Bank Unions Oppose Move To Allow Compromise Settlement For Defaulters

The RBI's recent 'framework for compromise settlements and technical write-offs' is a detrimental step that may compromise the integrity of the banking system and undermine the efforts to combat wilful defaulters effectively, unions said in a joint statement

Bank unions AIBOC and AIBEA have opposed the Reserve Bank's move to allow lenders to settle loans of wilful defaulters under compromise settlement.

The RBI's recent 'framework for compromise settlements and technical write-offs' is a detrimental step that may compromise the integrity of the banking system and undermine the efforts to combat wilful defaulters effectively, unions said in a joint statement.

"As key stakeholders in the banking industry, we have always advocated for strict measures to address the issue of wilful defaulters," All India Bank Officers' Confederation (AIBOC) and All India Bank Employees Association (AIBEA) said in a statement.

Allowing compromise settlement for accounts classified as fraud or wilful defaulters is an affront to the principles of justice and accountability, it said, adding, it not only rewards unscrupulous borrowers but also sends a distressing message to honest borrowers who strive to meet their financial obligations.