RBI has published draft guidelines for classification of Wilful Defaulters:


1) Earlier RBI did not have a specific timeline within which a borrower should be declared a wilful default once a loan has turned NPA (i.e. a default has happened)

2) Wilful defaulters are those (Individuals & Companies) who have the ability to pay a bank’s (or NBFCs) dues but do not or divert bank funds. A wilful defaulter means a borrower or a guarantor who has committed wilful default and the outstanding amount is Rs 25 lakh and above.

3) The lender shall examine the ‘wilful default’ aspect in all accounts with outstanding amount of Rs 25 lakh and above or as may be notified by the RBI from time to time, and complete the process of classification/ declaring the borrower as a wilful defaulter within six (6) months of the account being classified as NPA. Evidence of wilful default needs to be examined by an Identification Committee, to be set up by lenders.

4) Wilful defaulter are Individuals and in case of company, its Promoters and Directors at the time of default and in case of any entity (other than company), persons who are managing the company.

5) No additional credit facility be granted by any lender to a wilful defaulter or any entity with which a wilful defaulter is associated.

6) Wilful defaulters will not be eligible for restructuring of credit facility.

7) In case the said guarantor refuses to comply with the demand made by the lender, such guarantor shall also be considered for classification as a wilful defaulter

8) Any (borrower) account included in List of Wilful Default (LWD), where the lender has entered into a compromise settlement with the borrower, will be removed from the list of LWD only when the borrower has fully paid the compromise amount.

Wilful default norms have been revised after a review of the instructions and consideration of various judgments and orders from the Supreme Court and High Courts, as well as representations and suggestions received from banks and other stakeholders

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