Reserve Bank of India, on 29th September, 2016 directed banks and financial institutions to publish photographs of only wilful defaulters in the newspapers. RBI directed that photographs of other defaulters, who have not been declared as wilful defaulters are not to be published by banks and financial institutions.
The guidelines regarding penal measures including publishing of photographs in newspapers, against the borrowers declared as wilful defaulters are given in RBI Master Circular on Wilful Defaulters dated July 1, 2015.
Now, RBI has observed that some banks and institutions are publishing photographs of defaulters/ guarantors in newspapers, even when they are declared as wilful defaulters. In view of the sensitivity involved and need to prevent the publishing of photographs of defaulting borrower/ guarantor in an indiscriminate manner, RBI has directed as under:
(i) A lending institution can consider publication of the photographs of only those borrowers, including proprietors/ partners /directors / guarantors of borrower firms/ companies, who have been declared as wilful defaulters following the mechanism set out in the RBI instructions referred to above. This shall not apply to the non-whole time directors who are exempted from being considered as wilful defaulters unless the special conditions, in accordance with these instructions, are satisfied.
Lending institutions are required to formulate a policy with the approval of their Board of Directors which clearly sets out the criteria based on which the decision to publish the photographs of a person will be taken by them so that the approach is neither discriminatory nor inconsistent.