State Bank of India requested the Telangana High Court to dismiss the petitions challenging the circular of the Reserve Bank of India. The High Court asked all the banks to declare suspicious accounts as fraud accounts.
Challenge of the Petitioner Before the Court
Rajesh Agarwal of BS company and others filed the present petitions. They have challenged the Reserve Bank of India’s circular. They have asked all the banks to declare suspicious bank accounts as fraud accounts.
Submissions of the Respondent
Advocate General BS Prasad appeared for State Bank of India. He urged the Telangana High Court to dismiss the petitions. The SBI alone had lost over Rs. 1,500 crore in this loan fraud case.
It was submitted that this may include the amount lost by some other banks as well. If the loss of all the banks is taken into account, the extent of fraud will be over Rs. 4,000 crore.
Issue Before the Court
During the hearing, the Bench questioned the Attorney General as to whether the impugned circular deprives the borrowers of an opportunity of hearing under the principles of natural justice.
Further Submission of the Respondent
In reply, Adv. BS Prasad presented his arguments. The said persons unnaturally defrauded the banks. It was submitted that they need not be given any opportunity under the principles of natural justice.
The Directions of the Court
The RBI had brought out the circular with an intention to prevent further fraud. The Court directed all the banks to declare suspicious accounts as fraud accounts. The Court further directed for this message to be disseminated to other banks as it would prevent similar frauds. The Bench posted the matter for further hearing.
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