Compromise with wilful defaulters to help banks recover dues much faster

RBI says compromise settlement is not a new regulation, has been around for over 15 years; But unlike normal defaulters, wilful and fraud accounts barred from availing bank finance for 5 years

The Reserve Bank of India on Monday clarified that banks have been allowed for compromise settlement to wilful defaulters and fraudulent accounts to help them to recover the money without much delay.

“The primary regulatory objective is to enable multiple avenues to lenders to recover the money in default without much delay. Apart from the time value loss, inordinate delays result in asset value deterioration which hampers ultimate recoveries,” RBI said in the frequently asked questions section released today.

“The imperatives for lenders are no different when it comes to recovery from borrowers classified as fraud or wilful defaulter,” the