Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Tally On Cloud Tally on Cloud: Ready for the Daily Backup Requirement
Keep your Tally books accessible from anywhere while supporting your Rule 46(8) obligations. With daily backups configured on servers physically located in India, Tally on Cloud helps you maintain the backup arrangement required for electronic books of account under the Income-tax Rules, 2026. Move your Tally to the cloud with confidence.
Open DEMAT Account with in 24 Hrs and start investing now!
« Latest Circulars »
Open DEMAT Account in 24 hrs
 RBI announces special window for Public Sector Oil Marketing Companies to meet dollar requirements
 RBI issues Amendment Directions on 'Standardised Approach for Counterparty Credit Risk (SA-CCR)’
 Monetary Policy Statement, 2026-27 Resolution of the Monetary Policy Committee October 5 to 7, 2026
 Preserving Financial Stability in an Evolving World - Special Address by Shri Sanjay Malhotra, Governor, Reserve Bank of India, at the Fifth Kautilya Economic Conclave on October 3, 2026
 India’s External Debt as at the end of June 2026
 RBI Bulletin – September 2026
 From Digital Banking to Resilient Banking – Technology, Cyber Security and AI as Pillars of Trust - Address by Shri Rohit Jain, Deputy Governor at the SBI Banking & Economic Conclave on September 24, 2026 in Mumbai
 Data on Forex inflows via FCNR(B) Deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) under Reserve Bank’s Swap facility
 RBI issues Directions on Minimum Capital Requirements for Market Risk under Basel III for Commercial Banks
 Reserve Bank of India (Rural Co-operative Banks – Know Your Customer) Amendment Directions, 2026
 Reserve Bank of India (Priority Sector Lending – Targets and Classification) Third Amendment Directions, 2026

Guidelines on Wilful Defaulters Clarification regarding Guarantor, Lender and Unit
September, 10th 2014

RBI/2014-15/221
DBOD.No.CID. 41/20.16.003/2014-15

September 9, 2014

All Scheduled Commercial Banks (excluding RRBs and LABs) and
All India Notified Financial Institutions (FIs)

Dear Sir/ Madam

Guidelines on Wilful Defaulters –
Clarification regarding Guarantor, Lender and Unit

Please refer to the Master Circular on Wilful Defaulters DBOD.No.CID.BC.3/20.16.003/2014-15 dated July 1, 2014.

2. Paragraph 2.1 of the circular lists out various events when a “wilful default” would be deemed to have occurred. In view of references received from a few banks regarding scope/definition of “wilful default”, it is clarified as follows:

  1. The term ‘lender’ appearing in the circular covers all banks/FIs to which any amount is due, provided it is arising on account of any banking transaction, including off balance sheet transactions such as derivatives, guarantee and Letter of Credit.

  2. The term ‘unit’ appearing therein has to be taken to include individuals, juristic persons and all other forms of business enterprises, whether incorporated or not. In case of business enterprises (other than companies), banks/FIs may also report (in the Director column) the names of those persons who are in charge and responsible for the management of the affairs of the business enterprise.

3. Paragraph 2.6 of the circular is amended to read as follows:

“While dealing with wilful default of a single borrowing company in a Group, the banks /FIs should consider the track record of the individual company, with reference to its repayment performance to its lenders. However, in cases where guarantees furnished by the companies within the Group on behalf of the wilfully defaulting units are not honoured when invoked by the banks /FIs, such Group companies should also be reckoned as wilful defaulters”.

4. In connection with the guarantors, banks have raised queries regarding inclusion of names of guarantors who are either individuals (not being directors of the company) or non-group corporates in the list of wilful defaulters. It is advised that in terms of Section 128 of the Indian Contract Act, 1872, the liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. Therefore, when a default is made in making repayment by the principal debtor, the banker will be able to proceed against the guarantor/surety even without exhausting the remedies against the principal debtor. As such, where a banker has made a claim on the guarantor on account of the default made by the principal debtor, the liability of the guarantor is immediate. In case the said guarantor refuses to comply with the demand made by the creditor/banker, despite having sufficient means to make payment of the dues, such guarantor would also be treated as a wilful defaulter. It is clarified that this would apply only prospectively and not to cases where guarantees were taken prior to this circular. Banks/FIs may ensure that this position is made known to all prospective guarantors at the time of accepting guarantees.

5. Banks/FIs may take due care to follow the provisions set out in paragraph 3 of the Master Circular on Wilful Defaulters dated July 1, 2014 in identifying and reporting instances of wilful default in respect of guarantors also. While reporting such names to RBI, banks/FIs may include “Guar” in brackets i.e. (Guar) against the name of the guarantor and report the same in the Director column.

6. This circular is issued in exercise of the powers conferred upon Reserve Bank of India under Section 35A of the Banking Regulation Act, 1949.

Yours faithfully

(A K Pandey)
Chief General Manager

Home | About Us | Terms and Conditions | Contact Us
Copyright 2026 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting