The Reserve Bank of India (RBI) on Thursday proposed sweeping changes in norms concerning wilful defaulters, defining them as someone who has an outstanding amount of Rs 25 lakh and above and has refused to repay despite having the capacity to pay.
RBI has sought comments on the new draft master direction that proposes to expand the scope for lenders which can classify borrowers as wilful defaulters, and refine the identification process.
Wilful defaulters shall not be eligible for restructuring of credit facility and cannot be on the board on any other company.
"The lender shall, wherever warranted, initiate legal action against the borrowers/ guarantors for foreclosure/ recovery of dues expeditiously," the draft said.
It also proposes a review and finalisation on wilful default aspects within six months of an account being classified as a non-performing asset.
Comments on the draft can be submitted to RBI by October 31.