Mumbai, Sep 21 (IANS) The RBI in its draft master directions issued on Thursday has proposed that lenders should label defaulting borrowers as 'wilful defaulters' within six months of an account turning non-performing asset (NPA).The RBI identifies 'wilful defaulters' as those who have the ability to pay a bank's dues but do not or divert bank funds. The RBI did not earlier have a specific timeline within which such borrowers had to be identified.
A wilful defaulter, or any entity with which a wilful defaulter is associated, will not get any additional credit facility from any lender and will not be eligible for restructuring of credit facility, the circular stated.
The RBI has proposed that non-banking finance companies (NBFCs) should also be allowed to tag accounts using the same parameters.
The RBI has also suggested that banks should set up a review committee and allow the borrower up to 15 days to make a written representation, as well as a chance for in-person hearing if needed.
The central bank also said that lenders would need to complete an investigation into a defaulting account to determine or rule out 'wilful default' before transferring it to another lender or an asset reconstruction facility.
“The directions also aim to put in place a system to disseminate credit information about wilful defaulters for cautioning lenders to ensure that further institutional finance is not made available to them," the circular added.
The RBI said that stakeholders can give feedback on the draft rules till October 31 through email (firstname.lastname@example.org) with the subject line 'Feedback on Master Direction – Treatment of Wilful Defaulters and Large Defaulters'.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.