The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Regional Rural Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025.
The following has been stated: -
•The RBI (Regional Rural Banks – Treatment of Wilful and Large Defaulters) Directions, 2025, provide a transparent, non-discriminatory process for classifying borrowers as wilful defaulters and disseminating their credit information.
•Applicable to all RRBs, the Directions define key terms including wilful defaulters, large defaulters (₹1 crore+), diversion/siphoning of funds, and roles of promoters, directors, and guarantors.
•Identification involves an internal two-stage committee process, with show-cause notices, written submissions, and review hearings before final classification; non-whole-time directors are exempt unless complicity is proven.
•Wilful defaulters face restrictions on new credit, penal measures, publication of their details, and legal/criminal proceedings, while accurate reporting to credit information companies is mandatory.
•Preventive measures include credit appraisal checks, monitoring end-use of funds, forensic audits, and accountability of auditors and third parties; previous instructions on defaulters are repealed.
•These directions shall come into effect from November 28, 2025.
[Notification.: RBI/DOR/2025-26/264 DOR.FIN.REC.No.183/20-16-003/2025-26]
