WILFUL DEFAULTS

Meaning: 

• Default means not meeting loan repayment obligations. 
  
  
• Criteria: According to a Reserve Bank of India, a default is wilful when it fulfils one of the following four conditions: 
  • A borrower (or an entity) does not pay up even when it has the capacity to pay,
    
    
  • a borrower has not used the loan for the purpose borrowed and diverted it elsewhere,
    
    
  • a borrower has siphoned off the funds and the money is not available with it in the form of other assets, and,
    
    
  • a borrower sells assets given as security against the loan without informing lenders.
    
    
  
  
  
• Following can be termed as Wilful defaulters:
  • Individuals,
    
    
  • Juristic persons (groups of individuals, such as corporations) and
    
    
  • All forms of business enterprises.