Punjab National Bank & Ors vs Kingfisher Airlines Limited & Ors on 17 December, 2015

1. The Reserve Bank of India (RBI), from time to time, issued a number

of Circulars to Banks and Financial Institutions (FIs), containing

instructions on matters relating to wilful defaulters. To enable the Banks /

FIs to have all the existing instructions on the subject at one place, a Master

Circular dated 1st July, 2013, incorporating all the instructions / guidelines

issued on cases of wilful default, was issued. The purpose thereof was

defined as, to put in place a system to disseminate credit information

pertaining to wilful defaulters for cautioning Banks / FIs so as to ensure that

further bank finance is not made available to them. The said Circular inter

alia provides for submission by Banks / Financial Institutions of data of

wilful defaulters to RBI on a quarterly basis and preparation of a list of

wilful defaulters by the RBI and communication thereof to the Securities

Exchange Board of India (SEBI) and to Credit Information Bureau (India)

Ltd. (CIBIL). The said Circular requires all the Scheduled Commercial

Banks and All India Notified Financial Institutions to identify cases of

wilful default and to constitute a committee of higher functionaries headed

by the Executive Director and consisting of two General Managers / Deputy

General Managers as decided by the Board of the concerned Bank / FI, to

LPA No.589/2014 & LPA No. 113/2015 Page 2 of 45
decide on the classification of the borrower as a wilful defaulter. The

Circular also requires the Banks / FIs to i) advise the borrower about the

proposal to classify him as wilful defaulter along with the reasons therefor;

Source: Indian Kanoon

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