Wilful Defaulter In 1999, RBI classified “wilful” and “non-wi | UPSCPrelimsZone

Wilful Defaulter

In 1999, RBI classified “wilful” and “non-wilful” defaulters to differentiate those who were deliberately using the banking system to not pay back dues from those who were genuinely fallen on debt trap.

As per RBI, a person or a company is termed as “wilful defaulter” in any of the four circumstances given below:

Defaults on their payment obligation despite being capable of meeting it.

Diverted the funds for purpose other than what was defined on the contract.

Funds are suspected to be siphoned off by the borrower.

Funds are used to buy and sell assets without informing the bank/lender.

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