In Brief
Banks are not required to give borrowers an oral hearing before classifying their loan accounts as "fraud," the Supreme Court ruled. The Court upheld RBI's 2024 directions requiring only: a written show-cause notice, disclosure of forensic audit reports, written replies, and reasoned orders. This procedure satisfies fairness principles without paralyzing banking operations. However, banks must furnish complete forensic audit reports—not just conclusions—with limited exceptions for protecting third-party privacy. The decision clarifies that the 2023 Rajesh Agarwal judgment did not mandate personal hearings, balancing regulatory efficiency against borrower protection.
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