PSB’s LOC is violative of fundamental right: HC

On April 23, the court quashed Centre’s circular empowering top bank officials to issue LOCs

The lookout circulars (LOC) issued by the Ministry of Home Affairs (MHA) against loan defaulters at the behest of public sector banks (PSBs) are "strong-arm tactics" to bypass the legal processes, and violates fundamental rights of the citizens, observed the Bombay High Court.

On April 23, the HC quashed the clause of an office memorandum (OM) issued by the Centre, which empowered the chairman, managing directors and chief executive officers of a PSB to issue LOCS against default borrowers or even persons who stood guarantee for such borrowers. The detailed 289-page judgement, delivered by a bench of Just have Jamdar, was made available on Friday.