The RBI identifies 'wilful defaulters' as those who have the ability to pay a bank's dues but do not or divert bank funds. The RBI did not earlier have a specific timeline within which such borrowers had to be identified.

A wilful defaulter, or any entity with which a wilful defaulter is associated, will not get any additional credit facility from any lender and will not be eligible for restructuring of credit facility, the circular stated.

The RBI has proposed that non-banking finance companies (NBFCs) should also be allowed to tag accounts using the same parameters.

The RBI has also suggested that banks should set up a review committee and allow the borrower up to 15 days to make a written representation, as well as a chance for in-person hearing if needed.

The central bank also said that lenders would need to complete an investigation into a defaulting account to determine or rule out 'wilful default' before transferring it to another lender or an asset reconstruction facility.

“The directions also aim to put in place a system to disseminate credit information about wilful defaulters for cautioning lenders to ensure that further institutional finance is not made available to them," the circular added.

The RBI said that stakeholders can give feedback on the draft rules till October 31 through email (wdfeedback@rbi.org.in) with the subject line 'Feedback on Master Direction – Treatment of Wilful Defaulters and Large Defaulters'.