Winning Bizness Desk

Mumbai. The Reserve Bank of India (RBI) has unveiled a comprehensive plan to address the issue of willful loan defaulters, issuing new guidelines to banks and non-banking financial companies (NBFCs). The directive, released on Tuesday, mandates stricter measures against borrowers who deliberately fail to repay their loans.

New Guidelines for Identifying Willful Defaulters

Under the new directive, banks and NBFCs are required to scrutinize all non-performing asset (NPA) accounts with dues of ₹25 lakh or more to identify willful defaulters. A willful defaulter is defined as a borrower or guarantor who has intentionally avoided repaying their debt, with an outstanding amount exceeding ₹25 lakh.

Investigation and Classification Process

The RBI has stipulated a rigorous process for identifying willful defaulters. Banks must conduct periodic investigations of all NPA accounts with significant dues. If intentional default is suspected, the bank is required to complete the process of classifying the borrower as a willful defaulter within six months of the account being classified as an NPA.

Policy and Compliance

Additionally, the RBI has instructed lenders to develop a policy for handling willful defaulters, which must be approved by their boards. This policy should ensure a non-discriminatory approach in the investigation and classification process. The RBI's latest directive emphasizes its commitment to addressing deliberate loan defaults with increased vigilance and strict enforcement.