ET Commentary

Compromise settlement for wilful defaulters and the moral hazard

Compromise settlement for wilful defaulters and the moral hazard
BCCL

Synopsis

The RBI's recent move to allow lenders to settle loans of wilful defaulters under compromise settlement trivialises the necessity to pay back a loan even when funds are available, or when they have been grossly misused.

By
6 mins read, Last Updated:
What do grand larceny and moral hazard - the ability to take risks at someone else's expense - have in common? Depending on the circumstances, several dodgy attributes, including acting in bad faith at the outset, misappropriating disproportionate value without consent during an undertaking, and committing perjury through denial of guilt when accused of malfeasance. But when the law limits the risk of a potential malefactor, circumstantial
( Originally published on Jun 21, 2023 )

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