By allowing wilful defaulters and fraudsters to settle loans under compromise, the RBI is effectively condoning their actions, placing the burden of their misdeeds on the shoulders of ordinary citizens.
The RBI, in its 'Prudential Framework for Resolution of Stressed Assets' (June 7, 2019), made clear that the borrowers who committed frauds/ malfeasance/ wilful default will remain ineligible for restructuring.
Last week, the Reserve Bank of India (RBI) released a framework for lenders governing technical write-offs and compromise settlements, including those classified as fraud or wilful defaulters.
RBI’s recent ‘framework for compromise settlements and technical write-offs’ is a detrimental step that may compromise the integrity of the banking system
On June 8, the RBI issued a circular which said that regulated entities may undertake compromise settlements of accounts categorised as wilful defaulters, without prejudice to the criminal proceedings against them. While some bankers say it will help to recover money faster, unions argue it will promote fraudsters.