Rajan said the final guidelines on small banks and payments banks will be issued by November-end

MUMBAI : Governor Raghuram Rajan said the Reserve Bank is in the process of modifying the definition of “wilful defaulters” so as to bring the directors of defaulting companies under its ambit.

“The (Calcutta High) Court had some questions about whether all directors could be declared wilful defaulters and we have looked at that. We are in the process of modifying the definition so that the directors should be seen as culpable in the sense of actively participating or being grossly negligent of wilful default,” Rajan said.

The “non-cooperative” borrower guidelines will be different from the current wilful defaulter norms.

“They are tackling two different things. The wilful defaulter is about somebody who has essentially not used funds for the appropriate purposes… It’s (non-cooperative borrowers norms) trying to tackle a different issue,” Rajan said.

“There are some borrowers who basically resist repaying at every corner, holding up the process. And our sense is whatever their recourse to the legal process is…from a prudential perspective, they impose a cost to the system because banks cannot get their money using the existing laws, such as SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act),” Rajan explained.

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