Dismiss petitions challenging RBI circular, SBI requests Telangana High Court

Advocate General BS Prasad, appearing for State Bank of India, on Monday urged the Telangana High Court to dismiss the petitions filed by Rajesh Agarwal of BS company and others, who have challenged the Reserve Bank of India’s circular asking all the banks to declare suspicious bank accounts as fraud accounts. 

The SBI alone had lost over Rs 1,500 crore in this loan fraud case and if the amount lost by some other banks is included the extent of fraud will be over Rs 4,000 crore, he said.

During the course of hearing, the bench asked the AG whether the impugned circular deprives the borrowers of an opportunity of hearing under the principles of natural justice. In reply, Prasad submitted that the persons, who defrauded the banks in an unnatural way, need not be given any opportunity under the principles of natural justice.

The RBI had brought out the circular with an intention to prevent further frauds, and it has asked all the banks to declare suspicious accounts as fraud accounts and to forthwith circulate the same message to other banks to prevent similar frauds. The bench posted the matter to Tuesday for further hearing.