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Wilful Defaulter
The newly appointed board of debt-ridden IL&FS has moved an urgent application before the appellate tribunal NCLAT to restrain 11 public sector lenders from initiating proceedings to declare its group companies as "wilful defaulters". In its petition, IL&FS said it is aggrieved by the "blatant violation and disregard" of previous NCLAT orders by the banks. IL&FS also charged banks of taking procedural action under the garb of the RBI guidelines, and harassing the Directors of the IL&FS companies". The banks are "issuing show cause notices, calling for a personal hearing before the Wilful Defaulter Identification Committee, threatening initiation of criminal proceedings, including initiating proceedings as well as and for declaring IL&FS companies and their current Directors as Wilful Defaulters, as well as getting issued Look Out Circulars," it submitted. "All such coercive actions/steps are attempts by the Respondent Banks to pressurize the IL&FS companies to .
In order to ensure maximum recovery from distressed assets, the Reserve Bank of India has allowed banks to go for compromise settlement of fraud accounts and wilful defaults. All regulated entities (REs) will be required to put in place board-approved policies for undertaking compromise settlements, with the borrowers as well as for technical write-offs laying down the process to be followed for all compromise settlements and technical write-offs, with specific guidance on the necessary conditions precedent, the RBI has said in a notification. Conditions would include minimum ageing, deterioration in collateral value etc., it said. The policies would also put in place a graded framework for the examination of staff accountability in such cases with reasonable thresholds and timelines as may be decided by the board. REs may undertake compromise settlements or technical write-offs in respect of accounts categorised as wilful defaulters or fraud without prejudice to the criminal ...