IMPACT OF DEBT WAIVER SCHEME ON BANK'S PROFITABILITY - Softcover

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A debt waiver scheme is a program in which a government or other organization forgives or cancels a certain portion of outstanding debts owed by individuals or entities. While such a program can provide much-needed relief to those burdened by debt, it can also have negative consequences for the financial institutions that hold those debts.

When a debt waiver scheme is implemented, banks and other lenders may experience a significant reduction in their loan portfolios, as a large number of borrowers take advantage of the program to have their debts canceled. This can lead to a decrease in the banks' profitability and financial stability, as they may have to write off a significant portion of their loans as bad debt.

Additionally, the implementation of a debt waiver scheme can also have a negative impact on banks' willingness to lend in the future. If banks believe that the government may be willing to forgive loans in the future, they may be less likely to extend credit to borrowers, as they may see such loans as too risky.

Overall, while debt waiver schemes can provide relief to borrowers struggling with debt, they can also have unintended consequences for financial institutions that hold those debts.

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