SC seeks Reserve Bank of India's response on bank loans
Reserve Bank of India to file an affidavit indicating whether its circulars mandate banks to furnish/supply documents that are signed at the time of granting of loans and if the lenders are under obligation to inform the borrowers in writing about any interest rate fluctuations and also give yearly statement of their loan accounts to them.
A Bench led by Justice Sanjiv Khanna while seeking RBI’s response in four weeks observed that “there has to be a complete transparency.”
The apex court was hearing a Punjab National Bank’s appeal against the Punjab and Haryana High Court’s judgment that quashed the PNB’s demand notice issued to Guru Nanak Engineering Works under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi Act) and asked the lender to classify its NPA account as standard and also refund interest.
The SC Bench while staying the HC order allowed Sarfaesi and DRT proceedings to continue in accordance with law.
“The impugned judgment is wholly unjustified. It will paralyze the entire debt recovery system because such kinds of judgments lead to uncertainty in the entire banking industry,” the lender argued.
The PNB argued that overcharging of interest was a pure question of fact.
