What changed
Paragraph 6(2) of the Wilful Defaulter Directions, 2025 is modified. Banks now have a fixed six-month timeline from the date an account is classified as NPA to complete the wilful defaulter classification process. Earlier, no such explicit deadline existed.
What it means for you
Banks must accelerate their internal screening and review mechanisms to meet the six-month deadline. This reduces ambiguity and ensures timely action against wilful defaulters, potentially improving asset quality recognition and provisioning timelines.
What you must do
- Update internal wilful defaulter identification and classification SOPs to align with the six-month timeline from NPA date.
- Train credit and risk teams on the revised timeline and its linkage to the new asset classification directions.
- Review current pending cases to ensure they meet the April 1, 2027 effective date compliance.
- Coordinate with legal and recovery teams to streamline the preliminary screening and classification process.
Who it affects
Commercial banks, Credit risk management teams, Recovery and legal departments
When does the six-month timeline start?
The timeline starts from the date the account is classified as NPA under the Reserve Bank of India (Commercial Banks - Asset Classification, Provisioning and Income Recognition) Directions, 2026.
What happens if a bank fails to complete classification within six months?
The amendment does not specify consequences; banks must comply from April 1, 2027.