Wilful defaulters may get loans after 5 years of settlement

Banks will be allowed to extend loans to wilful borrowers and defaulters after five years of a compromise settlement and debt restructuring will be allowed only if there is change in promoters, sources aware of the development said.

On June 8, the Reserve Bank of India (RBI) had issued a circular on compromise settlement with borrowers, including wilful defaulters and fraud accounts. The regulator mandated a board approved policy for compromise settlements, and proposals for compromise settlements in respect of debtors classified as fraud or wilful defaulters would require approval of the board in all cases.