Reserve Bank of India (‘RBI’), the Apex Bank of the country is bestowed with the power to regulate the banks as well as financial institutions (FIs) of the Country. From time-to-time RBI issues numerous circulars laying down its instructions and guidelines which all the subordinate banks are bound to follow. Among several circulars, the most remarkable circular introduced by RBI is pertaining to Wilful Default, which initially was brought into light on 1st July, 2013 which later on, underwent certain major changes and accordingly a Master Circular was introduced on 1st July, 2015.

The rationale of RBI to have such a circular is to put in place a system to disseminate credit information pertaining to wilful defaulters for cautioning banks and financial institutions so as to ensure that further bank finance is not made available to them. In recent time the lending business is deemed as a threat for several banks due to rise in the non-performing assets which have put the future of several Banks and FIs in jeopardy. However, one must understand that even though the RBI Circular is made to aid the banks, it can in no manner be prejudicial to the borrowers being categorised as Wilful Defaulters.

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