Money & Banking
RBI adds non-cooperative borrower tag to deal with NPAs

A non-cooperative borrower is one who does not engage constructively with his lender by defaulting in timely repayment of dues while having the ability to pay


The Reserve Bank of India (RBI) today came out with guidelines to define what it terms a 'non-cooperative borrower'. While the wilful defaulter category is well known, RBI has now gone on to identify this new category of borrowers. In its circular to all banks, RBI gives the definition of a Non-Cooperative Borrower to read as under:
The RBI had first spoken of such borrowers in its ‘Framework for Revitalising Distressed Assets in the Economy - Guidelines on Joint Lenders' Forum (JLF) and Corrective Action Plan (CAP)’. The latest circular said that, “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, thwarting 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. In effect, a non-cooperative borrower is a defaulter who deliberately stone walls legitimate efforts of the lenders to recover their dues.”
In this connection, RBI advises that banks/FIs should take the following measures in classifying/ declassifying a borrower as non-cooperative borrower and reporting information on such borrowers to Central Repository of Information on Large Credits (CRILC):
The cut off limit for classifying borrowers as non-cooperative would be those borrowers having aggregate fund-based and non-fund based facilities of Rs.50 million from the concerned bank/FI. A non-cooperative borrower in case of a company will include, besides the company, 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.
It would be imperative on the part of the banks / FIs to put in place a transparent mechanism for classifying borrowers as non-cooperative. A solitary or isolated instance should not be the basis for such classification. The decision to classify the borrower as non-cooperative borrower should be entrusted to a Committee of higher functionaries 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.
If the Committee concludes that the borrower is non-cooperative, it shall issue a Show
Cause Notice to the concerned borrower (and the promoter/whole-time directors in case of companies) and call for his submission and after considering his submission issue an order recording 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 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, in addition, of two independent directors of the Bank/FI and the order shall become final only after it is confirmed by the said Review Committee.
Banks/FIs will be required to report information on their non-cooperative borrowers to CRILC under CRILC-Main (Quarterly Submission) return. The return will be under the heading, ‘Reporting to Central Repository of Information on Large Credits (CRILC)’. The quarterly CRILC Main report is required to be submitted within 21 days from the close of the relevant quarter.
Boards of banks/FIs should review on a half-yearly basis the status of non-cooperative borrowers for deciding whether their names can be declassified as evidenced by their return to credit discipline and cooperative dealings. Removal of names from the list of non-cooperative borrowers should be separately reported under CRILC with adequate reasoning/rationale for such removal.
If any particular entity as mentioned above is reported as non-cooperative, any fresh exposure to such a borrower will by implication entail greater risk necessitating higher provisioning. Banks/FIs will therefore be required to make higher provisioning as applicable to substandard assets in respect of new loans sanctioned to such borrowers as also new loans sanctioned to any other company that has on its board of directors any of the whole time directors/promoters of a non-cooperative borrowing company or any firm in which such a non-cooperative borrower is in charge of management of the affairs. However, for the purpose of asset classification and income recognition, the new loans would be treated as standard assets.
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 under the Act.



B. Yerram Raju

2 years ago

It is not pragmatic to distinguish borrowers on the basis of cooperation. Either the borrower conforms to the terms and conditions of sanction and behaves well or does not. A borrower who defaults on the terms and conditions is a bad borrower and has to be classified as such. There is absolutely no need to soft peddle the borrowers who willfully prefers to distance from the financial discipline.

