The government noted on Monday that, as per the information provided by the Reserve Bank of India, there were 2,623 unique borrowers classified as wilful defaulters, with an aggregate outstanding of Rs 1,96,049 crore by scheduled commercial banks till the end of March 2023. The data is for borrowers with aggregate exposures of Rs 5 crore and above.
Minister of State for Finance Bhagwat Karad, in a written reply, informed the Lok Sabha that, as per inputs received from the RBI, the primary regulatory objective behind allowing wilful defaulters to enter into compromise settlements is to enable multiple avenues for lenders to recover the money in default without much delay.
“Further compromise settlement is not available to borrowers as a matter of right; rather, it’s a discretion to be exercised by lenders based on their commercial judgement,” he stated.
In October, the RBI turned down a request made by banks to defer the implementation of the ‘Framework for Compromise Settlement and Technical Write-offs’ by at least six months. After issuing the circular on June 8, the regulator came out with an explainer, stating that the provision enabling banks to sign compromise settlements in respect of borrowers categorised as fraud or wilful defaulters was not a new regulatory instruction. It had been the settled regulatory stance for more than 15 years, it said.
Later in September, the RBI came out with a draft master directive on the treatment of wilful defaulters, wherein it suggested a mechanism for the identification and classification of wilful defaulters. As per the draft, the lender shall examine the ‘wilful default’ aspect in all accounts with an outstanding amount of Rs 25 lakh and above, or as may be notified by the Reserve Bank of India from time to time, and complete the process of classification or declaring the borrower as a wilful defaulter within six (6) months of the account being classified as non-performing.
In response to another question, he stated that commercial banks have collected an aggregate amount of Rs 5,309.80 crore as panel charges, including penalty charges against delay in payment of loans, during the financial year 2022–23.
Karad further informed the Lok Sabha that, as per the RBI’s inputs, the Central Payments Fraud Information Registry (CPFIR), a web-based payment-related fraud reporting solution, has been put in place by the RBI as of March 23, 2020.