No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2007-2008/59 · issued 02 Jul 2007 · ~2 min read
Quick answerRBI consolidated all existing instructions on wilful defaulters into a single master circular. It defines wilful default, sets a Rs.25 lakh reporting threshold, outlines penal measures, and mandates quarterly reporting to RBI/CIBIL for scheduled commercial banks and notified FIs.
What changed
RBI issued a master circular consolidating all previous circulars on wilful defaulters into one document. The circular formalizes the definition of wilful default, including deliberate non-payment, siphoning of funds, and asset misutilisation. It also prescribes penal measures, roles of auditors, and a grievance redressal mechanism.
What it means for you
Banks and FIs now have a single reference for all wilful defaulter guidelines, reducing ambiguity. The circular reinforces the need for strict monitoring of end-use of funds and accurate reporting to credit bureaus. Lenders must ensure their internal committees identify and report wilful defaults promptly to avoid regulatory action.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal policies to align with the master circular's definition of wilful default and penal measures.
Ensure all non-performing accounts with outstandings of Rs.25 lakh and above are reviewed by a committee for wilful default.
Report confirmed wilful defaulters to RBI and CIBIL quarterly in the prescribed format.
Strengthen end-use monitoring of funds and audit processes to detect diversion or siphoning early.
Implement the grievance redressal mechanism for borrowers aggrieved by inclusion in the wilful defaulters list.
Who it affects
All scheduled commercial banks (excluding RRBs and LABs), All India Notified Financial Institutions, Borrowers with outstanding credit facilities of Rs.25 lakh and above
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 16:00 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn05 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the threshold for reporting a wilful defaulter?
Banks and FIs must report all non-performing borrowal accounts with outstandings (funded and non-funded facilities converted to funded) aggregating Rs.25 lakh and above that are identified as wilful default by a committee of higher functionaries.
What actions can banks take against wilful defaulters?
Penal measures include filing criminal cases, debarring from accessing additional credit, and reporting to credit bureaus. Banks can also initiate criminal action under the JP Committee recommendations and monitor end-use of funds closely.
How can a borrower challenge inclusion in the wilful defaulters list?
The circular provides a grievance redressal mechanism where aggrieved borrowers can approach the bank's internal committee. If unsatisfied, they may escalate to the Banking Ombudsman or other appropriate forums as per existing RBI guidelines.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2400: DBOD.No.DL.BC.12928/20.16.003/2007-08 — "Master Circular on Wilful Defaulters" dated July 2, 2007”
📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/59
DBOD No.DL.BC.12928/20.16.003/2007-08
July 2, 2007
The Chief Executives of
i) All scheduled commercial banks (excluding RRBs and LABs) and
ii) All India Notified Financial Institutions
Dear Sirs,
Master Circular on Wilful Defaulters
As you are aware, the Reserve Bank of India has, from time to time, issued a number of circulars to banks and financial institutions (FIs) containing instructions on matters relating to wilful defaulters . In order to enable the banks/FIs to have all the existing instructions on the subject at one place, this Master Circular has been prepared. The Master Circular incorporates all the instructions/ guidelines issued on cases of wilful default, which are operational as on date. The Master Circular has also been placed on the RBI web-site (http://www.rbi.org.in).
Yours faithfully,
(Vinay Baijal)
Chief General Manager
Master Circular on ‘Wilful Defaulters’
Purpose
The Reserve Bank of India decided in April 1999 to introduce a scheme under which the banks and notified All India Financial Institutions were required to submit to RBI the details of the wilful defaulters with outstandings of Rs.25 lakh and above. This was pursuant to the instructions of the Central Vigilance Commission for collection of information on wilful defaults of Rs.25 lakhs and above by RBI and dissemination to the reporting banks and FIs. This circular prescribes the norms for declaring an individual borrower a wiful defaulter, penal measures that can be taken against a willful defaulter, roles and responsibilities of a audit and inspecting teams while they deal with such accounts and a mechanism by which the grievance can be addressed if any party feels aggrieved on account of inclusion of its name in the wilful defaulters list. The circular also deals with the criminal action that a bank can take against the willful defaulters and precautions a bank can take in this regard before giving credit facilities to the borrowers.
Previous instructions :
The Master Circular incorporates all the instructions/ guidelines issued on cases of wilful default, which are operational as on date.
Application :
To all scheduled commercial banks (excluding RRBs and LABs) and All India Notified Financial Institutions.
Structure :
1.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/59 · issued 02 Jul 2007. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3670&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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