Reserve Bank of India on 22 December 2014 issued guidelines to define non-cooperative borrowers. RBI also fixed the cut off limit for classifying borrowers as non-cooperative borrowers.
As per the guidelines, 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;
- who thwarts 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; and
- who have aggregate fund-based and non-fund based facilities of 5 crore rupees from the concerned bank/financial institution (FI)
- A non-cooperative borrower in case of a company will include 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.
- Banks/FIs to report information on non-cooperative borrowers to the Central Repository of Information on Large Credits (CRILC)
- The 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 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 order of the committee should be reviewed by another committee headed by the Chairman/CEO and MD and consisting 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 to review on a half-yearly basis the status of non-cooperative borrowers.