Consider the following statements regarding recently released Reserve Bank of India regarding Treatment of Wilful Defaulters and Large Defaulters Directions, 2023 : 1. The directions are applicable to all regulated entities including NABARD, SIDBI and EXIM Bank. 2. A wilful default borrower needs to be reviewed and finalised within six months of an account being classified as a non-performing asset (NPA). 3. Lender cannot proceed against guarantor without exhausting the remedies against principal debtor. How many of the statements given above are correct?
RBI Wilful Defaulters Directions 2023: Statement Analysis
Evaluating the correctness of statements regarding the RBI's 'Treatment of Wilful Defaulters and Large Defaulters Directions, 2023'.
Statement 1: Applicability Scope
Statement: The directions are applicable to all regulated entities including NABARD, SIDBI and EXIM Bank.
Verdict: Incorrect. The specific scope of these 2023 Directions typically applies to scheduled commercial banks and certain NBFCs. While NABARD, SIDBI, and EXIM Bank are regulated entities, they may not fall under the exact purview or might have different guidelines compared to the broad claim of applicability to all regulated entities.
Statement 2: Wilful Default Review Timeline
Statement: A wilful default borrower needs to be reviewed and finalised within six months of an account being classified as a non-performing asset (NPA).
Verdict: Correct. The RBI framework mandates timely action against wilful defaults. A stipulated timeframe of six months from the date an account is classified as an NPA is generally required for completing the review and finalization process.
Statement 3: Guarantor Rights
Statement: Lender cannot proceed against guarantor without exhausting the remedies against principal debtor.
Verdict: Correct. This aligns with the general legal principle that lenders should typically pursue recovery actions against the primary borrower first. Proceedings against a guarantor usually commence only after exhausting available remedies against the principal debtor, barring specific contractual agreements.
Correct Statements Count
Statements 2 and 3 were found to be correct based on the analysis.
Number of correct statements: 2.
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