Hey,
There is a difference between willful defaulter meaning and unintentional defaulter. Sometimes, borrowers are unable to pay back the loaned amount ( principal amount and interest) because they don't have the capacity. These borrowers are known as unintentional defaulters. I will share details about the former below.
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When a borrower defaults on his repayment to the lender (bank or financial institutions) despite having the capacity to repay the loan amount, he is known as a wilful defaulter. When the borrower does not use the financed amount from the bank (lender) for the specific purpose it was financed for. Diversion of funds also comes under the purview of wilful defaulting on a loan.
Basically, a person who doesn't make payments to the bank despite having a good net worth and cash flow is a wilful defaulter. As the name suggests, it is a person who is defaulting on the loan payment by their own will.
Under the Indian Penal Code, 1860, a wilful defaulter can be prosecuted under Sections 415 and 403 of the IPC. I was reading some stats and realised that the amount owed to Indian banks by these defaulters reached a whopping Rs 2.4 lakh crore on May 31, 2022.
The RBI in their guidelines has expressed concerns about these defaulters and their impact on the financial system. To combat the problem of wilful defaulter CIBIL, the Reserve Bank of India along with the Government of India, has opened a Working Group on Wilful Defaulters (WGWD).
This is all from my end on willful defaulter meaning.
Read more :
What is loan disbursement
How to calculate prepayment of home loan
How many years CIBIL keep record of defaulters?
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What is wilful defaulter ?
Urvashi
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2022-08-12T19:04:05+00:00 2022-08-12T19:04:06+00:00Comment
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