Willful Defaulters: Banking sector regulator Reserve Bank of India (RBI) has rejected the demand of banks to give more than 6 months to classify those who take loans from banks as willful defaulters. RBI has clearly told the banks that any person who is deliberately not returning the loan taken from the banks, will have to complete the process of declaring them as willful defaulters within six months. RBI had reduced the time limit for declaring willful defaulters to six months. Banks were unhappy with this decision of RBI.
Complete the process of declaring defaulter in 6 months
According to the report of Economic Times, just a few days ago, RBI has clearly told the banks that the banks will have to complete the process of declaring any person taking loan from the banks as a willful defaulter within six months. RBI believes that delay in the process of declaring people who default on loans from banks as willful defaulters leads to decline in the value of assets and to stop the decline in the value of assets, RBI has taken this decision. . This step of RBI will save banks from the crisis of loan defaults and will also help in maintaining financial stability.
Allowing too much time derails the process
RBI has prepared a blueprint to declare those taking loans from banks as willful defaulters. Under this rule, if the person taking loan from the bank does not pay the principal and interest for more than 90 days, then his loan account is declared NPA. Banks then internally alert the client as a willful-defaulter. After this, the person taking the loan is given time to present his side. But many times the borrower starts using this time to derail or delay the process.
Willful defaulter will not be able to leave the country
This is the reason why RBI is not in favor of giving more than six months to banks to complete the process of declaring such a person a willful defaulter. RBI believes that willful defaulter is a sensitive matter which is also politicized. In such a situation, banks should immediately start the legal process against such people so that the person taking the loan cannot flee the country. Once a person is declared a willful defaulter, all doors to taking a loan are closed for that person by applying this tag. At the same time, one has to face embarrassment in the society.
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