What is the difference between write off and waive off?
One of the major differences between write off and waiver is that the former is an action taken by the lender when there is no opportunity to recover the loan. It is done so that financiers can maintain a clean record of unrecovered loans in their balance sheets.
On the other hand, a loan waive off is initiated by a financier or the government in most cases. In this case, borrowers are not obligated to repay their debt. This facility is primarily extended to individuals who cannot repay their debt due to financial crises.
Meaning of loan write off
The loan write off means that financial institutions annul this loan. However, this does not mean that respective lenders will stop the pursuit of recovery; also, they will not clear out this debt from their books.
The primary reason for opting for this facility is to utilise the funds set aside during lending to generate further business. Additionally, this move makes the balance sheet more presentable. Financial institutions only opt for this method when the chances of recovering a debt are zero, and they need to use available assets of the defaulter or arbitration for this purpose.
Meaning of loan waive off
A loan waive off means situations where borrowers cannot repay their debt due to any financial setback. This facility is granted only after a thorough investigation that suggests a particular individual cannot repay this loan due to lack of income. Usually, waiving off a loan is only granted by the government.
For instance, if a farmer fails to repay a loan due to a bad year, the government waive-off that loan.
Irrespective of loan write off and waive off, a point to keep in mind is that they come with terms and conditions that one needs to fulfil. Otherwise, applicants will not qualify for this. Individuals can contact their respective business loan lenders for further information.
