The Reserve Bank of India issued the “Treatment of Wilful Defaulters and Large Defaulters (Amendment) Directions, 2026” to strengthen the framework for identifying and classifying wilful defaulters. Effective from April 1, 2027, the amendment aligns the classification process with the updated Asset Classification, Provisioning and Income Recognition (IRACP) Directions, 2026. It mandates that once an account is classified as a Non-Performing Asset (NPA) and wilful default is observed during preliminary screening, banks must complete the formal process of declaring the borrower as a wilful defaulter within six months. This introduces a clear timeline, ensuring timely action and reducing delays in enforcement. The amendment aims to enhance accountability, improve credit discipline, and ensure consistency with broader asset classification norms. By imposing a structured timeframe, the RBI seeks to strengthen the monitoring of large defaulters and promote more effective risk management within the banking system.
Reserve Bank of India
RBI/2026-27/28
DOR.STR.REC.18/20-16-001/2026-27 | Dated: April 27, 2026
Reserve Bank of India (Commercial Banks – Treatment of Wilful Defaulters and Large Defaulters) – Amendment Directions, 2026
Please refer to Reserve Bank of India (Reserve Bank of India (Commercial Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. Consequent to the issuance of Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026and in exercise of the powers conferred by the section 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. Paragraph 6(2) shall be modified as under:
“If wilful default is observed in the internal preliminary screening, a bank shall complete the process of classification/ declaring the borrower as a wilful defaulter by following the mechanism set out in Paragraph 5, within six months of the account being classified as NPA in accordance with the instructions regarding asset classification contained in the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026.”
4. The above amendment shall come into force from April 01, 2027.
(Vaibhav Chaturvedi)
Chief General Manager
