The RBI has revised the instructions on wilful defaulters after a review of the extant instructions and consideration of various judgments/orders from the Supreme Court and High Courts, as well as representations/suggestions received from banks and other stakeholders. The revised instructions contained in the ‘Draft Master Direction – Treatment of Wilful Defaulters and Large Defaulters‘ have been published on Thursday by the Reserve Bank of India on its website for comments from stakeholders and members of the public.
The draft Master Direction expands the scope for Regulated Entities, which can classify borrowers as wilful defaulters, broadens the definition of wilful default, refines the identification process and mandates a review and finalisation on wilful default aspects within six months of an account being classified as a non-performing asset. It also addresses the treatment of wilful default loans sold to Assets Reconstruction Companies and their status under the Insolvency and Bankruptcy Code. Comments/ feedback from Regulated Entities and other stakeholders may be submitted by October 31, 2023, through email with the subject line ‘Feedback on Master Direction – Treatment of Wilful Defaulters and Large Defaulters.’ The final Master Direction will be issued by the Reserve Bank after considering the feedback received.
