The Reserve Bank of India (RBI) plays a crucial role in dealing with wilful defaulters. Here are some of its key functions in this area:

• Identifying wilful defaulters and publishing their names to prevent further lending in the future.
• Prescribing guidelines for banks to deal with wilful defaulters, including initiating recovery proceedings and preventing them from accessing further credit.
• Classifying non-performing assets (NPAs) as wilful defaults if the borrower fails to repay despite having the capacity to do so.

Recently, the RBI decided to allow compromise settlements for wilful defaulters under certain conditions. This move has generated some debate among stakeholders. Here are some of its potential implications:

• The decision will enable banks to recover some of the bad debts they have accumulated due to wilful defaults, which is positive news for lenders and the banking system as a whole.
• However, critics argue that this move may encourage wilful defaulters to take advantage of the situation and offer lower settlements instead of repaying the full amount.
• Moreover, some stakeholders have raised concerns about the lack of transparency in the decision-making process and the potential for misuse of power.

Overall, the RBI's recent decision to allow compromise settlements for wilful defaulters is a double-edged sword that warrants close scrutiny and careful implementation.