The Reserve Bank of India (RBI), on Monday, modified the definition of a non-cooperative borrower and also fixed the cut off limit for classifying borrowers as non-cooperative would be those borrowers having aggregate fund-based and non-fund based facilities of Rs.5 crore from the concerned bank/financial institution (FI).
“A non-cooperative borrower is one who does not engage constructively with his lender by defaulting in timely repayment of dues while having ability to pay, thwarting lenders’ efforts for recovery of their dues by not providing necessary information sought, denying access to assets financed/collateral securities, obstructing sale of securities, etc,” said the RBI.
In effect, said the RBI, “a non-cooperative borrower is a defaulter who deliberately stonewalls legitimate efforts of the lenders to recover their dues.”
RBI asked banks/FIs to report information on these borrowers to the Central Repository of Information on Large Credits (CRILC). Further removal of names from the list of non-cooperative borrowers should be separately reported to CRILC with adequate reasoning/rationale.
A non-cooperative borrower in case of a company will include, besides the company, its promoters and directors (excluding independent directors and directors nominated by the Government and the lending institutions).
In case of business enterprises (other than companies), non-cooperative borrowers would include persons, who are in-charge and responsible for the management of the affairs of the business enterprise.
The RBI told banks/FIs to put in place a transparent mechanism for classifying borrowers as non-cooperative.
“The decision to classify the borrower as non-cooperative borrower should be entrusted to a committee of higher functionaries, headed by an Executive Director and consisting of two other senior officers of the rank of general managers/deputy general managers as decided by the board of the concerned bank/FI.”
“An opportunity should be given to the borrower for a personal hearing if the committee feels such an opportunity is necessary,” the RBI added.
However, it said that the order of the committee should be reviewed by another committee headed by the Chairman/CEO and MD and consisting, in addition, of two independent directors of the bank/FI and “the order shall become final only after it is confirmed by the Review Committee.”
Boards of banks/FIs were asked to review on a half-yearly basis the status of non-cooperative borrowers .
