‘Compromise settlement’ provides ways to lenders to recover lost money: RBI

New Delhi, June 20 (SocialNews.XYZ) The Reserve Bank of India (RBI) said on Tuesday that a "compromise settlement" with borrowers aims to enable multiple avenues to lenders to recover the money in default without much delay.

The RBI made the remarks while issuing a set issued a set of frequently asked questions (FAQs) on Framework for Compromise Settlements and Technical Write-offs.

"The primary regulatory objective is to enable multiple avenues for lenders to recover the money in default without much delay," the RBI noted.

It further said that the provision enabling banks to enter into a compromise settlement in respect of borrowers categorised as fraud or wilful defaulter, is not a new regulatory instruction and has been the settled regulatory stance for more than 15 years.

On June 8, the RBI has issued a circular on Framework for Compromise Settlements and Technical Write-offs.

On dilution of penal measures, the central bank said it will remain unchanged what has been mentioned in the Master Directions on Frauds dated July 1, 2016, and the Master Circular on Wilful Defaulters dated July 1, 2015.

These penal measures entail that no additional facilities should be granted by any bank to borrowers listed as wilful defaulters, and that such companies can get debarred from institutional finance for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters.

Also borrowers classified as fraud are debarred from seeking bank finance for a period of five years from the date of full payment of the defrauded amount, the RBI added.

Source: IANS