Reserve Bank Governor Raghuram Rajan said the central bank is working on a new system for making public the list of wilful defaulters and new mechanism for out-of-court settlement of bad loan-related disputes.  The central bank was in favour of protecting privacy in cases where there is no wrongdoing, he said, adding a blanket edict that everybody’s name should be made public on the website might not be desirable. He further said it might not be correct to flash the name of all and sundry, including those who forgot to pay their credit bills.

Indian banks are grappling with record non-performing assets as several projects have failed to take off and several companies are saddled with excessive debt but low revenue flow from their businesses as demand too has remained weak. RBI has been pushing banks to classify several accounts as non-performing, which has impacted the profitability of lenders and pushed several of them – from Bank of Baroda and Bank of India to IDBI and Indian Overseas Bank into losses.

Wilful Defaulter

A wilful defaulter is somebody who has essentially not used the fund for the purpose it has been borrowed or when he has not repaid when he can do so; when he has siphoned off the funds or when he disposed of the assets pledged for availing of loan without the bank’s knowledge.