The Supreme Court on Tuesday examined the issue whether banks are legally bound to give a personal hearing to account holders before classifying or closing their accounts as “fraud”, and sought the Reserve Bank of India's (RBI) response in the matter.

The Bench of Justices JB Pardiwala and KV Viswanathan was hearing a plea filed by the State Bank of India (SBI) challenging a Calcutta High Court decision that relied on the 2023 judgment in State Bank of India v. Rajesh Agarwal 2023 LiveLaw (SC) 243, which recognised the borrower's right to be heard before the account was closed as fraudulent.

SBI's Argument: Personal Hearing Not Always Feasible

Appearing for SBI, Solicitor General Tushar Mehta contended that the Rajesh Agarwal judgment should not be interpreted to mean that an

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