Explanation:

Statement 1: Writing off debt means that asset has
turned from a debt to a bad asset, with little hope of recovery. Banks dothis in order to improve their current balance sheet. Writing off loansdoes not mean waiving them.
Statement 2: Once an asset is recognised as a non-performing asset(NPA), banks must decide what to do with it. They have several options.
• One, they can try to seize the assets pledged by the borrower andsell these. This typically involves large losses on loans as the assetshave to be sold at steep discounts to their book value.
• Two, under the RBI’s Strategic Debt Restructuring (SDR) scheme,they can convert their loans into equity, acquire a majority stake inthe firm, dislodge the promoters or management and bring in newpromoters and management.
• While this happens in advanced economies all the time, the SDRscheme has not taken off in India.
• Indian banks do not have experience in running businesses tillsuch time as new promoters are found. Nor do they haveexperience in locating promoters and management who can takeover the stressed assets.