Vijay Mallya, Nirav Modi, the Yes Bank scam and DHFL are just some of the major loan fraud cases that shocked the nation, as major scammers still evade justice. But while few scams make headlines, FY22 alone had more than 9,000 cases of conmen siphoning off money from banks, that account holders had deposited with trust.
Although people who default on loans and aren't traceable are considered fraudsters, now the Supreme Court wants banks to hear them out before giving the label.
Natural justice needs to be kept in mind
Upholding a 2020 judgment by the Telangana High Court, the SC urged banks to give borrowers a chance to reply before calling a default fraud.
It invoked the principle of natural justice to be applied alongside the Reserve Bank of India's circular on cases of cheating, forgery and misappropriation.
The apex court told banks to read 'audi alterm partem' principle, which means listening to the other side.
Anil Ambani's firm fighting the stigma
The court acknowledged the serious civil consequences that can follow once an account is declared fraudulent and hence called for restraint.
The judgment also comes as ex-directors of Anil Ambani's Reliance Communications approached high court against their accounts being probed by CBI for fraud.
The Delhi High Court's order stopped the CBI from filing a case against Reliance Communications' directors, even after the State Bank of India and other lenders complained against them.
