Key Points
New Delhi: Banks are considering a common framework for borrowers to respond before their loan accounts are classified as fraudulent, said executives aware of the development..
It will detail the process of approaching borrowers, the documents to be submitted and reports to be given to them, along with timelines and the course of action.. "Banks will share this common framework with the Reserve Bank of India (RBI) before finalising the guidelines to be followed by all lenders in such cases," said a senior executive aware of the matter...
Banks can also look at standard operating procedures (SOPs) that can later be codified by the RBI, he said.. Earlier this month, the country's largest bank, the State Bank of India, asked the court for clarification about the nature of the hearing and whether the ruling will apply prospectively...
The Supreme Court clarified that borrowers should be heard by banks before their accounts are labelled fraud as per the RBI July 2016 circular but this did not mean they should be "personally heard.". "Personal hearing meant that a defaulter should be given adequate notice and an opportunity to make a representation..
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