RBI Has Wide Supervisory Powers Over Financial Institutions Like SIDBI, Its Directions Are Statutorily Binding: Supreme Court
3 years ago

RBI Has Wide Supervisory Powers Over Financial Institutions Like SIDBI, Its Directions Are Statutorily Binding: Supreme Court

Live Law  

A Supreme Court bench comprising, while presiding over a matter regarding delayed payments of principal amount and interest accrued on bonds issued by SIDBI, stated that " The facts of the case relate to the issuance of a number of bonds by the appellant to M/s. The appellant refused to do so citing that RBI had issued a facsimile directing defendant not to affect any transfer or otherwise deal with any security invested by CRB Capital and its group Companies without prior permission of the official liquidator appointed by the Company Court at Delhi. While the trial court treated RBI's order as a directive and noted that there was a clear stipulation against affecting any transfer without the permission of official liquidator and dismissed the suit, the High Court of Calcutta reversed the order of the trial court and directed the appellant to pay interest amount from the date of accrual on the bonds. Regarding the respondent's claim that the appellant derived undue benefit by intentionally withholding payment, the bench noted that since the amounts due on Bonds were in fact immediately transferred to the 'Accrued Interest' head and not used by appellants for themselves and thus any argument regarding mala fide intention behind withholding payment by the appellant is unacceptable. Three concluding observations were made by the bench clearly stating that "Firstly, the appellant was justified in withholding payment as they were under RBI's direction to do so; secondly, the defendant hasn't derived any undue benefit by their act and; thirdly, due payment was promptly made to the plaintiffs upon settlement of rights by the court."

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History of this topic

RBI To Determine Bank's Knowledge Of Borrower's Account Balances, Application Of 'Right Of Recompense': Kerala High Court
1 year, 2 months ago

RBI To Determine Bank's Knowledge Of Borrower's Account Balances, Application Of 'Right Of Recompense': Kerala High Court

Live Law  

The Kerala High Court recently held that the determination of whether the bank had knowledge of the amount remaining in the borrower's account at the time of granting the One Time Settlement, and whether the bank could therefore exercise the 'Right of Recompense,' is a matter to be decided by the bank itself.‘Right of Recompense’ is a tool used by …

Should Banks Inform Borrowers About Changes In Interest Rates, Give Annual Loan Statements? Supreme Court Asks RBI
1 year, 3 months ago

Should Banks Inform Borrowers About Changes In Interest Rates, Give Annual Loan Statements? Supreme Court Asks RBI

Live Law  

The Supreme Court of India on Monday requested the Reserve Bank of India to submit an affidavit clarifying its directives concerning banks’ obligations to borrowers. A bench of Justices Sanjiv Khanna and SVN Bhatti was hearing a special leave petition filed by the Punjab National Bank against an August 2022 decision of the Punjab and Haryana High Court quashing a …

Supreme Court Issues Notice On RBI Appeal Against Kerala HC Order That Lifted Loan Restrictions Imposed On Co-Operative Bank
1 year, 5 months ago

Supreme Court Issues Notice On RBI Appeal Against Kerala HC Order That Lifted Loan Restrictions Imposed On Co-Operative Bank

Live Law  

The Supreme Court on Friday issued notice to in an appeal filed by the Reserve Bank of India, against an order of the Kerala High Court that lifted the loan restrictions imposed by it on Thiruvalla East Co-Operative Bank Ltd. A division bench of the Kerala High Court had affirmed the order of a single bench that lifted the restriction …

"RBI Officials Involved In Scams Like Kingfisher, Yes Bank", Alleges Subramanian Swamy; Supreme Court Issues Notice On Plea For CBI Probe
2 years, 2 months ago

"RBI Officials Involved In Scams Like Kingfisher, Yes Bank", Alleges Subramanian Swamy; Supreme Court Issues Notice On Plea For CBI Probe

