The Reserve Bank of India ('RBI')
updated its Master Directions on Frauds in 2016, to consolidate all
earlier circulars on classification of fraud, reporting and
monitoring.
In a case1 wherein a division bench of the
Supreme Court heard various civil appeals that collectively
challenged specific provisions of the Reserve Bank of India (Frauds
Classification and Reporting by Commercial Banks and Select FIs)
Directions, 2016 ('MFoF')2. All
appellants in this case formed a Joint Lenders Forum
('JLF'), which included Union Bank, Andhra
Bank, Bank of Baroda, etc. and was led by the State Bank of India
('SBI').
Background
The civil petition representing the grievances and frustration
of various entities challenged the MDoF on the ground that
borrowers whose accounts have been classified as
'fraudulent' were not given the opportunity to be heard,
let alone defend. The subject companies involved have either
defaulted on a payment of some credit facility or failed to
