Key Points
Banks will have to set down a proper process, including a platform to hear the views of borrowers and accounts labelled as a fraud, even after a forensic audit finds such delinquents guilty of embezzlement...
Bankers and lawyers said that though the process to declare a fraudulent account may get elongated after the Supreme Court verdict, a detailed standard operating procedure (SoP) will eventually eliminate legal hurdles in the future...
On Monday, a two-judge bench of Chief Justice of India DY Chandrachud and Justice Hima Kohli said that borrowers must be heard before their accounts are classified as fraud, upholding a Telangana High Court order against an appeal by State Bank of India (SBI)...
The order does not have retrospective applicability, which means it will not apply to accounts already labelled a fraud.. Bankers and lawyers said the order will standardise the process for declaring fraudulent accounts...
Bankers said declaring an account as fraud was always used as a weapon by banks to put pressure on promoters to pay back a loan as recovery from fraud accounts is difficult..
