The Reserve Bank of India(RBI) adopts a classic "double game" of accountability when addressing the colossal write-offs of loans belonging to wilful defaultersa systemic failure that bleeds public-sector banks. Publicly, the RBI insists, "We do not write off loans; banks decide on technical write-offs as per their board-approved policies." This stance, often repeated in official statements and RTI responses, successfully shifts the blame onto individual banks.
However, the structural catchthe part they conveniently downplayis that the RBI's own Master Circulars and regulatory frameworks(e.g., Master Direction on Wilful Defaulters) permit and regulate the very mechanism of these "technical write-offs." By allowing banks to remove fully provisioned bad loans from their balance sheets to "clean them up, " the RBI provides the essential regulatory lubricant for this quiet disposal of public money.
The devastating scale of this failure was exposed by an RTI, which confirmed that banks wrote off over ₹;68, 600 crore in loans in the year 2020 from wilful defaulters alone(including names like Mehul Choksi). While banks must nominally continue recovery efforts, the data shows a negligible recovery rate from these accounts, indicating the "technical write-off" is often a de facto waiver for the super-rich, supported by the present political regime in India.
This evasive pattern of the RBIclaiming "Not our jurisdiction" regarding CoC expenditures or meeting minutes in the RTIs related to the DHFL debacle, and insisting banks are solely responsible for write-offsestablishes the central regulator as an innocent bystander in a system its own rules created. This framework, tragically amplified by processes like the IBC(Insolvency and Bankruptcy Code), allows major corporate promoters to siphon funds, drive companies into manufactured bankruptcy(as alleged in the DHFL case which caused a loss of over ₹;40, 000 crores to lenders), and then benefit from a resolution plan that gives the new promoter the right to future fraud recoveries.
In the present Indian political economy, this regulatory architecture fundamentally privileges large corporate debtors, ensuring that public moneythe taxpayer's contribution used to recapitalize these very Public Sector Banksis slaughtered in broad daylight. The RBI's denial is merely an institutional strategy to avoid accountability for a system designed to give the super-rich their way.
