Reports Say RBI Wrote off Loans of Rs 68,600 Cr, Apex Bank Denies
Some media outlets reported that RBI had written off loans worth Rs 68,607 crore due from 50 top wilful defaulters.
A number of media outlets on Tuesday, 28 April, reported that the Reserve Bank of India had written off loans worth Rs 68,607 crore due from 50 top wilful defaulters, including Mehul Choksi's Gitanjali Gems and Vijay Mallya's Kingfisher Airlines, till September 2019.
The reports came after ex-journalist, RTI activist and Congress party supporter, Saket Gokhale, took to Twitter to upload the list of defaulters as of September 2019, which he had received from the RBI in response to his RTI asking about the top 50 wilful defaulters.
The list uploaded by Gokhale revealed that Choksi's Gitanjali Gems is the first among the 50 top defaulters with a sum of Rs 5,492 crore, while Mallya’s Kingfisher Airlines featured in the list with Rs 1,943 crore. Also appearing in the list is Baba Ramdev and his aide Balkrishna's group company's Ruchi Soya Industries Ltd, which owes Rs 2,212 crore.
Many news outlets reported on this RTI response, with headlines like “RBI wrote off Rs 68,600-cr loans of wilful defaulters, including Choksi, Kingfisher Airlines: RTI”.
The Week published a news article with this headline and wrote about how the RBI had “written off” these loans.
The Logical Indian also published a news article with a similar headline, saying that RBI had written off the loans.
However, their article mentioned that RBI had said that “Indian banks have technically written off an amount of Rs 68,607 crore due from 50 top wilful defaulters, including absconding diamantaire Mehul Choksi.”
News18 also carried a similar headline, saying that RBI had written off the loans.
Pune Mirror and Ahmedabad Mirror, carried news reports by IANS, mentioned the following in their leads – “The Reserve Bank of India (RBI) has admitted to writing off a staggering amount of Rs 68,607-crores due from 50 Top Wilful Defaulters, including absconding diamantaire Mehul Choksi, according to a reply under RTI.”
However, their headlines, while saying the loans had been “written off”, left out any mention of RBI.
The same applied to Bangalore Mirror, who also carried an IANS copy.
Outlook also carried this headline.
Many people on Twitter fell for the various news reports which carried headlines such as the ones mentioned above.
TRUE OR FALSE?
While this is a list of wilful defaulters, it is actually the banks and not the RBI who have technically written off these loans. The headlines and the language of these copies is actually misleading in saying that the loans were simply written off and that the RBI had done so.
WHAT WE FOUND
The biggest factual error here is that the central bank, ie RBI, cannot write off loans because it never 'lends to non-government or non-bank entities'.
On reading the RTI carefully, we saw that the first page mentions their “sum of Funded Amount Outstanding & Amount technically/prudentially written off as on 30 Sept 2019 reported in CRILC by banks”.
It specifies that the loans were “technically/prudentially” written off, which is different from just written off and also mentions that this data is reported by the banks, and does not come from itself and that the RBI takes no responsibility of its accuracy.
Further, The Quint contacted the spokesperson of the Reserve Bank of India, who denied the headlines.
He said, "The RBI does not write off any loan since they do not lend to non-government or non-bank entities, and this headline is not correct. That is a complete misunderstanding of how banking works. RBI doesn't give loans to companies, it lends only to banks and government. The author instead of saying banks have technically written off loans as per information provided under RTI by RBI, has said RBI has written off loans. Also, a technical write off is when a bank provides for dues when repayment is delayed. It doesn't mean that loan can't be recovered. Should banks recover the default amount, it is added to their profit and loss account."
Therefore, it is clear that the news reports have claimed falsely that the RBI has written off these loans.
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