Live Law  

A Division Bench of the Supreme Court of India on Monday issued notice on a writ petition filed by Dr Subramanian Swamy seeking an enquiry by the Central Bureau of Investigation into the role of Reserve Bank of India officials in various banking scams. Gavai and B.V. Nagarathna that the RBI officials had allegedly escaped scrutiny with respect to their …

Borrower Can't Claim Loan Moratorium As A Right Based On RBI's Circular Of March 2020 : Karnataka High Court
2 years, 11 months ago

Borrower Can't Claim Loan Moratorium As A Right Based On RBI's Circular Of March 2020 : Karnataka High Court

Live Law  

The Karnataka High Court recently set aside the directionsissued to Reserve Bank of India by a single judge bench of the High Court directing it to monitor the implementation of Covid-19 package announced on March 27, 20202, by which RBI had allowed Banks to declare a three-month moratorium on all term loans, outstanding as on March 1, 2020. Senior Advocate …

RBI Is 'State' Under Article 12; Private Banks Discharging Public Functions Amenable To Writ Jurisdiction: Calcutta High Court
3 years, 9 months ago

RBI Is 'State' Under Article 12; Private Banks Discharging Public Functions Amenable To Writ Jurisdiction: Calcutta High Court

Live Law  

The Calcutta High Court has held that th Reserve Bank of India is "State" under Article 12 of the Constitution and thus, a writ petition is maintainable against it. The Single Bench ruled, "Since the Reserve Bank of India is an instrumentality of the State, it comes squarely within the meaning of "State" as contemplated in Article 12 of the …

Steps Taken By RBI Are For The Benefit Of Depositors; Bombay HC Refuses To Stay RBI's Decision To Cancel CKP Co-Operative Bank's License [Read Order]
4 years, 6 months ago

Steps Taken By RBI Are For The Benefit Of Depositors; Bombay HC Refuses To Stay RBI's Decision To Cancel CKP Co-Operative Bank's License [Read Order]

Live Law  

The Bombay High Court last week refused to stay the decision of the Reserve Bank of India to cancel the license of CKP Co-operative bank and observed that the steps taken by the central bank are in the interest of depositors. Division bench of Justice Nitin Jamdar and Justice SP Tavade were hearing two writ petitions filed by Vishwas Utagi …

Loan moratorium: Supreme Court directive to Centre, RBI
4 years, 7 months ago

Loan moratorium: Supreme Court directive to Centre, RBI

The Hindu  

The Supreme Court on Tuesday directed the Central government and the Reserve Bank of India to file their formal response to a petition challenging the charging interest rate on loans even during the three-month moratorium declared amid the COVID-19 pandemic and national lockdown. The petitioner, Gajendra Sharma, said though there was a moratorium on loans, there is also accrual of …

Plea Seeking Extension of The Benefits Of RBI Circular on Loan Moratorium To All NBFCs: SC Issues Notice
4 years, 7 months ago

Plea Seeking Extension of The Benefits Of RBI Circular on Loan Moratorium To All NBFCs: SC Issues Notice

Live Law  

The Supreme Court has issued notice to the Centre and Reserve Bank of India in a plea by The Confederation of Real Estate Developers' Associations of India which sought for clarification regarding whether all NBFCs were eligible for loan moratorium or whether banks had the discretion to give the benefit. On March 27, in wake of the COVID-19 pandemic and …

Coronavirus | Supreme Court directive to RBI on loan repayment moratorium
4 years, 8 months ago

Coronavirus | Supreme Court directive to RBI on loan repayment moratorium

The Hindu  

The Supreme Court on Thursday asked Reserve Bank of India to ensure that the central bank’s March 27 circular directing banks and financial institutions to provide borrowers a three-month moratorium on loan repayments is implemented in “letter and spirit” amid the COVID-19 pandemic. “We direct Reserve Bank of India to ensure the implementation of the circular dated March 27, 2020 …

