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Key Highlights Of The RBI Draft

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.