The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Rural Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025.
The following has been stated namely: -
• These directions aim to enhance transparency and accountability, thereby safeguarding the financial health of RCBs and ensuring prudent lending practices.
• The directions apply to all RCBs, including State and Central Co-operative Banks, and extend to all entities regulated by the RBI. They mandate that RCBs classify and report wilful defaulters and large defaulters, defined as borrowers with outstanding dues of ₹25 lakh and above. These classifications shall be submitted quarterly to Credit Information Companies (CICs) like CIBIL.
• For wilful defaulters, the directions impose several restrictions. RCBs are prohibited from granting additional credit facilities to such defaulters or any entity associated with them for one year after their removal from the wilful defaulter list. Moreover, these defaulters are barred from obtaining credit for establishing new ventures for five years post-removal. Any restructuring of loans involving wilful defaulters must adhere to the RBI's "Resolution of Stressed Assets" guidelines.
• The directions also emphasize the importance of accurate reporting and due diligence. RCBs are required to maintain a list of wilful defaulters, which shall be updated and submitted to CICs. This list serves as a tool for other lenders to assess the creditworthiness of potential borrowers and to prevent further financial exposure to defaulters.
[Notification no. - RBI/DOR/2025-26/313 DOR.FIN.REC.No.232/20-16-003/2025-26]
