A borrower becomes a defaulter when there is no repayment of interest or principal component for a period of 90 days. Once a loan is tagged as NPA (non-performing asset), banks need to set aside additional amount as provisions to cover the losses. A default typically happens when the borrower faces financial problems such as a business loss or job loss. A wilful defaulter, on the other hand, is a person who wouldn't pay back to banks even if he has the ability to do so. In the world of banking, this is unruly behavior. Once a person is tagged as wilful defaulter, he cannot access loans from any other bank. He is ostracised from the financial system.