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Omozing Answers › Credit scores and bureaus
Written by the Omozing Credit Team · Reviewed for accuracy by our credit and compliance team · Updated October 2026
A simplified summary of the RBI Master Direction on wilful defaulters (2024). The lender has to establish each element; you get a chance to respond before any decision.
Notice what the label is really about: intent and capacity, not just non-payment. Someone who lost their job and couldn’t keep up with a large home loan has defaulted, but they haven’t chosen not to pay while able to. The rules are aimed at borrowers who had the means and walked away, or who used a loan for something other than its stated purpose and moved the money out of reach.
| Ordinary default | Settled account | Wilful defaulter | |
|---|---|---|---|
| What it means | EMIs missed; the loan is overdue or classified NPA after 90+ days | You paid less than you owed and the lender accepted it | Deliberate non-payment despite capacity, or diversion of funds, on ₹25 lakh+ |
| Who it usually affects | Any borrower going through a hard patch | Borrowers who negotiated a one-time payment | Large borrowers and their guarantors |
| Process | Lenders must notify you before reporting a default | Agreed between you and the lender | Show-cause notice, 21 days to respond, review committee |
| Way back | Clear the dues and rebuild with on-time payments | Pay the shortfall and ask for the status to be updated to “closed” | Far harder; a very serious mark with lenders |
An ordinary default is serious enough on its own, and it is the one most people actually face. How long a default stays on your report and what “settled” means explain the routes back.
You have 21 days to respond. Note the date and what the lender says you did.
Salary records, job-loss letters, medical bills and bank statements showing where the loan money went.
Explain why non-payment wasn’t deliberate. A lawyer’s help is worth considering at this stage.
A repayment proposal backed by real numbers shows good faith and keeps the conversation open.
A default is not a life sentence. See what lenders look for after one, and how to rebuild.
No, not just for missing EMIs. The label needs ₹25 lakh or more outstanding, deliberate non-payment despite being able to pay (or diversion of funds) and a formal process with a show-cause notice.
Yes. The rules apply to guarantors as well as borrowers, if the same conditions are met.
The show-cause notice gives you 21 days to respond, and a review committee considers the case before any classification.
No. An NPA is a loan overdue for more than 90 days, whatever the reason. Wilful default is a separate finding about deliberate non-payment or misuse of funds.
Often, once the dues are cleared and you have a run of on-time payments. Omozing considers salaried applicants with a score from 600, and a credit officer reads the full report.
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