Banking expert claims – Supreme Court’s order will increase the trouble of banks, there will be difficulty in recovering loans

New Delhi. The Supreme Court has said in an important decision related to Banking Fraud that such account holders should be given one more chance. This decision of the apex court may be in the interest of the borrowers, but the banking industry believes that this will increase their troubles further. If banking experts are to be believed, there may be further delay in loan recovery due to legal entanglement.

The apex court, in a judgment given on March 27, said that before any loan account is declared a fraud, its side should be given another chance to be heard. According to the decision, the loan holder also has the right to hear his side before the bank declares his account as a fraud. The Supreme Court said that this should be taken care of before following the master circular of the Reserve Bank issued in 2016.

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why gave this decision
The Supreme Court said that when an account is declared a fraud, many types of civil and criminal activities are automatically associated with that account holder. He is blacklisted and in future he cannot get a loan in any way. Therefore, before taking such a step, following the master circular of RBI, the words of such account holder should also be heard. RBI had said in the master circular issued in 2016 that the bank can declare the account of willful non-payment of loan as fraud. On this, the top court said that before registering an FIR against the borrower, his side should also be heard.

Why the banking sector is worried
Banking sector experts say that the first effect of this decision will be that banks will have to wait a long time to hear the cases of such borrowers. Former SBI chairman Rajnish Kumar said, after this order, banks will have to go through more process. Murali Ramakrishnan, MD-CEO of South Indian Bank said, this will make it more difficult to declare and report an account as a fraud in time. Along with this, there will also be a problem in taking quick steps against the account holders who commit fraud.

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Expenses on banks will also increase
Banking expert and former banker of BCCI, Naresh Malhotra says that this will also increase the expenditure on banks for settling the legal process. Not only this, now before declaring an account as fraud, banks will have to go through a long legal process, which will not only take more time but will also increase the expenses on the banks. Karan Gupta, Banking Analyst, India Ratings, Fitch Group, says that now banks will have to present fresh evidence in the court against the account holder who has already become a willful defaulter. It is only a matter of increasing the process.

What is the condition of the defaulters now?
If you look at the Financial Stability Report of RBI, now the Gross NPA (GNPA) of the banks is at the lowest level of 7 years with 5 percent. At the same time, the Net NPA has gone down to a 10-year low with 1.3 per cent. The country’s top 50 willful defaulters currently have a debt of about Rs 92,570 crore. Willful defaulters are those who do not want to repay the loan despite having money.

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Tags: bad loan, business news in hindi, loan default, RBI, supreme court