RBI On Wilful Defaulter: Banks will have to declare loan defaulters as willful defaulters within six months of the loan being declared NPA. Banking sector regulator Reserve Bank of India has issued proposed guidelines for changing the rules for declaring willful defaulter, on which feedback and suggestions have been sought from stakeholders.
In the proposed proposal of this draft master direction of RBI, it has been proposed to increase the scope of declaring willful defaulters who do not repay the loans taken by the banks as defaulters for the banks. In this, the definition of willful defaulters will be expanded and the process of identifying them will be redesigned.
According to the draft proposal, it is proposed to declare the person taking the loan as willful defaulter within six months of declaring the loan as Non-Performing Assets i.e. NPA. Also, selling the loans of willful defaulters to Asset Reconstruction Companies will be brought under the Insolvency and Bankruptcy Code. This proposal states that the credit information of willful defaulters will be publicized in which other lenders will be warned so that willful defaulters cannot get further loans.
According to the proposal, the Identification Committee will scrutinize the evidence of willful defaulters and if it is found that willful default has taken place, a show cause notice will be issued to the borrower. The loan lender will have to investigate all aspects of willful default in case of loan given for Rs 25 lakh or more. RBI will have to notify about this from time to time. And the borrower will have to be declared a willful defaulter within six months of declaring NPA.
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