In the world of finance, two terms often create confusion—loan waived off and loan written off. At first glance, they sound similar, but in reality, they are very different concepts with distinct meanings, processes, and impacts. If you have ever wondered whether they mean the same thing, this article will clear your doubts.
What is a Loan Waived Off?
When a loan is waived off, it means the borrower is no longer legally required to repay the loan. The lending institution (like a bank or government body) forgives the entire or partial loan amount.
This usually happens under special circumstances such as:
- Natural disasters affecting farmers
- Government schemes for poor or distressed borrowers
- Social welfare measures to reduce financial burden
Example:
If a farmer has taken a loan of ₹1,00,000 and the government announces a farm loan waiver, the farmer does not have to repay that loan. The liability is completely cancelled.
Impact:
- The borrower gets permanent relief.
- The bank or lender bears the loss (often compensated by the government in case of policy-driven waivers).
- It may encourage bad credit culture if done frequently.
What is a Loan Written Off?
A loan is written off when the lender realizes that the chances of recovery are very low and decides to remove it from their balance sheet. However, the borrower still legally owes the money.
This is more of an accounting practice than actual forgiveness.
Situations when banks write off loans:
- Borrower is not repaying despite reminders.
- Loan has turned into an NPA (Non-Performing Asset).
- To show cleaner books and reduce taxable income.
Example:
If a business owes ₹5,00,000 to a bank but hasn’t paid for years, the bank may “write it off” in its accounts. However, recovery agents or legal proceedings may still continue against the borrower.
Impact:
- Borrower is still liable.
- Bank may try to recover through auctions, legal cases, or settlements.
- It helps banks maintain a healthy financial statement.
Key Differences Between Waived Off and Written Off
| Factor | Loan Waived Off | Loan Written Off |
| Meaning | Complete cancellation of borrower’s liability | Removal from books for accounting purposes |
| Borrower’s Obligation | Borrower is free from repayment | Borrower is still legally liable |
| Who Benefits? | Borrower gets direct relief Bank | manages accounts but recovery efforts continue |
| Who Decides? | Usually government or lender’s policy decision | Bank’s internal decision as per RBI norms |
| Impact on Borrower | Relief and fresh start | Stigma of default remains, recovery attempts possible |
Conclusion
The terms loan waived off and loan written off are not interchangeable.
- A waiver gives total relief to the borrower and is more of a political or social decision.
- A write-off is an accounting adjustment by the lender, but the borrower still owes the money.
For borrowers, a waiver is a blessing, but a write-off does not mean freedom from repayment. For lenders, both have financial consequences, but a write-off helps manage accounts while a waiver often needs external support.
Tip for Readers:
Always track your loan repayment and understand the terms carefully. A waiver may save you, but a write-off does not erase your responsibility.
