Reserve Bank of India Governor Raghuram Rajan has said the wilful defaulter tag is a powerful weapon in the hands of banks for resolving bad loans. His comments came days after United Bank of India declared Vijay Mallya as ‘wilful defaulter’.
“The wilful defaulter tag is a powerful weapon in the hands of creditors for resolving distressed assets. It shuts out access to credit within the Indian financial system for a borrower,” Dr. Rajan said without naming Mallya.
He was speaking at an event organised by American bank Citi at Boston on Thursday. The comments come from a note circulated by the event organiser.
Mr. Mallya, whose Kingfisher Airlines owes money to several banks, had on Thursday said he would challenge UBI’s decision to declare him a wilful defaulter.