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The Reserve Bank of India (RBI) is considering making in-person hearings with borrowers mandatory for lenders dealing with potential wilful defaulters, in an effort to increase chances of recovery at an early stage.

On June 8, 2023, the RBI said in a circular that banks can undertake compromise settlements or technical write-offs in respect of accounts categorised as wilful defaulters or fraud without prejudice to the criminal proceeding underway against such debtors.

Given that there are enough processes to identify wilful defaulters, the need for a specific process to identify wilful default seems superfluous, but perhaps an acquiescence to the principles of natural justice

According to the Reserve Bank data, Scheduled Commercial Banks (SCBs) have done aggregate recovery of Rs 10,16,617 crore during the last nine financial years.

Comprehensive measures taken by the government and the Reserve Bank of India (RBI) to recover and to reduce NPAs has enabled an aggregate recovery of ₹10,16,617 crore | Latest News India

Lawyers, resolution professionals and bankers attribute spike to clearance of a backlog

Rather than fixing legal delays, the RBI has chosen to embrace a compromise model.

Public sector banks account for 85% of the wilful defaults at Rs 2.92 lakh crore with SBI having the highest number of such accounts amounting to Rs 79,227 crore as of December 2022, Cibil data showed.