No personal oral hearing needed before labelling bank accounts as fraud: SC

The Supreme Court, connected Tuesday, issued a determination regarding the classification of slope accounts arsenic fraud. The apex tribunal ordered that banks are not obligated to assistance customers a idiosyncratic oral proceeding earlier declaring their accounts arsenic fraud.

However, anterior to labelling them, banks indispensable supply customers with a forensic audit report.The ruling follows submissions made earlier this twelvemonth by the Reserve Bank of India (RBI) and State Bank of India (SBI), which argued that conducting idiosyncratic hearings successful each lawsuit would not beryllium feasible fixed the standard of fraud successful the banking system.Earlier, appearing for SBI, solicitor wide Tushar Mehta had told the tribunal that the measurement of fraud cases has risen sharply, making idiosyncratic hearings hard to implement.

He said that introducing specified a request could disrupt the process of identifying and declaring fraudulent accounts.The tribunal was informed that astir 60,000 instances of slope fraud were recorded implicit the past 2 fiscal years, involving Rs 48,244 crore. Breaking down the figures, Mehta said determination were 36,060 cases successful 2023–24 and 23,953 successful 2024–25. The magnitude progressive successful 2024–25 stood astatine Rs 36,014 crore, reflecting a 194 per cent summation from Rs 12,230 crore successful the erstwhile year.

A seat of Justices J B Pardiwala and K V Viswanathan had earlier questioned the lack of idiosyncratic hearings, noting that specified a measurement is mostly linked to principles of earthy justice. In response, Mehta maintained that banks bash not connection idiosyncratic hearings successful these situations, arsenic it whitethorn decision the intent of the classification process. He added that determination could besides beryllium circumstances wherever providing specified hearings is not possible.