Business Mantra: Faridabad
On the specific demand of our readers, we are giving the definition of “Willful Defaulters” of Banks/FIs.
A Willful Defaulter is a borrower:
- Who has the capacity to pay its dues but does not pay willfully to the Banks/FIs etc.
- Who Diverts its funds for its own benefit rather than the benefit of its firm/Company etc.
- Who deliberately does not fulfill the purpose of finance i.e. generation of assets to be created out of Bank/FI finance.
- Who disposes off or removes its assets without the permission or the knowledge of the Bank/FI.
As per the Reserve Bank of India guidelines, no willful defaulters can get further finance from any Bank/FI. Moreover, action is initiated against such willful defaulter like legal proceedings for recovery, criminal proceedings against the defaulting borrowers and its guarantors. Such persons, firms, companies and its directors are debarred from entering into companies as directors as the Banks/FIs shall not finance such companies/firms in future.