Question

A wilful defaulter can be defined as

Code:

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is C

Both 1 and 2

According to RBI, a "wilful default" would be deemed to have occurred if any of the following events is noted:-

1. The unit has defaulted in meeting its payment to the lender when it has the capacity to honour the said obligations.
2. The unit has defaulted in meeting its payment and has not utilized the finance from the lender for the specific purposes for which finance was availed
3. The unit has defaulted in meeting its payment and has siphoned off the funds

The unit has defaulted in meeting its payment and has also disposed off or removed the movable fixed assets or immovable property given by him or it for the purpose of securing a term loan without the knowledge of the bank/lender.