What changed
RBI issued a Master Circular consolidating all prior circulars on wilful defaulters into one document for easier reference. The circular retains existing definitions, thresholds, and penal measures without introducing new rules.
What it means for you
Banks and financial institutions now have a single reference point for identifying, reporting, and acting against wilful defaulters. This streamlines compliance and ensures consistent application of penal measures, including criminal action for large defaults.
What you must do
- Review the Master Circular to ensure your bank's wilful default identification and reporting processes align with RBI guidelines.
- Report all wilful default accounts with outstanding of Rs.25 lakh and above to RBI quarterly, using the prescribed format.
- Examine all wilful default cases of Rs.1 crore and above for filing suits and consider criminal action where fraud is detected.
- Ensure a committee of higher functionaries (headed by ED, with two GMs/DGMs) identifies wilful defaults before reporting.
Who it affects
All scheduled commercial banks (excluding RRBs and LABs), All India Notified Financial Institutions
What is the threshold for reporting wilful defaulters to RBI?
Banks must report all non-performing borrowal accounts with outstanding funded facilities (and non-funded facilities converted to funded) aggregating Rs.25 lakh and above that are identified as wilful defaults.
What actions are required for wilful defaults of Rs.1 crore and above?
Banks should examine such cases for filing suits and consider criminal action if instances of cheating or fraud are detected.
Does this Master Circular introduce new rules?
No, it consolidates all existing instructions on wilful defaulters that were operational as of July 1, 2010, into a single document for ease of reference.