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The apex court said the principles of natural justice demand that the borrowers must be given an opportunity to explain the conclusions of the forensic audit report.
NEW DELHI (Reuters) - Indian banks must give defaulters an opportunity to be heard before they classify a loan account as fraud, the Supreme Court ruled on Monday. | 04:53am
Banks cannot unilaterally declare an account as fraud without providing the defaulter the right to be heard, the Chief Justice-led bench said
The Supreme Court on Monday rejected the State Bank of India's appeal, upholding the Telangana High Court's order and ruled that it is reasonably practicable for the lender banks to provide an opportunity for a hearing to the borrowers before classifying their accounts as fraud.
The apex court noted that classifying an account as fraud entails serious civil consequences for the borrower, and amounts to blacklisting