Government’s ‘Right‑Off’ Accounting Explained and Its Impact on Borrowers

The concept of "right‑off" or "bucket" accounting has become a flashpoint in India's banking debate. In a recent editorial, Shiv Sena (UBT) dissected the government's explanation that moving a loan to a bad‑loan bucket is merely an accounting adjustment, not a forgiveness of debt.

Data released by the Finance Ministry show that between FY 2014‑15 and FY 2025‑26, public sector banks transferred 1,249 high‑value loans—totaling INR 7.75 lakh crore—into the bucket. Each of these accounts carries a minimum exposure of INR 100 crore. Despite this, recovered amounts stand at just INR 3.10 lakh crore, indicating a substantial shortfall.

Critics argue that the bucket entry effectively removes the liability from a bank's profit‑and‑loss statement, allowing banks to appear healthier while the underlying debt remains unpaid. The editorial warned that such practices create moral hazard, encouraging large borrowers to default with the expectation of eventual write‑off.

The piece also highlighted the legal and policy disconnect: while the RBI Act shields large defaulters' identities, the same confidentiality is not extended to small borrowers, leading to asymmetric enforcement.

Shiv Sena called for a revision of accounting norms, greater transparency, and strict enforcement of repayment obligations across all borrower categories to protect the financial system and the interests of ordinary taxpayers.