Under the existing rules, banks and FIs are required to report to the RBI only those cases which involve a default of Rs 1 crore and more. The central bank had introduced a "scheme of disclosure of information on defaulting borrowers" of banks and FIs in April 1994 under which banks and notified FIs are required to furnish details of defaulters of Rs 1 crore and above doubtful or loss accounts as well as suit-filed accounts. An RBI release on Saturday said that the information on willful defaults detected after March 31, 1999, should cover all non-performing borrowal accounts with outstandings (funded facilities and those non-funded facilities which are converted into fundedfacilities) aggregating Rs 25 lakh and above.

"Banks have also been asked to ensure that only the boards of directors empowered to consider fresh/renewal/enhancement of limits in the case of willful defaulters on the merits of individual cases," the release said.The Reserve Bank has defined willful default as: * Deliberate non-payment of dues despite adequate cash flow and good networth;

* Siphoning off funds to the detriment of the defaulting unit;
* Assets financed have either not been purchased or have been sold and proceeds have been misutilised;
* Misrepresentation/falsification of records;
* Disposal/removal of securities without the knowledge of the bank; and
* Fraudulent transactions by the borrower.
The Reserve Bank under the directions of CVC has already formulated a scheme under which banks and FIs like the Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI) and ICICI will be required to submit the list of willful defaults to the centralbank.The scheme, which comes into effect from April 1, will see banks and FIs file the first return on willful defaults containing cases for the quarter April-June 30, 1999. The return is required to be submitted within one month from the quarter to which it relates.

"The return should contain inter-alia, the names of directors who are stakeholders only and not the names of the professional/nominee directors of FIs, central/state governments. Further in the case of consortium/multiple lendings, the information on willful defaulters should also be shared by bank and FIs with other participating/financing entities. Cases of willful defaults at overseas branches should also be reported if such disclosure is permitted under the laws of the host country," the RBI release said.

The RBI also pointed out that the returns for the subsequent quarters should contain fresh cases as well as those reported in the earlier return but should exclude cases which have been subsequently regularised. The identification of thedefault should be made keeping in view the track record of the borrower and not on the basis of isolated transactions, the RBI said.