How and when a loan is written off
A write-off recognises that a loan is no longer expected to be recovered. It is a controlled, approved action in Ustawi with a defined impact on the general ledger and on regulatory reporting — never a quiet adjustment.
When a write-off is appropriate
A loan is typically considered for write-off once it has aged into the worst classification band and recovery efforts through the collections ladder have been exhausted. Write-off is an accounting recognition of the loss; depending on policy, recovery activity can still continue afterward.
The approval path
Because a write-off directly affects the books, it requires approval and is captured with maker-checker controls. The person raising the write-off cannot be the person who authorises it, and the action is recorded in the audit log.
GL and reporting impact
- The general ledger posts the write-off against the loan-loss provision/reserve, so the books reflect the loss.
- The loan leaves the performing portfolio, which affects PAR and the classification/provisioning figures in regulatory reports.
- The full history remains for audit — a written-off loan is not deleted.
If a loan is covered by credit-life and the borrower's policy pays out, the balance is cleared as a real repayment, not a write-off — a different outcome with a different GL treatment.