Wilful Defaulter and Non-Cooperative Borrower
The provisioning in respect of existing loans/exposures of banks to companies having director/s (other than nominee directors of government/financial institutions brought on board at the time of distress), whose name/s appear more than once in the list of wilful defaulters, will be 5% in cases of standard accounts; if such account is classified as NPA, it will attract accelerated provisioning as indicated at para 31.1 of Master Circular on Prudential Norms. This is a prudential measure since the expected losses on exposures to such borrowers are likely to be higher. It is reiterated that no additional facilities should be granted by any bank/FI to the listed wilful defaulters, in terms of paragraph 2.5 (a) of Master Circular on Wilful Defaulters dated July 1, 2015.
With a view to discouraging borrowers/defaulters from being unreasonable and non-cooperative with lenders in their bona fide resolution/recovery efforts, banks may classify such borrowers as noncooperative borrowers, after giving them due notice if satisfactory clarifications are not furnished. Banks will be required to report classification of such borrowers to CRILC. Further, banks will be required to make higher/accelerated provisioning in respect of new loans/exposures to such borrowers as also new loans/exposures to any other company promoted by such promoters/ directors or to a company on whose board any of the promoter / directors of this noncooperative borrower is a director. The provisioning applicable in such cases will be at the rate of 5% if it is a standard account and accelerated provisioning as per para 31.1 of Master Circular on Prudential Norms, if it is an NPA. Reporting of non-cooperative borrower has to be read along with Reserve Bank of India circular no. DBR.No.CID.BC.54/20.16.064/2014-15.