Bombay High Court slams banks casual take on declaring accounts fraud, asks Anil Ambani to approach RBI

Bombay High Court issues notice to UBI and RBI over casual bank account classification, directs Ambani to approach RBI.

Raising concerns over banks casual take in declaring bank accounts as defaulter or fraud, the Bombay High Court on Friday, issued notice to Union Bank of India (UBI) and the Reserve Bank of India (RBI) in response to a petition filed by industrialist Anil Ambani. The petition challenges the October 10, 2024, order passed by the UBI by which it classified Mr. Ambani’s loan account linked to Reliance Communications as a fraudulent account under the RBI’s Master Circular.  

A Division Bench of Justices, Revati Mohite-Dere and Dr. Neela Gokhale declined to stay the order and directed Mr. Ambani to approach the RBI with his grievance.  

“We have come across cases where the bank committee merely copies and pastes the findings of the auditor. The committee of the bank also needs to apply its mind. Despite the Master Circular, banks are not complying. They need to be more mindful, and we want you to do something about it. The Master Circular of 2025 directs banks to frame policies. None of the banks have done so. If you don’t take action, this will continue. We need to be mindful of the fact that this involves public money. You cannot pass such casual orders. We need to determine whether these actions are deliberate. The RBI needs to bring in some mechanism to resolve this issue,” the Bench observed.  

Representing the RBI, Senior advocate, Venkatesh Dhond said that the RBI has a complaint mechanism in place where any aggrieved person can lodge an online complaint with the RBI if they feel dissatisfied with such orders.  

“Nobody comes and informs the RBI that a particular borrower is unhappy with the bank order. There is a separate department of supervision that can examine such grievances to the RBI. If there is any violation of natural justice, we issue an advisory,” he said, adding that the RBI does not go into the merits of the case after a complaint is filed, but only see if mandatory procedures were followed before passing the order. He also said that the RBI would update its FAQs to raise awareness of the complaint process.  

“The Master Circular of 2025 directs banks to frame policies. None of the banks have done so. If you don’t take action, this will continue,” the court observed and asked Mr. Ambani to lodge his complaint with the RBI.  

Union Bank of India is expected to file its affidavit in response to Mr. Ambani’s petition within a week. The matter is kept for further hearing on March 13.