In a notification issued this week, the Reserve Bank of India (RBI) has given relief to willful defaulters and allowed settlement agreements with banks. But now the protest against the decision of RBI has started from the organizations of the bank employees themselves. Bank officers and employees’ unions have opposed allowing banks to settle cases of fraudulent accounts and willful or willful defaults through settlement for maximum recovery from stressed assets. These willful defaulters will also be eligible to get loans again from the banks after 12 months of settlement as per the directions of the Reserve Bank.
honest lenders will be discouraged
The Reserve Bank of India (RBI) on Monday, in a notification, approved compounding in cases of fraudulent accounts and willful default in loan repayments, saying policies would have to be formulated at the level of the board of directors. Bank employees’ and officers’ organizations said in a joint statement on Tuesday that the Reserve Bank’s recent settlement settlement and technical write-off framework is a retrograde step. This will affect the integrity of the banking system as well as set back efforts to deal with willful defaulters.
Protests are happening on these issues
All India Bank Officers’ Confederation (AIBOC) and All India Bank Employees’ Association (AIBEA) said in the statement, “As an important stakeholder of the banking industry, we have always advocated strict action against willful defaulters.” According to the statement With the new arrangement of the Reserve Bank, not only willful defaulters are being rewarded in a way, but also a wrong message is being sent among the honest borrowers.
Reserve Bank had given conditional exemption
It is noteworthy that some necessary conditions have also been set under this rule. These conditions will also include aspects like the minimum tenure of the loan, the decline in the value of the property kept as security. The board of directors of the banks will also decide a format for examining the accountability of their employees in such loans. As per the notification, the Reserve Bank regulated financial entities may, in respect of accounts classified as willful defaulter or fraud, enter into settlement or technical write-off without prejudice to the ongoing criminal proceedings against such defaulters.
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