Lenders Again Move RBI For Extension Of Timeline

Banks have again approached the Reserve Bank of India (RBI), to seek more time to declare a non-performing account as a wilful defaulter, said people familiar with the development.

In September, the RBI granted banks a period of six months in its draft rules 'Framework for Compromise Settlement and Technical Write-offs' for the treatment of large and wilful defaulters. However, banks demand that they need at least 12 months to complete the entire process.

Banks have sought some more time after RBI rejected their earlier request in October to defer the implementation of the set of guidelines by six months.

Lenders have made a fresh representation last month, ahead of the final guidelines expected to be released by the end of December 2023, according to a media report.

The media report stated that they have made a representation through the Indian Banks' Association to the RBI, to request an extension of the timelines for completing the process of declaration of wilful default within a time frame of one year of the account being classified as non-performing.

Bankers have cited that a six-month period is short and may not be enough to complete the process entirely, as they are now required to give borrowers an "in-person" hearing before classifying an account as a wilful default.

Earlier it was reported that the banks should give defaulting borrowers an "in-person hearing" at the time they identify an account as being under stress rather than at the last stage before classifying the borrower as a wilful defaulter.

The executive said that they are expecting the regulator to consider their views and make favourable amendments to the draft regulations.