Not all non-performing loans can be written off, but certain conditions must be met. The central government has strict legal procedures for loan write-off. It must be a non-performing loan that has been determined by various efforts that there is no possibility of recovery or reduction, and has become a bad loan.
when the loan is written off, it will be compensated (the amount depends on the situation), so the main body of this loan is generally state-owned enterprises that enjoy the support of national policies. Write-off is not a loss to the bank. Because write-off can wash away some dormant account, which will reduce the overall non-performing loan ratio of banks.
Extended information:
Loan write-off is the abbreviation of "write-off of bad loans", which is a system in which banks write off bad loans or loan losses according to regulations.
According to the relevant provisions of the Interim Provisions of the Ministry of Finance on Establishing Reserve for Bad Loans of National Specialized Banks:
If the amount of bad loans is less than 5, yuan each, the local banks will examine and approve it jointly with the central financial institutions at the same level;
if the amount of bad loans is more than 5, yuan and less than 1, yuan each, the provincial banks will examine and approve it jointly with the central financial institutions at the same level;
if the amount of bad loans is more than 1, yuan each, the head office of each specialized bank shall examine and approve it according to the opinions of subordinate banks and provincial central financial institutions, and report it to the Ministry of Finance for the record.
in the specific implementation, the approval amount has been adjusted. Banks and central financial institutions should strictly implement the relevant provisions of the state on loan write-off in the process of loan write-off, and should not approve beyond their authority or in violation of relevant provisions, and offenders will be held accountable.
Not all non-performing loans can be written off, but certain conditions must be met. The central government has strict legal procedures for loan write-off. It must be a non-performing loan that has been determined by various efforts that there is no possibility of recovery or reduction, and has become a bad loan.
Write-off of bad debts is based on profits, which will reduce the bank's income in the current year. However, the general banking regulatory bureau requires banks to have an index of non-performing loan ratio, so banks must comprehensively consider profits and non-performing indicators to decide whether to write off. Under the current policy, bad records are not allowed to be eliminated, and the only way to eliminate them is to appeal through the Credit Information Center of the People's Bank of China. If it is verified, it can be eliminated.
Loan repayment after write-off:
For the loan that the bank has written off, the bank can ask the court to continue to execute the borrower who has written off the loan. Article 26 of the Administrative Measures for the Write-off of Financial Bad Debts stipulates: "Finance must establish an asset preservation and recovery system after the write-off of bad debts. Except in the case that the creditor's rights and debts or the relationship with the debtor have been completely terminated according to laws and regulations, the finance continues to reserve the right of recourse for the written-off bad debts, and continues to collect the written-off bad debts, off-balance-sheet interest receivable and accrued interest after write-off. "
Write-off of bad debts is only the internal accounting treatment of banks, which belongs to the "internal affairs" of banks. Under normal circumstances, it does not have the nature of external debt forgiveness, and there will be no consequences of the elimination of bad debts. After the write-off of bad debts, the bank should actively collect all the principal and interest of the lender instead of the repayment obligation.