Banks can't publish defaulters' photo randomly: RBI

RBI today said lenders can publish photographs of only those borrowers in newspapers who have been declared wilful defaulters as per the central bank's guidelines.
While asking the banks not to indiscriminately publish photographs of defaulters and guarantors in newspapers, it directed the lending institutions to formulate a policy in this regard.
The policy should clearly sets out the criteria based on which the decision to publish the photographs of a person will be taken by them so that the approach is neither discriminatory nor inconsistent.
The Reserve Bank said that it has been observed that some lending institutions have been publishing the photographs of defaulters and guarantors in newspapers.

In view of the "sensitivity involved and need to prevent" the publishing of photographs of defaulting borrower/ guarantor in an indiscriminate manner, the RBI said photographs of only those borrower who have been declared as wilful defaulters could be published.
"A lending institution can consider publication of the photographs of only those borrowers, including proprietors/ partners /directors / guarantors of borrower firms/ companies, who have been declared as wilful defaulters following the mechanism set out in the RBI instructions...," it said.

This will not apply to the non-whole time directors who are exempted from being considered as wilful defaulters unless the special conditions are satisfied.

Further, the lending institutions should formulate a policy with the approval of their Board of Directors which clearly sets out the criteria based on which the decision to publish the photographs of a person will be taken by them so that the approach is neither discriminatory nor inconsistent.
"The lending institutions shall not publish photographs of any other defaulting borrowers," the RBI added.