High Court bans declaration of account fraud without hearing
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The Goyal couple had challenged SBI’s decision to declare their accounts as fraud. The High Court also stayed the action of SBI. Earlier on March 27, the Supreme Court had upheld a decision of the Telangana High Court. The High Court had called the hearing mandatory under the master circular of RBI. On Monday, the Bombay High Court asked about the Supreme Court’s clarification order of May 12. The Supreme Court had given this order on the application of SBI. The court had said that the principles of natural justice demanded that a notice should be given to the borrowers and they should be given a chance to present their case.
what does the circular say
In her petition, Anita Goyal challenged SBI’s decision to declare her account as a fraud. She said that she was a non-executive director and promoter of Jet Airways but had not given any guarantee for any loan taken by the company. SBI had declared the accounts of Jet Airways as fraud and along with this Anita Goyal’s account was also put in this list. He was not given a chance to be heard.
RBI had issued this circular in 2016. This was in relation to fraud classification and reporting by commercial banks and select financial institutions. As per the circular, when a bank classifies an account as fraud, it is the responsibility of that bank to alert other banks. If a bank directly classifies an account as a fraud, it has to inform the RBI and any investigating agency within 21 days.
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