\
The banking sector in India has faced significant scrutiny and regulatory changes over the past few years. The Reserve Bank of India (RBI) has implemented various prudential norms to ensure that banks maintain a healthy balance sheet and do not engage in reckless lending practices. One such norm is the requirement for banks to declare accounts as Non-Performing Assets (NPAs) on the 90th day of irregularities.
Recently, the Delhi High Court has weighed in on this issue, ruling that banks cannot unilaterally declare an account as NPA on the 90th day of irregularities without complying with RBI norms. In a significant judgment, the court held that the action of a bank declaring an account as NPA on the 90th day of irregularities is not ‘premature’ and must be in line with RBI’s guidelines.
This ruling has significant implications for banks operating in India, as it underscores the importance of adhering to regulatory requirements. Banks must ensure that their lending practices are prudent and transparent, and that they comply with RBI norms when declaring accounts as NPAs. Failure to do so can result in serious consequences, including penalties and reputational damage.
The Delhi High Court’s ruling is also significant because it highlights the need for greater transparency and accountability in the banking sector. Banks must be held accountable for their lending practices, and regulators must ensure that they are complying with established guidelines. This will help to build trust between banks and depositors, and promote a more stable financial system.
In conclusion, the Delhi High Court’s ruling on the Banking Regulation Act is an important development in India’s banking sector. It underscores the importance of regulatory compliance and transparency, and highlights the need for greater accountability in lending practices. As the banking sector continues to evolve, it is essential that regulators and banks work together to promote a stable and secure financial system.
\
\
\
About the Author
