Lenders once more contact RBI regarding classifying non-performing accounts under the wilful defaulter category

5 Dec 2023 , 11:42 AM

According to news reports, banks have contacted the Reserve Bank of India (RBI) once more, requesting more time before declaring a non-performing account to be a wilful defaulter.

Regarding the treatment of willful and significant defaulters, the RBI had given banks six months to review its draft ‘Framework for Compromise Settlement and Technical Write-offs’ rules in September. Banks, however, require a minimum of 12 months to finish the procedure.

Following the regulator’s rejection of their last request in October to postpone the guidelines’ implementation by six months, banks have requested further time. Prior to the final guidelines being announced by the end of December, lenders submitted new representations last month.

‘We have made a representation through the Indian Banks’ Association to the RBI, requesting an extension of the timelines for completing the process of declaration of wilful default within one year of the account being classified as non-performing,’ a bank executive with knowledge of the issue told ET.

Given that banks must now provide debtors with a ‘in-person’ hearing before labelling an account as in willful default, bankers have suggested that six months may not be sufficient to finish the procedure.

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