The official told the newspaper: “RBI nod for compromise settlement for wilful defaulters and fraud companies can lead to a tricky situation. There’s a possibility that more public money will be lost in the process. A wilful defaulter is a borrower who refuses to repay loans despite having the capacity to pay up.”
The bank unions said that the sudden change in the framework by the RBI to grant compromise settlements to wilful defaulters will not only lead to the erosion of public trust in the banking sector but also undermines the confidence of depositors.
It fosters an environment where individuals and entities with the means to repay their debts choose to evade their responsibilities without facing appropriate consequences, the joint statement said.
Such leniency serves to perpetuate a culture of non-compliance and moral hazard, leaving banks and their employees bearing the brunt of the losses, it said.
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