5 December 2022

Bengaluru : If a bank account is declared to be fraud and ac count holders ‘ wilful defaulters ‘ , then the bank can initiate criminal proceedings as per Reserve Bank of India’s master circular and invoke Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002 . the Karnataka high court has said in a recent judgement .

Banks Can Take Criminal Action
Banks Can Take Criminal Action

” Having initiated recovery proceedings before the Debt Recovery Tribunal and having a recovery certificate in their hand would not mean the proceedings cannot be initiated against these petitioners , ” Justice M Nagaprasanna has observed in his order , dismissing the petition filed by Associate Lumbers and its directors . The judge has said Clause 8.1 of RBI’s master circular mandates that if the amount involved in a fraud is be tween Rs 25 crore and Rs 50 crore , then the bank should com plain to CBI’s Banking Security and Fraud Cell ” irrespective of the involvement of a public servant ” .

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