A willful defaulter is an entity or a person that has not paid the loan back despite the ability to repay it. Simply, default means non-payment of a loan availed by a borrower.
As per the RBI regulations, willful default covers several broad areas: Deliberate non-payment of the dues despite adequate cash flow and good net worth, siphoning off of funds to the detriment of the defaulting unit, Assets and proceeds have been misutilised; Misrepresentation / falsification of records; Disposal / removal of securities without bank’s knowledge; Fraudulent transactions by the borrower.
Though willful default covers the above mentioned broad areas, major instance is non-repayment of loan availed despite the ability to pay the loan. Hence, it is in the sense of non-repayment of debt that willful default is seriously defined.
