Write off of bad debt of a bank that is declared non-collectable (such as a loan on a defunct business or a credit card due that is now in default), removing it from their balance sheets.
their loan portfolio, in many cases, deteriorates and uncertainty arises in realizing such loans and advances. These loans are adversely classified as per existing
rules and necessary provision has to be made against such loans. Writing off bad loans having adequate provision is an internationally accepted normal
phenomenon in banking business. Owing to the reluctance of banks in Bangladesh in resorting to this system
their balance sheets
are becoming unnecessarily and artificially inflated. In order
to
avoid possible legal complications in retaining the claims of
the
banks over the loans written off section 28 ka has been incorporated in 2001 in the Bank Company Act, 1991