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RBI's New Guidelines on Wilful and Large Defaulters
Context
The Reserve Bank of India (RBI) has introduced a Master Direction focusing on the treatment of wilful defaulters and large defaulters. This move aims to enhance the scrutiny and reporting mechanisms for non-performing asset (NPA) accounts.
Key Highlights
- Examination Requirement: Banks and Non-Banking Financial Companies (NBFCs) are mandated to examine the 'wilful default' aspect in all NPA accounts with outstanding amounts of Rs 25 lakh and above.
- Reporting and Dissemination: Provisions regarding reporting and dissemination of credit information for large defaulters apply to all entities regulated by the RBI, even if they do not meet the definition of 'lender' in the guidelines.
- All RBI-regulated entities must submit information to all credit information companies (CICs) on a monthly basis. This includes:
- A list of suit-filed accounts of large defaulters.
- A list of non-suit filed accounts of large defaulters classified as doubtful or loss.
- Threshold Calculations
- For calculating the Rs 1 crore threshold, any unapplied interest should be included.
- In the case of suit-filed accounts, the threshold pertains to the amount for which suits have been filed.
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