On Sep. 21, IND RBI proposed instructions on handling defaulters.
IND RBI drafted master direction on treatment of wilful defaulters and large defaulters.
Background
Master circular on wilful defaulters was last updated on Jul. 1, 2015; changes are now proposed after a review of the extant instructions and consideration of various court judgments, as well as representations received from banks and other stakeholders.
Draft
Expands the scope for regulated entities to classify borrowers as wilful defaulters, broadens the definition of wilful default, improves the identification process.
Mandates a review within six months of an account becoming non-performing.
Also addresses the treatment of wilful default loans sold to assets reconstruction companies and their status under the Insolvency and bankruptcy code.
Effectiveness
The consultation is open for comments until Oct. 31, 2023; the finalized master direction will be issued by IND RBI after considering any feedback received.
Jul. 2024 Master Direction Finalized
On Jul. 30, 2024, IND RBI issued finalized Reserve Bank of India (treatment of wilful defaulters and large defaulters) directions, 2024, effective 90 days from publication.
