Indian lenders must hear their borrowers’ version before tagging any loan account as fraudulent, the country’s top court ruled, blunting banks’ powers to make quick recoveries.
The verdict turned down an appeal by the country’s banking regulator and the State Bank of India, the nation’s largest, against a lower court judgment that stripped lenders’ power to unilaterally declare loan accounts as fraudulent. Such classifications should record reasons after allowing borrowers to be heard, the Supreme Court of India said on Monday.
