Guidelines on Wilful Defaulters
The Reserve Bank of India (RBI) has issued guidelines on wilful defaulters, defining key terms such as ‘lender’, ‘unit’, and ‘wilful default’. A wilful defaulter is one who has diverted or siphoned funds, or has not utilized them for the intended purpose.
Key Provisions:
• Diversion and siphoning of funds, and failure to utilize funds for the intended purpose are considered wilful default.
• Lenders must monitor end-use of funds and report cases of wilful default to credit information companies.
• Penal measures, including criminal action, may be taken against wilful defaulters.
• Guarantees furnished by individuals, group companies, and non-group companies will be considered in determining wilful default.
• Auditors and internal audit/inspection teams play a crucial role in identifying wilful defaulters.
• Lenders must report cases of wilful default accurately, including details of guarantors and government undertakings.
• A format for submitting data on cases of wilful default has been prescribed.
Mechanism for Identification and Reporting
The RBI has outlined a mechanism for identifying wilful defaulters, including monitoring end-use of funds and reporting cases to credit information companies.
Criminal Action:
• Lenders may take criminal action against wilful defaulters, as recommended by the Joint Parliamentary Committee (JPC).
• The RBI has emphasized the need for ensuring accuracy in reporting cases of wilful default.
Chat with the Master Circular:
Download: Master Circular on Wilful Defaulters