MUMBAI: RBI has asked banks to consider the borrower’s intent before classifying them as wilful defaulters. Additionally, banks must have an identifying committee, which includes a whole-time director, to classify a borrower as a defaulter.
RBI on Tuesday announced its new master direction for the treatment of wilful defaulters. The new circular follows observations by various courts that banks must provide reasoned orders before labelling a loan defaulter with the wilful tag.
“The identification of the wilful default should be made keeping in view the track record of the borrowers and should not be decided on the basis of isolated transactions/ incidents,” RBI said in its circular. “The default to be categorised as wilful must be intentional, deliberate, calculated and meeting the conditions set out,” the circular added.
The 2015 circular outlined different situations that could lead to a loan being categorised as a wilful default, including cases where the borrower used the money for purposes other than what it was originally intended for. This caused confusion at times, especially when a loan was provided for a specific project but some of the funds were used for related investments that were not part of the main project.
In terms of the guidelines, to identify and classify a borrower as a wilful defaulter, the process begins with an identification committee examining the evidence of wilful default. If satisfied, the committee issues a show cause notice to the relevant parties, calling for their submissions.
RBI on Tuesday announced its new master direction for the treatment of wilful defaulters. The new circular follows observations by various courts that banks must provide reasoned orders before labelling a loan defaulter with the wilful tag.
“The identification of the wilful default should be made keeping in view the track record of the borrowers and should not be decided on the basis of isolated transactions/ incidents,” RBI said in its circular. “The default to be categorised as wilful must be intentional, deliberate, calculated and meeting the conditions set out,” the circular added.
The 2015 circular outlined different situations that could lead to a loan being categorised as a wilful default, including cases where the borrower used the money for purposes other than what it was originally intended for. This caused confusion at times, especially when a loan was provided for a specific project but some of the funds were used for related investments that were not part of the main project.
In terms of the guidelines, to identify and classify a borrower as a wilful defaulter, the process begins with an identification committee examining the evidence of wilful default. If satisfied, the committee issues a show cause notice to the relevant parties, calling for their submissions.
Elgar Parishad case: HC rejects default bail pleas of 5 accused
The Bombay High Court dismissed pleas for default bail by five accused in the Elgar Parishad case from June 2018. Justices Ajay Gadkari and Shyam Chandak rejected appeals filed by Surendra Gadling, Rona Wilson, Sudhir Dhawale, Mahesh Raut, and Shoma Sen. The accused had argued procedural lapses, but the court upheld the special NIA court’s decision.
The Bombay High Court dismissed pleas for default bail by five accused in the Elgar Parishad case from June 2018. Justices Ajay Gadkari and Shyam Chandak rejected appeals filed by Surendra Gadling, Rona Wilson, Sudhir Dhawale, Mahesh Raut, and Shoma Sen. The accused had argued procedural lapses, but the court upheld the special NIA court’s decision.
Smart borrowing: Tips to make the most of your personal loan
The article discussed how personal loans can be a valuable tool for achieving financial goals, like home renovations or vacations, when managed wisely. It highlighted the benefits of FIRSTmoney smart personal loans, emphasizing careful financial assessment, maintaining a good credit score, understanding interest rates, selecting the right tenure, and reading loan terms thoroughly before proceeding.
The article discussed how personal loans can be a valuable tool for achieving financial goals, like home renovations or vacations, when managed wisely. It highlighted the benefits of FIRSTmoney smart personal loans, emphasizing careful financial assessment, maintaining a good credit score, understanding interest rates, selecting the right tenure, and reading loan terms thoroughly before proceeding.
Banks to follow home loan growth story for MSMEs
Banks were tasked to use the digital footprint of small businesses for loan decisions, including salary payments, electricity bills, and GST details, to enhance lending in this sector. The move, part of the government’s plan to boost financing for small businesses, mirrors methods used in home loans, aiming to provide a new credit rating mechanism.
Banks were tasked to use the digital footprint of small businesses for loan decisions, including salary payments, electricity bills, and GST details, to enhance lending in this sector. The move, part of the government’s plan to boost financing for small businesses, mirrors methods used in home loans, aiming to provide a new credit rating mechanism.
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