Classification of frauds may get delayed: Banks

AFTER THE SUPREME Court rejected the State Bank of India (SBI)'s plea seeking clarity on fraud classification norms, bankers say bad actors may misuse the clause of being heard by lenders before their account is marked as a fraud and delay the entire fraud classification process.

- PIYUSH SHUKLA

"If the Supreme Court says borrowers should be given a full hearing before classifying fraud accounts, then unless things change, it will not be easy. Because the hearings can go on forever... the corporate system has taken advantage of gaps in the legal system. In some cases, companies go to court and pray for their account not to be marked as fraud," a senior banker at a private bank said, seeking anonymity.

The Supreme Court clarified on Friday that it had not directed banks to accord a "personal hearing" before classifying a borrower's account as fraud, as reported by PTI."We never stated that the personal hearing should be granted to borrowers. Rather, we had said they should be given adequate to notice and an opportunity make a representation," a Bench comprising chief justice DY Chandrachud and Justices PS Narasimha and JB Pardiwala said.