NEW DELHI: Banking regulator RBI and the nation’s largest PSU financial institution SBI Monday advised Supreme Courtroom it was not doable to offer private hearings to account holders earlier than declaring an account fraud in view of the large variety of banking frauds.The nation witnessed 60,000 instances of financial institution fraud within the final two monetary years involving Rs 48,244 crore, the monetary establishments stated.Responding to question of a bench of Justices JB Pardiwala and KV Viswanathan on why private hearings can’t be given earlier than declaring an account fraud which is a part of pure justice, solicitor normal Tushar Mehta, showing for SBI, stated the variety of financial institution frauds had been alarming in recent times and any private or oral listening to would derail the complete technique of declaring an account fraud.
He stated the variety of financial institution frauds was 23,953 in FY 2024-25 and 36,060 in FY 2023-24. The quantity concerned was Rs 36,014 crore in 2024-25, which was a 194% leap from Rs 12,230 crore within the earlier yr. Mehta stated no financial institution offers private hearings as it might defeat the very goal of declaring the account to be a fraud. He argued that banks could must encounter conditions by which it could not be doable to afford oral listening to or private listening to to the events involved.RBI additionally advised the bench it had not issued any round for making private hearings obligatory in declaring an account fraud. The lawyer showing for RBI stated operationally it could not be possible to take action, and whether it is made obligatory, then bankers must spend extra time on granting private hearings than doing banking operations. He stated RBI left it to the knowledge of banks to take a name, and the whole lot can’t be micromanaged by the regulator. The bench, nevertheless, stated there could also be conditions the place private listening to needs to be given for which there aren’t any tips.In 2023, SC held that the ideas of pure justice demand that debtors should be served a discover and given a possibility to clarify the findings of the forensic audit report earlier than their account is assessed as fraud beneath the Grasp Instructions on Frauds. As well as, the choice classifying the borrower’s account as fraudulent should be made by a reasoned order. After the decision, the controversy arose whether or not private hearings wanted to be given or written response filed by account holder was sufficient earlier than declaring an fraudulent account.