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Master Direction on Treatment of Wilful Defaulters and Large Defaulters

Notification No: RBI/DoR/2024-25/122 DoR.FIN.REC.No.31/20.16.003/2024-25

Notification Date: 30 July 2024

Relevant Act: Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, Credit Information Companies (Regulation) Act, 2005

Relevant Section:  Section 45-L of the Reserve Bank of India Act, 1934, Section 21, Section 35-A and Section 35-A read with Section 56 of the Banking Regulation Act, 1949 and Section 11 of the Credit Information Companies (Regulation) Act, 2005

Applicable on/Issued to: 

  • All Commercial Banks including Small Finance Banks, 
  • Local Area Banks and Regional Rural Banks and excluding Payments Banks
  • All Primary (Urban) Co-operative Banks/ State Co-operative Banks/ Central Cooperative Banks
  • All India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI and NaBFID)
  • All Non-Banking Financial Companies including Housing Finance Companies 
  • All Asset Reconstruction Companies 
  • All Credit Information Companies

Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, 2024 serves as a comprehensive guideline delineating the regulatory framework and procedures for classification of borrowers as wilful defaulters. This directive plays a crucial role in maintaining the integrity of the financial system by outlining the measures and consequences for those borrowers who deliberately default on their financial obligations. These Directions shall come into force after 90 days from placing it on the website of the Reserve Bank. These Directions were released on July 30, 2024.

 

The primary objective of these Directions is to provide for a non-discriminatory and transparent procedure, having regard to the principles of natural justice, for classifying a borrower as a wilful defaulter by the lenders. The directions also aim to put in place a system to disseminate credit information about wilful defaulters for cautioning lenders to ensure that further institutional finance is not made available to them.

 

The said Guidelines are attached for further reference.

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