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RBI Rules Not 'Paper Tigers,' Says High Court
24 Dec
Summary
- Bombay High Court stayed coercive action against Anil Ambani.
- Court found forensic audit report incomplete and unsigned.
- Lenders warned against selective or non-compliant RBI norm invocation.
The Bombay High Court has stayed coercive actions by public sector banks against Anil Ambani and Reliance Communications group companies, emphasizing that the Reserve Bank of India's Master Directions are binding. Justice Milind N Jadhav halted actions, including show cause notices and fraud classifications, by Bank of Baroda, IDBI Bank, and Indian Overseas Bank.
The court deemed the October 15, 2020, forensic audit report "prima facie inconclusive and incomplete" and noted its lack of a Chartered Accountant's signature. This report was the sole basis for the banks' adverse proceedings, which the court found legally unsustainable without adherence to statutory procedures.
Justice Jadhav stressed that banks cannot remain inactive for years and then initiate drastic actions. He criticized the banks for not red-flagging issues earlier, stating that adherence to timelines and due process is crucial when handling public money. The court highlighted the banks' accountability to the public for safeguarding their hard-earned savings.
