RBI tells banks to take legal recourse in standoff with CBI
Reserve Bank of India (RBI) has advised banks to seek legal remedy in case of a stand-off with the Central Bureau of Investigation (CBI) over matters classified as fraud.
The RBI's advice was in response to the CBI returning complaints filed by some banks to probe accounts tagged as fraud and where they have already filed an FIR (first information report).
In several cases, the investigative agency has informed the lender that its complaint has been returned because the borrower concerned has not been given an in-person hearing before the account was classified as fraud.
The CBI's observation stems from a Supreme Court ruling dated March 27, 2023, which said the principle of natural justice demands that every borrower must be served a notice, be given an opportunity to explain the outcome of the forensic audit report, and be given an in-person hearing before declaring the account as fraud.
In the backdrop of the top court's order, several borrowers accused of fraud and who were probed by the CBI prior to the top court's order, appealed in court claiming that their lenders had tagged them and their accounts as 'fraud' without allowing them a hearing. Subsequently, the Delhi High Court also ruled in favour of the borrowers, saying they should have been given an opportunity to be heard before being tagged as 'fraud'.
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