Reserve Bank of India (Rural Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025
RBI master-direction RBI/DOR/2025-26/313 · 28 Nov 2025
RBI master-direction RBI/DOR/2025-26/313 · 28 Nov 2025
Summary
Check the official recordThese directions establish a framework for Rural Co-operative Banks (RCBs) to manage wilful defaulters and large defaulters. RCBs must deny additional credit facilities to wilful defaulters and their associated entities. This restriction lasts for one year after the removal of the name from the List of Wilful Defaulters. RCBs must also deny credit for new ventures for five years after such removal. RCBs must report large defaulters to credit information companies at monthly intervals. RCBs must verify the identity of directors and guarantors against lists of large defaulters during credit appraisal. RCBs must monitor the end-use of funds through regular inspections and audits. These rules apply to State Co-operative Banks and Central Co-operative Banks with immediate effect.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/313 DOR.FIN.REC.No.232/20-16-003/2025-26 November 28, 2025
Reserve Bank of India (Rural Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025
Table of Contents Chapter I - Preliminary Chapter II - Treatment of Wilful Defaulters Chapter III - Reporting of Wilful Defaulters and Large Defaulters Chapter IV - Repeal and Other Provisions Annex I - Format for submission of List of Large Defaulters
The directions 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.
Accordingly, in exercise of the powers conferred by the Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949; and Section 11 of the Credit Information Companies (Regulation) Act, 2005, the Reserve Bank, being satisfied that it is necessary and expedient in public interest so to do, hereby, issues these Directions hereinafter specified.
(1) These directions shall be called the Reserve Bank of India (Rural Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025.
(2) These directions shall come into force with immediate effect.
(1) These Directions shall be applicable to Rural Co-operative Banks (hereinafter collectively referred to as 'RCBs' and individually as a 'RCB').
For the purpose of these Directions, ‘Rural Co-operative Banks’ mean State Co-operative Banks and Central Co-operative Banks, as defined in the National Bank for Agriculture and Rural Development Act, 1981.
(2) The restrictions on further financial accommodation to wilful defaulters and provisions regarding large defaulters contained in these Directions, shall apply to all entities regulated by the Reserve Bank, irrespective of whether they fall within the definition of ‘lender’ as provided in these Directions or not.
(1) All the expressions used in these Directions shall have the same meaning as have been assigned to them under the Reserve Bank of India (Urban Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025 or the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934 or the Credit Information Companies (Regulation) Act, 2005, or the Companies Act, 2013, or any statutory modification or re-enactment thereto or other regulations issued by the Reserve Bank of India or the Glossary of Terms published by Reserve Bank or as used in commercial parlance, as the case may be.
(1) The penal measures mentioned below shall be implemented by a RCB in the case of any person / entity classified as wilful defaulter by any lender:
(i) No additional credit facility shall be granted by the RCB to the wilful defaulter or any entity with which the wilful defaulter is associated.
(ii) The bar on additional credit facility to the wilful defaulter or any entity with which the wilful defaulter is associated shall be effective for a period of one year after the name of the wilful defaulter has been removed from the List of Wilful Defaulters by the lenders.
(iii) No credit facility shall be granted by the RCB for floating of new ventures to the wilful defaulter or any entity with which the wilful defaulter is associated for a period of five years after the name of wilful defaulter has been removed from the List of Wilful Defaulters by the lenders.
(iv) The restructuring of wilful defaulters or any entity with which a wilful defaulter is associated shall be as per the stipulations contained in the Reserve Bank of India (Rural Co-operative Banks – Resolution of Stressed Assets) Directions, 2025.
Provided that the penal provisions mentioned above shall cease to be applicable on the associated entities when they are no longer associated with the wilful defaulters.
Explanation 1: If the wilful defaulter is a company, another company will be deemed to be associated with it, if that company is – i. a 'subsidiary company' as defined under clause 2 (87) of the Companies Act, 2013. ii. falls within the definition of a 'joint venture' or an 'associate company' under clause (6) of section 2 of the Companies Act, 2013.
Explanation 2: If the wilful defaulter is a natural person, all entities in which he is associated as promoter, or director, or as one in charge and responsible for the management of the affairs of the entity shall be deemed to be associated.
(1) A RCB shall submit information in Annex I to all credit information companies (CICs) in respect of the large defaulters at monthly intervals:
(i) a list of suit filed accounts of large defaulters; and
(ii) a list of non-suit filed accounts of large defaulters whose account has been classified as doubtful or loss (in accordance with the instructions issued by the Reserve Bank from time to time).
(2) For calculating the threshold of ₹1 crore, the unapplied interest, if any, shall also be included. In the case of suit-filed accounts, the threshold shall relate to the amount for which the suits have been filed.
(1) The penal measures as detailed in Paragraph 4 shall not be applicable to such entities / business enterprises after implementation of the resolution plan involving change in ownership, under the IBC or the resolution framework Directions issued by the Reserve Bank.
Explanation: The resolution framework Directions issued by the Reserve Bank shall mean any of the following Directions: (i) Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions (ii) Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions (iii) Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions (iv) Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions.
(2) The penal measures detailed in Paragraph 4 (ii) and (iii) shall continue to apply to the erstwhile promoter(s) / director(s) / guarantor(s) / persons who were in charge and responsible for the management of the affairs of the entity / business enterprise, and to the entities they are associated as a promoter or director or as one in charge and responsible for its management.
(1) The responsibility for reporting correct information and also ensuring the accuracy of facts and figures rests with the reporting RCB.
(2) A RCB, while furnishing information to credit information companies, shall ensure the accuracy of the particulars of the directors, and wherever possible, by cross-checking with the database maintained by the Registrar of Companies.
A RCB shall report to credit information companies the details of guarantors who have failed to honour the commitments thereunder when invoked, as large defaulters. The details shall be reported as per Annex I.
(1) Credit appraisal
(i) While carrying out the credit appraisal, a RCB shall verify as to whether the name of any of the directors of a company / guarantors / persons in charge of the management of affairs of the entity appears in the list of large defaulters / LWD by way of reference to DIN / PAN, etc.