Compromise with the borrowers... to open the way for recovery of money

The main objective of entering into settlement with the debtors is to provide multiple avenues to the creditors to recover the money without any delay. The RBI made this comment on the FAQs on Framework for Settlement Settlement and Technical Write-off. RBI says that the primary regulatory objective is to enable multiple avenues for lenders to recover the money without any delay. RBI has issued a circular on Framework for Settlement Settlement and Technical Write-off.

On dilution of punitive measures, the central bank said that as mentioned in the Master Direction on Frauds dated July 1, 2016 and the Master Circular on Willful Defaulters dated July 1, 2015, will remain unchanged. These punitive measures include that no additional facilities should be extended by any bank to borrowers listed as willful defaulters. Such companies may be debarred from institutional finance for starting new ventures for a period of five years from the date of striking off their names. Borrowers classified as fraud are barred from seeking bank finance for a period of five years from the date of full payment of the fraud amount.