A non-cooperative borrower is one
who does not engage constructively with his lender by defaulting in repayment
of dues while having ability to pay, thwarting lenders’ efforts for recovery by
not providing necessary information sought, denying access to securities,
obstructing sale of securities, etc. In effect, a non-cooperative borrower
is a defaulter who deliberately stone walls legitimate efforts of the lenders
to recover their dues.
Banks should take the following
measures in classifying a borrower as non-cooperative borrower and reporting
information on such borrowers to Central Repository of Information on Large
Credits (CRILC):
a) Non-cooperative
borrowers would be those borrowers having aggregate facilities of Rs.5 Crores from the concerned bank. In case of companies, non-cooperative
borrower will include the company itself, promoters and directors. In case of other
than companies, non-cooperative borrowers would include persons in-charge and
responsible for the management of the business.
b)
A solitary or isolated instance should
not be the basis for such classification. The decision should be entrusted to a
Committee of higher functionaries headed by an ED and two other senior officers
of the rank of GM or DGM as decided by the Board of the bank.
c) If the Committee concludes that the
borrower is non-cooperative, it shall issue a Show Cause Notice to the
concerned borrower and call for his submission. After considering his reply,
the committee will issue an order metioning the borrower to be non-cooperative
and the reasons for the same. An opportunity should be given to the borrower
for a personal hearing if the Committee feels necessary.
d) The order of the Committee should be reviewed
by another Committee headed by the CMD and two independent directors of the
Bank. The order shall become final only after it is confirmed by the said
Review Committee.
e)
Banks will be required to report
information on their non-cooperative borrowers to CRILC under CRILC-Main return.
The quarterly CRILC Main report is required to be submitted within 21 days from
the close of the relevant quarter.
f)
Boards of banks should review the status
of non-cooperative borrowers on a half-yearly basis, for deciding whether their
names can be declassified. Removal of names should be separately reported under
CRILC with adequate rationale.
g)
Banks will be required to make higher
provisioning as applicable to substandard assets in respect of new loans
sanctioned to such borrowers. However, for the purpose of asset classification
and income recognition, the new loans would be treated as standard assets.
h) It is reiterated that as the CRILC data
is collected under the provisions of the RBI Act, non-adherence to reporting
instructions attracts penal provisions.
Based on the
Master Circular of 1/7/15.
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