Reserve Bank of India (Rural Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025
UR
- Applies toRural co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length20 points in 5 sections · 2 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Opening paragraphs
1. Warn the other lenders
The rules aim to spread word of a wilful defaulter so no fresh money reaches him.
Chapter I. Preliminary
1. Wilful default for RCBs
This paper sets how rural co-operative banks name a wilful defaulter.
2. Start date
These Directions came into effect on the day RBI issued them.
3. Who is covered
These Directions apply to every rural co-operative bank.
4. Every RBI-regulated lender
The bar on fresh money to a wilful defaulter binds every lender RBI regulates.
Chapter II. Treatment of Wilful Defaulters
1. One-year credit ban
Banks cannot give a wilful defaulter new credit for one year after removal from the list.
2. Penalty ends with the tie
The penalties stop applying to an associated firm once the tie is broken.
3. Associated firms are caught
Every firm a wilful defaulter runs or sits on the board of is tied to him.
Chapter III. Reporting of Wilful Defaulters and Large Defaulters
Must know
1. One crore includes unapplied interest
Unapplied interest counts towards the ₹1 crore threshold.
BankPulse example. Suppose the principal outstanding is ₹98 lakh and the unapplied interest is ₹4 lakh. Together that is ₹1.02 crore. The account crosses the ₹1 crore threshold, because the interest counts.
2. Do not lean on auditors
A lender must not go by the auditor's paper alone.
Do it
3. Check the director details
Director details sent to the bureaus must be checked against the Registrar's database.
4. Report failed guarantors
Guarantors who do not honour an invoked guarantee must be reported to the bureaus.
5. Check identical names yourself
Where two names are the same, the lender must check who is who on its own.
6. Watch where the money goes
The end use of funds must be watched and a certificate taken from the borrower.
7. End use in the policy
End use checks must form part of the lender's own loan policy document.
Background
8. Suits go by sued amount
For a suit filed account the threshold is the amount sued for.
9. New owner, clean slate
The bar lifts once a rescue plan puts the firm in new hands.
10. A false certificate means court
A false paper from the borrower may take him to court.
Chapter IV. Repeal and Other Provisions
1. Older rules cancelled
This document cancels the older wilful-defaulter rules for rural co-operative banks.
2. Old cases continue
Penalties and legal cases already started under the old rules still continue.
The same subject for other kinds of institution
The same subject for other kinds of institution.
RBI wilful defaulter rules for all India financial institutions
RBI wilful defaulter rules for asset reconstruction companies
Other RBI rules for rural co-operative banks
RBI Kisan Credit Card rules for rural co-operative banks 2026
RBI capital adequacy rules for rural co-operative banks 2025
RBI credit bureau reporting rules for rural co-operative banks 2025
RBI customer service and fair conduct rules for rural co-operative banks 2025
RBI deposit interest rate rules for rural co-operative banks 2025
RBI digital banking channel rules for rural co-operative banks 2025
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