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<h1>Wilful defaulter designation unsupported when banks cannot prove intentional diversion of borrowed funds, undermining creditor declarations.</h1> Declaration as wilful defaulters under the RBI Master Circular is legally unsustainable where banks do not establish by verified and objective material that borrowed funds were intentionally diverted or siphoned off; such a designation requires contemporaneous objective evidence and consideration of the borrower's overall track record, because the declaration inflicts a form of civil death and therefore demands strict adherence to the Master Circular's procedural and evidentiary prerequisites.