‘Would throw banking operations into disarray’: Why SC rejected oral hearings for accounts declared fraudulent

What Happened

The Supreme Court held that banks need not grant oral hearings before classifying loan accounts as fraudulent under RBI norms. A notice, written response opportunity, and reasoned decision satisfy natural justice requirements. The court rejected borrower arguments that personal hearings were necessary, stating oral hearings would disrupt banking operations. The ruling overturned earlier High Court decisions requiring such hearings. The classification can trigger credit blacklisting and criminal scrutiny.

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