The Delhi High Court ruled that banks failed to prove intentional misuse of borrowed funds by Ratul Puri and Nita Puri, striking down their wilful defaulter status. This decision highlights the need for solid evidence before labeling borrowers, protecting them from serious financial and reputational damage.
Bombay: The Bombay High Court asked the Reserve Bank of India (RBI) whether it plans to take action against banks that repeatedly classify a person’s loan account as fraudulent without first giving them a chance to explain their side. The court’s direction came while hearing a petition filed by industrialist Anil Ambani, whose loan account with Canara Bank was declared fraudulent without any hearing.
The Bombay High Court’s recent ruling sets strict guidelines for banks labeling borrowers as wilful defaulters under RBI’s directives. The judgment emphasizes transparency and fair process, following the IL&FS Financial Services Ltd case. It mandates banks to provide all necessary documents to accused parties, ensuring principles of natural justice. This landmark decision highlights the importance of fairness and transparency in the banking sector.
