (February 12), bankers need not get perturbed by former Reserve Bank of India (RBI) deputy governor K C Chakrabarty's view. Writing off of large non-performing assets (NPA), either partially or fully, in opposition to provisions, is an approved method of trimming or cleaning up banks' balance sheets, as stipulated in RBI circulars.
However, such an account continues to be treated as an NPA for the purpose of follow-up and recovery. The NPA status of the account should be reflected in all reports to the RBI or the government. The technical write-off should not be used as a means to hide NPAs in the bank; it should be used only to arrive at the net NPA percentage at the bank level. Chakrabarty's statement should be considered in this spirit.
Rugmani Vinod Thiruvananthapuram
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number