Assembly Election Results: BJP leads in Jharkhand as J&K stares at hung house

BJP emerged as the single largest party in terms of vote share in J&K and was hovering close to a majority in the Jharkhand assembly, decimating the Congress again and damaging regional contenders


With wins in 35 seats and leads in 8 seats, out of the 81 in Jharkhand, Bharatiya Janata Party and its ally All Jharkhand Students Union were to form a majority in Jharkhand. In Jammu & Kashmir, BJP's mission 44 seemed to have been a pipe-dream, but with 25 seats it made significant gains in terms of seats and a major achievement in terms of gaining the highest vote share in the state. People's Democratic Party was leading as the single largest party in J&K with 28 seats.
"I extend my wishes to the BJP workers in both states as it wouldn't have been possible without their efforts," BJP President Amit Shah said.
In Jharkhand, the BJP and its ally AJSU, was leading with 43 seats (including both wins and leads). Jharkhand Mukti Morcha (JMM) was at second place with 18 seats, followed by Congress and Jharkhand Vikas Morcha at 7 seats each. A grand alliance of the Janata group failed to dent the BJP or garner significant number of seats. 
There were major upsets all over, with 3 ex-CMs losing at least one of their seats they were contesting. Madhu Koda lost from Majhgaon, Arjun Munda lost from Kharsawan, and Babulal Marandi lost from the Giridh seat, but his second seat is still awaiting result. 
The biggest shock might be the loss of outgoing CM Hemant Soren's loss from Dumka, while he managed a win from Barhait.
In Jammu and Kashmir, the PDP was leading with 28 seats, followed closely by the BJP with a strong 25 seats. The outgoing ruling party, the National Conference was at 15 seats with the Congress holding onto 12 seats. 
Omar Abdullah, the outgoing Chief Minister, lost on one of the two seats he was contesting, he won from the Beerwah constituency.
With the split between parties coming nowhere close to a majority, it is likely that there will be a coalition government in J&K. Mehbooba Mufti of the PDP suggested that the PDP was more likely to form a coalition with the Congress but both, the PDP and the BJP said 'all options were open'.


Kingfisher Airlines asked to pay Rs12.9 lakh to ex-pilot

The Judge disposed of the case in favour of Captain Sanjay Sudan and declined the plea of Vijay Mallya's now defunct Kingfisher Airlines to be heard in the matter


A Delhi court on Tuesday directed Vijay Mallya's grounded Kingfisher Airlines to pay the outstanding salary of three months amounting to Rs12.91 lakh to one of its former pilots who had moved court over non-payment of dues.
Additional District Judge Rakesh Kumar disposed of the case in favour of Captain Sanjay Sudan and declined the plea of the airline to be heard in the matter, saying having a counter-claim against the plaintiff (pilot) is “not a ground for grant of leave to defend”.
“This suit is decreed. The defendant (Kingfisher airlines) shall pay a sum of Rs12.91 lakh to the plaintiff (Sudan),” it said.
The court noted that Kingfisher had not disputed the amount of salary and the period for which it was due, as claimed by Sudan, and said “in view of the provisions of Civil Procedure Code (CPC), the application (by Kingfisher) for leave to defend has been declined, the plaintiff is entitled to a judgement forthwith”.
The court rejected the claim of the cash-strapped airline that any monthly pay to the pilot was contingent on completion of 70 flying hours.
It accepted the contention of advocate Jasmeet Singh, who appeared for Sudan, that there was no flying taking place, as stated by the airline, then how could the company want him to complete 70 hours of flying.
“Despite various oral as well as written reminders, personal visits and follow ups the defendant (airline) has failed and neglected to make the outstanding payment which is due and payable to the plaintiff and a decree for recovery of salary along with interest be passed in favour of the pilot,” the court said.
Captain Sanjay Sudan had filed the suit against Kingfisher Airlines seeking recovery of around Rs13 lakh, his outstanding salary for three months from the airline.
According to the suit, Sudan was employed by the airline as Transition Captain with effect from 12 January 2008 on a salary of Rs4.3 lakh per month which was subsequently raised and his last drawn salary was Rs5.2 lakh per month, October 2011 onwards.
“The airline company was in terrible financial mess and was unable to pay salaries to most of its pilots and examiners including the plaintiff and had not paid the salary for the months of December 2011 to February 2012,” the suit said.
It was further claimed that the plaintiff had no option but to resign on 10 February 2012, which was accepted by the airline in June 2012 and the salaries from December 2011 to February 2012 amounting to Rs12.91 lakh was admitted by the airline in its tax sheets showing deduction of tax.


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