Mumbai: RBI Thursday said a non-whole time director of a defaulting company can be classified as a wilful defaulter only if there is conclusive proof that the person concerned is in the know of loan default.
The central bank also said that banks or financial institutions while disseminating information to Credit Information Companies on borrowers with outstanding amount aggregating Rs 1 crore and above classified as doubtful or loss assets, should exclude the names of non-whole time directors (nominee and independent directors).
RBI, however, said that the exception will not apply to a promoter director, even if he is not a whole-time director.
"... A non-whole time director should not be considered as a defaulter unless it is conclusively established that he was aware of the fact of default by the borrower by virtue of any proceedings recorded in the Minutes of the Board or a Committee of the Board and has not recorded his objection to the same in the Minutes," the central bank said in a notification.
Further, it said non-whole time directors cannot even be considered as wilful defaulters unless established of the fact that the default had taken place with their consent or connivance.
Under the Companies Act, 2013, only whole-time directors; directors where there is no key managerial personnel; directors who are aware of such contravention and have not objected to it; or where contravention had taken place with his consent or connivance are considered as defaulting entities, the notification said.
