Using ratio to show improved recovery trend

 Want to show better recovery in loans: Use Statistics



Normally lies are classified into (i) lies (ii) damned lies and (iii) statistics. The above news item comes under (iii).

As per the report, the loans written off  in the last three financial years ranged around Rs.120000 cr. In the current FY, for the 9 months period ended 31st Dec 24, the loans written off is app. Rs.60,000 cr. 

Against the write offs in the above years, the recovery from the written off accounts of the previous years (and not the current year) is depicted for comparison. 

The recovery in the last three years ranged between Rs.20,000 cr to Rs.40000 cr. (as per the graph). For the current FY (9MFY25), the recovery is shown app. at Rs.23000 cr. (at the lower end of the range)

Rajya Sabha was informed that the recovery from written off loans has improved and it is 47.1% for the current FY so far. Strangely, the percentage  of recovery has gone up as the denominator (loans written off) has come down, while the recovery (the numerator) remains around at the same level. Moreover, the last quarter is not yet over and the denominator is bound to go up in the last quarter of any FY.  To show an improved performance in recovery, using a  denominator not connected to the numerator, (which relates to recoveries for amounts written off in the previous years), as and when the denominator is on the decline is sometimes called 'statistics' ((iii) above).

Regards

V. Viswanathan

21st March 2025

Comments

  1. Ratan N V LMarch 22, 2025 at 6:15 AM

    Very correct. Lies, damn lies and statistics !!!

    ReplyDelete
  2. AnonymousMarch 22, 2025 at 9:03 PM

    Sir,

    Thankyou for taking time off to highlight the gaffe. You have exposed a serious flaw in the way issues are understood even by professionals.

    We see a very shallow knowledge of subjects studied at graduate & post graduation levels. Further, a tunnel appreciation of a subject, without the ability to relate it to other associated matters is a deep malaise. I wonder whether practicing professionals ever bother to expand their horizons by reading a variety of topics and building an ability to understand broader issues.

    This article must have been written by a person with good grades in university level, and must have been vetted by a more senior functionary. Yet the misinterpretation pointed out by you has been overlooked.

    The solution is to institutionalise the spirit of excellence and not rely on marks / grades / salaries as the sole arbiter of high achievement. Easier said than done!

    Regards
    Lakshmi Krishnamurthy.

    ReplyDelete
    Replies
    1. ViswanathanMarch 22, 2025 at 10:13 PM

      Thank you so much. I always wondered why 'more than life' images are projected, when truth is otherwise. Glorifying a good achievement is welcome but glorifying non performance is a crime. Regards.

      Delete

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