Revised guidelines applies only prospectively and not to cases where guarantees were taken prior to this circular
The Reserve Bank of India (RBI) has revised the guidelines on wilful defaulters making them tighter. As per the revised guidelines, the bankers can classify the guarantor group firms and management as wilful defaulters.The guarantor group companies can be reckoned as wilful defaulters, in cases where guarantees furnished by the companies within the Group on behalf of the wilfully defaulting units are not honoured when invoked by the banks /FIs.
The banker will be able to proceed against the guarantor/surety even without exhausting the remedies against the principal debtor, when a default is made in making repayment by the principal debtor.
Where a banker has made a claim on the guarantor on account of the default made by the principal debtor, the liability of the guarantor is immediate. In case the said guarantor refuses to comply with the demand made by the creditor/banker, despite having sufficient means to make payment of the dues, such guarantor would also be treated as a wilful defaulter.
However, the revised guidelines applies only prospectively and not to cases where guarantees were taken prior to this circular. Banks/FIs may ensure that this position is made known to all prospective guarantors at the time of accepting guarantees.
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