What changed
RBI issued standalone directions for Asset Reconstruction Companies (ARCs) on reporting wilful defaulters and large defaulters. ARCs must now submit monthly lists of suit-filed and non-suit-filed accounts for large defaulters (threshold ₹1 crore including unapplied interest) and wilful defaulters to all credit information companies. The directions also extend restrictions on further financial accommodation to wilful defaulters to all RBI-regulated entities, not just lenders.
What it means for you
ARCs now have a clear regulatory obligation to report default data, closing a loophole where transferred accounts might escape credit bureau scrutiny. Banks and other lenders must ensure they do not extend fresh credit to individuals or entities flagged as wilful defaulters by ARCs. This strengthens the credit discipline ecosystem and reduces the risk of defaulters obtaining new loans from any regulated entity.
What you must do
- Update internal systems to capture and report large defaulters (₹1 crore+ threshold) and wilful defaulters to all CICs monthly.
- Review loan sanction processes to check against ARC-reported wilful defaulter lists before approving any credit.
- Coordinate with ARCs to ensure timely and accurate data submission for transferred accounts.
- Train credit and compliance teams on the new reporting formats (Annex I and II) and monthly submission timelines.
Who it affects
Asset Reconstruction Companies (ARCs), All RBI-regulated entities (banks, NBFCs, etc.), Credit information companies (CICs), Borrowers classified as wilful or large defaulters
What is the threshold for reporting a large defaulter under these directions?
The threshold is ₹1 crore, including unapplied interest. For suit-filed accounts, the threshold is based on the amount for which the suit is filed.
Do these directions apply to all lenders or only ARCs?
The reporting obligations apply directly to ARCs. However, the restrictions on further financial accommodation to wilful defaulters apply to all entities regulated by RBI, regardless of whether they are defined as 'lender' in the directions.
How often must ARCs report default data to credit information companies?
ARCs must submit the information on large defaulters and wilful defaulters to all CICs at monthly intervals.