The amended guidelines, effective from April 1, 2027, aim to strengthen credit discipline and accountability
A wilful default includes cases where borrowers fail to repay despite having the capacity, divert or siphon funds, or dispose of secured assets without lender approval. | Photo Credit: ANUSHREE FADNAVIS
The Reserve Bank of India (RBI) said that if a wilful default is observed during an internal preliminary screening, a bank shall complete the process of classifying or declaring the borrower as a wilful defaulter within six months of the account being classified as an NPA (non-performing asset). This RBI directive on Commercial Banks – Treatment of Wilful Defaulters and Large Defaulters (Amendment Directions) will come into effect from April 1, 2027.
A wilful default occurs when a unit has defaulted in meeting its payment / repayment obligations to the lender, even when it has the capacity to honour the said obligations; has siphoned off the funds; has disposed off or removed the movable fixed assets or immovable property given by it for the purpose of securing a term loan without the knowledge of the bank/lender.
Published on April 27, 2026
aniltikotekar4sme.com 