RBI Draft Master Direction on Wilful Defaulters l Who are Wilful Defaulters l Hindi l 2023

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The Reserve Bank of India (RBI) proposed that lenders should classify a borrower as a “wilful defaulter” within six months of their account being declared a non-performing asset (NPA). The RBI did not earlier have a specific timeline within which such borrowers had to be identified. The lender shall examine the ‘wilful default’ aspect in all accounts with outstanding amount of Rs 25 lakh and above or as may be notified by the RBI from time to time, RBI said the evidence of wilful default needs to be examined by an Identification Committee, to be set up by lenders.

In case of publishing photographs of wilful defaulters, lenders will have to formulate a non-discriminatory board-approved policy.
That clearly sets out the criteria based on which the photographs of persons classified and declared as wilful defaulters will be published.

The RBI also proposed that no additional credit facility be granted by any lender to a wilful defaulter or any entity with which a wilful defaulter is associated. The bar on additional credit facility shall be effective up to a year after the name of wilful defaulter has been removed from the List of Wilful Defaulters (LWD) by the lender.In addition, no credit facility shall be granted for floating of new ventures by any lender to a wilful defaulter or any entity with which a wilful defaulter is associated for a period of five (5) years after the name of wilful defaulter has been removed from the LWD by the lender

As per the norms, wilful defaulters will not be eligible for restructuring of credit facility.
The new draft provisions would apply to banks, non-banking financial companies (NBFCs) and all-India financial institutions like the Export-Import Bank of India (Exim Bank). The RBI has sought comments on the draft master direction from various stakeholders by October 31.

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