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Reserve Bank of India (RBI) issued Master Direction on treatment of wilful and large defaulters laying down a regulatory framework and procedures for classification of borrowers as wilful defaulters
Wilful defaulters
A wilful defaulter means a borrower or a guarantor who has committed wilful default and the outstanding amount is Rs 25 lakh and above.
A large defaulter refers to a borrower with an outstanding balance of Rs 1 crore or more, whose account has been categorized as doubtful or a loss
Events Constituting Wilful Default:
The unit has failed to make payments or repayments to the lender despite having the ability to do so.
The unit has defaulted on payments and diverted the borrowed funds to purposes other than those intended.
The unit has defaulted on payments and misappropriated the funds, so they are neither used for the intended purpose nor available as assets.
The unit has defaulted on payments and has disposed of or removed assets used as collateral without informing the lender.
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