The definition of default is different as the purpose of recognition of default is different. What should banks be doing ? There is growing need for banks to strengthen their internal credit appraisal system i.e. on their credit assessment and risk management mechanisms. At the same time, banks should also consider using external credit appraisals in conjunction with their own assessment.
This would mean getting the house in order and at least on this score, banks would be on stronger ground. Banks would still be vulnerable to other factors such as economic slowdown, or policy changes or wilful defaults. But, one area of concern would be plugged.