Striking a Balance: RBI Allows Compromise Settlements and Write-Offs for Defaulters and Fraud Companies with Precautions

Rashmi | Last updated: 16 June 2023

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The Reserve Bank of India (RBI) has introduced new guidelines allowing banks to engage in compromise settlements and technical write-offs with wilful defaulters and companies involved in fraud. While this aims to expedite debt recovery and reduce bank costs, a mandatory 12-month cooling-off period before issuing new loans to such borrowers is enforced, except for farm credit. These measures are in place to balance recovery efforts with the protection of public funds and depositor interests.

The Reserve Bank of India (RBI) has issued a circular stating that banks and finance companies can enter into compromise settlements or technical write-offs with wilful defaulters and companies involved in fraud. This means that these institutions can reach agreements with such debtors to settle the

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About the Author

Rashmi

business

I am a Chartered Accountant with over 2 decades of experience in Auditing, Taxation, Accounting, Due diligence. I am currently a Managing Partner at RRL Global Services. I can be reached at rrlglobal @ yahoo.com or @ 9811757230

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