Bombay High Court Questions Banks' Approach in Defaulter Declarations

The Bombay High Court criticized banks for using a 'cut, copy, paste manner' when declaring accounts as defaulters or frauds without proper adherence to RBI guidelines. Industrialist Anil Ambani challenged a fraud declaration. The court urged RBI action against such practices to ensure accountability.

The Bombay High Court expressed serious concerns over the approach banks are adopting when declaring accounts as defaulters or frauds, describing it as a 'cut, copy, paste manner.' The remarks were made during a hearing of industrialist Anil Ambani's petition challenging the Union Bank of India's decision to label his loan account as fraud without providing a hearing or necessary documents.

Justices Revati Mohite Dere and Neela Gokhale noted that the banks often bypass Reserve Bank of India's guidelines when making such declarations. They emphasized that banking decisions must not be taken lightly as it involves public money. They urged the need for proper mechanisms and checks to prevent arbitrary actions by financial institutions.

Senior counsel for the RBI suggested that affected individuals could file complaints online, which would only be checked for procedural adherence, not the case's legal merits. The court encouraged Anil Ambani to lodge a complaint and directed the Union Bank to respond to the petition by the next hearing.

(With inputs from agencies.)