Increase in the Number of Wilful Defaulters

Published: June 25, 2019

The government has stated that the number of wilful defaulters in nationalised banks was increased by about 60 per cent in the last five years. The number of wilful defaulters has been increased to 8,582 in five years in March 2019 from 5,349 at the end of 2014-15.

What is a Wilful Default?

Reserve Bank of India (RBI) defines Wilful Default is deemed to have occurred when:

  • The unit has defaulted in meeting its payment/repayment obligations to the lender even when it has the capacity to honour the obligation.
  • The unit has defaulted in meeting its payment/repayment obligations to the lender and has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes.
  • The unit has defaulted in meeting its payment/repayment obligations to the lender and has siphoned off the funds so that the funds have not been utilised for the specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets.
  • The unit has defaulted in meeting its payment/repayment obligations to the lender and has also disposed off or removed the movable fixed assets or immovable property given for the purpose of securing a term loan without the knowledge of the bank/lender.

The number of Wilful Defaulters has been raising consistently since 2014-15, the number of such borrowers increased to 6,575 in 2015-16; 7,079 in 2016-17 and further to 7,535 in 2017-18.

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