Topic
The Punjab & Haryana HC held that SBI’s fraud classification complied with natural justice after a show cause notice, forensic audit report and reply were considered, clarifying RBI Directions on fraud reporting, affecting lenders and directors.
Calcutta HC quashes Punjab National Bank's fraud classification of borrower accounts, ruling that reliance on undisclosed Joint Lenders Meeting decisions and judicially quashed audit reports violates natural justice. The judgment reinforces that banks must provide borrowers an opportunity to respond to all adverse material before fraud tagging under RBI Master Directions.
The Supreme Court ruled that banks need not grant personal hearings before classifying loan accounts as fraud under RBI Master Directions, but must disclose forensic audit reports to borrowers to uphold procedural fairness. This sets a precedent balancing regulatory efficiency with borrowers' right to defend against fraud allegations.
Calcutta High Court holds that banks must serve Forensic Audit Reports with show cause notices under RBI Master Directions to uphold natural justice in fraud classification proceedings.