Key Highlights Of The RBI Draft:
Reserve Bank of India (RBI) in a recent draft proposed that lenders should classify a borrower as a wilful defaulter within six months of their account being declared a non-performing asset (NPA).
- Under the new regime, the lender must identify wilful defaulter borrowers within a specified six-month timeframe, whereas in the previous system, there was no such time constraint.
- Lenders must assess wilful default for accounts over Rs 25 lakh within 6 months of becoming NPAs.
- An Identification Committee formed by lenders reviews evidence of wilful default.
- Policies require non-discriminatory photo publishing for wilful defaulters, and no credit is given to them for up to 1 year post removal from the List of Wilful Defaulters (LWD); additionally, no credit for new ventures is allowed for 5 years after LWD removal.
- Guarantors can be pursued without exhausting remedies against principal debtors, and investigation of wilful default is necessary before transferring credit to others or ARCs.