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New Delhi: Rejecting the State Bank of India's (SBI) plea, the Supreme Court on Friday refused to clarify that its judgement, which makes it mandatory for banks to accord an opportunity of personal hearing to a borrower before classifying his loan account as fraudulent, will apply prospectively...
However, the apex court clarified that borrowers should be heard by banks before such classification as per the Reserve Bank of India's July 2016 circular did not mean that they should be personally heard.. "Personal hearing meant that a defaulter should be given an adequate notice and an opportunity to make a representation..
The judgment is likely to be misconstrued and a spate of litigation is apprehended on this ground by "those defaulters, whose default has substantially contributed to the weakening of the financial position of the banks, thereby affecting the economy of the nation", SBI counsel Sanjay Kapur stated in its application...
Rejecting the appeals filed by both the RBI and the SBI-led consortium of lenders, the apex court had on March 27 asked lenders to include principles of natural justice into the RBI's July 2016 'Master Direction on Frauds - Classification and Reporting by Commercial banks and select FIs' so as to afford an opportunity to the affected party or person to present their case..
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