#RBI Master Circular

The Calcutta High Court set aside a bank’s SARFAESI notice, ruling that under the RBI’s Master Circular an account can be classified as non-performing only after a continuous 90-day default. This safeguards borrowers from premature NPA status and compels banks to follow RBI guidelines.

Bombay HC reinforces that RBI-based show cause notices declaring wilful default must explicitly identify which of the four sub-clauses under Clause 2.1.3 of the RBI Master Circular was violated. Vague or generic notices violate principles of natural justice and are liable to be quashed, protecting borrowers from arbitrary classification as wilful defaulters.

Bombay High Court holds that breach of RBI guidelines does not render loan contracts void under Section 23 of the Indian Contract Act; borrowers remain liable for repayment.