Indiabulls Moves Delhi HC Against SIDBI, Says Loan Installments Can't Be Demanded In Light of Moratorium Imposed by RBI [Read Order]
4 years, 9 months ago

Indiabulls Moves Delhi HC Against SIDBI, Says Loan Installments Can't Be Demanded In Light of Moratorium Imposed by RBI [Read Order]

Live Law  

Indiabulls Commercial Credit Limited has moved the Delhi High Court challenging the demands for loan installments made by Small Industries Development Bank of India. He further submitted that the loan instalment of Rs.31,94,79,453/- for the month of March was duly paid on 09.03.2020, whereafter due to the onset of the pandemic of COVID19 and the subsequent lockdown in the country, …

Opinion | A judgement that balances power and proportionality
4 years, 10 months ago

Opinion | A judgement that balances power and proportionality

Live Mint  

In a judgement on Wednesday spanning elements as diverse as Vedic philosophy and cypherpunks, Jain parables and the history of central banking, the Supreme Court set aside a circular issued by the Reserve Bank of India banning entities regulated by it from dealing in virtual currencies. Rich with details on the character of virtual currencies and their manner of regulation, …

RBI's revised guidelines for resolution of stressed assets likely before 23 May; poll code may not impact issuance of new rules
5 years, 8 months ago

RBI's revised guidelines for resolution of stressed assets likely before 23 May; poll code may not impact issuance of new rules

Firstpost  

Against the backdrop of the Supreme Court quashing an RBI circular, issued on 12 February, 2018, a revised set of rules is under works and would be released soon, they said. New Delhi/Mumbai: The Model Code of Conduct for the Lok Sabha polls is unlikely to have any bearing on issuance of a revised framework for resolution of stressed assets …

RBI’s revised guidelines for resolution of stressed assets likely before May 23
5 years, 8 months ago

RBI’s revised guidelines for resolution of stressed assets likely before May 23

Live Mint  

New Delhi: The Model Code of Conduct for the Lok Sabha polls is unlikely to have any bearing on issuance of a revised framework for resolution of stressed assets by the Reserve Bank of India and the guidelines are expected to be announced before May 23, sources said. Against the backdrop of the Supreme Court quashing an RBI circular, issued …

SC's RBI Circular judgment: A Treatise On Interpretation Of Statutes
5 years, 9 months ago

SC's RBI Circular judgment: A Treatise On Interpretation Of Statutes

Live Law  

The recent Supreme Court judgment on the RBI circular dated 12th February 2018 is a treatise on the subject of interpretation of statutes. The Supreme Court, however, held in its 84-page judgment that the circular is ultra vires of Section 35AA of the Banking Regulation Act and that RBI had no powers to issue such an order under the current …

Fate Of The Accounts Covered Under The February 2018 Circular Post-Supreme Court Judgment
5 years, 9 months ago

Fate Of The Accounts Covered Under The February 2018 Circular Post-Supreme Court Judgment

Live Law  

The Supreme Court of India in the matter of Dharani Sugars & Chemical Ltd Vs. Union of India struck down Circular dated 12th February 2018 issued by RBI as ultra vires of section 35AA of the Banking Regulation Act, 1949. The Supreme Court analyzed the scope of power of RBI under Section 35 AA of the BR Act and held …

RBI to issue revised circular on bad loan resolution: Shaktikanta Das
5 years, 9 months ago

RBI to issue revised circular on bad loan resolution: Shaktikanta Das

Live Mint  

Mumbai: The Reserve Bank of India will issue a revised circular for resolution of stressed assets after its 12 February 2018 norms were struck down by the Supreme Court earlier this week, RBI governor Shaktikanta Das said on Thursday. The RBI will take steps in light of the court order, including issuance of a revised circular, for expeditious and effective …

RBI 12 February circular no more: What it means for banks, IBC cases
5 years, 9 months ago

