The Reserve Bank of India (RBI) has implemented the Supreme Court decision, which comes as a big relief to borrowers. Now, before categorizing the borrower as a defaulter or fraud, the banks will have to give him a chance to present his case. Last year, the Supreme Court had said that keeping in mind the principles of natural justice, borrowers should be given a chance to explain the findings of the audit report. Let us also tell you which Supreme Court decision has been implemented by the RBI. Thanks to this, common people, or rather, borrowers, will get relief.
Borrowers should have a chance
According to banking experts, private sector banks take immediate action against borrowers after a 90-day cooling-off period. It has been seen many times that haste on the part of banks has led to excesses. For this reason, the country’s top court ordered the RBI to change the rules last year.
According to Ashwini Rana from Voice of Banking, when a person goes to take a loan, the bank then considers all his documents, status and other aspects. In such a situation, when the same person is unable to repay the loan for some time, he should still be given a chance to find out what the reason is. This is the right way. She said that many such cases came to light when the bank initiated legal proceedings and later, even after knowing the poor status of the borrower in question, the bank officials were unable to provide any help.
The Supreme Court had made this decision.
According to banking expert Advocate Shrikant Shukla, the Supreme Court’s decision was based on natural justice. Earlier, if any bank had classified the borrower as a fraud or defaulter and initiated legal proceedings, in such a situation the borrower could only present his case or defence by approaching the court. Whereas the main objective of the bank is to recover the loan granted. In such a situation, banks will have no problem in knowing the opinion of the borrower before giving notice.
Shukla said there are thousands of such cases across the country where borrowers had told the RBI that the measures taken by the bank were excessive. When the matter came to the Supreme Court, the court made it clear that it is necessary to give a chance to the borrower. It may be noted that now banks will have to give three weeks to borrowers to submit their arguments in such cases. Also, without hearing the response, the bank will no longer issue a show-cause notice.