RBI 12 February circular no more: What it means for banks, IBC cases

Live Mint  

Mumbai: The Supreme Court setting aside the Reserve Bank of India’s 12 February 2018 circular to replace all loan restructuring schemes with a formal bankruptcy process has restored previous debt recast options for defaulting companies and given a free hand to banks to explore steps to rescue such companies outside the court. Catch all the latest news in our blog: …

RBI 12 February circular quashed gives power sector some breathing space
5 years, 9 months ago

RBI 12 February circular quashed gives power sector some breathing space

Live Mint  

Mumbai: The striking down of the Reserve Bank of India’s 12 February 2018 circular, which would have fast-forwarded defaulting companies to bankruptcy court, will now save stressed power assets from immediate liquidation, according to power sector executives. “This provides much-needed relief to power companies which had been taken to NCLT under the RBI circular, including assets of RattanIndia, GVK, IL&FS …

RBI Feb 12 circular quashed. All eyes now on monetary policy
5 years, 9 months ago

RBI Feb 12 circular quashed. All eyes now on monetary policy

Live Mint  

Mumbai/New Delhi: The Supreme Court on Tuesday quashed RBI's 12 February circular that had set strict norms for bad loan resolution, easing the concerns of some debt-laden companies and upending India’s fledgling bankruptcy process. The RBI circular directed banks to refer defaulters to bankruptcy courts if they were unable to find a resolution plan within 180 days for stressed accounts …

Supreme Court order on NPAs: Power firms body heaves a sigh of relief
5 years, 9 months ago

Supreme Court order on NPAs: Power firms body heaves a sigh of relief

Live Mint  

Welcoming the Supreme Court ruling quashing the RBI circular on resolution of stressed assets, the Association of Power Producers on Tuesday said it will give some breather and flexibility to restructure their debt. The apex court quashed the RBI circular of 12 February, 2018, that made it mandatory for banks to recognize even a one-day defaults by the borrowers and …

SC order quashing RBI circular to give relief to power companies but delay bankruptcy proceedings
5 years, 9 months ago

SC order quashing RBI circular to give relief to power companies but delay bankruptcy proceedings

Hindustan Times  

The Supreme Court order quashing a Reserve Bank of India circular on resolving bad debt will provide relief to power companies and lenders as well as flexibility to restructure debts but will slowdown bankruptcy proceedings, experts said Tuesday. The Supreme Court on Tuesday quashed RBI’s February 12 circular, which prescribed rules for recognising one-day defaults by large corporates and initiating …

Supreme Court strikes down RBI's 12 February circular on bankruptcy proceedings, declares it illegal
5 years, 9 months ago

Supreme Court strikes down RBI's 12 February circular on bankruptcy proceedings, declares it illegal

Firstpost  

Last month, the RBI had maintained that there was no dilution in its stand with regard to 12 February circular on stressed assets recognition and resolution. In a major relief to stressed power, sugar and infrastructure firms, the Supreme Court on Tuesday quashed the Reserve Bank of India’s 12 February, 2018 circular on bankruptcy proceedings and declared it ultra vires_,_ …

Supreme Court quashes RBI’s 12 February circular on one-day default
5 years, 9 months ago

Supreme Court quashes RBI’s 12 February circular on one-day default

Live Mint  

Mumbai: The Supreme Court on Tuesday quashed the Reserve Bank of India’s 12 February circular which prescribed rules for recognising one-day defaults by large corporates and called for insolvency action as a remedy. Since the central bank had also cancelled all its previous restructuring schemes in favour of 12 February circular, lenders will now have to individually look at resolution …

Opinion | An intruder undermines RBI
5 years, 10 months ago

Opinion | An intruder undermines RBI

Live Mint  

Bankruptcy proceedings usually involve protecting a firm’s assets from creditors. The ruling by the bankruptcy court, which is overseeing the government- Already India has lost two RBI governors because, among other things, they dared to ask banks to acknowledge problem loans in time, classify them correctly and make adequate provisions for losses. Already-delayed Indian tribunal proceedings will stretch forever, with …

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