2024 order declaring Anil Ambani’s loan account as ‘fraudulent’ withdrawn, Canara Bank tells Bombay HC

The order was issued on November 8 last year in the light of a Reserve Bank of India (RBI) master circular that permitted banks to declare any account as fraudulent and laid down guidelines for the same.

The high court stayed the order on February 7 this year. The court had then relied on the December 2024 order passed by another high court bench that stayed the effect of Canara Bank’s decision classifying the loan account of Reliance Communications independent director Manjari A Kacker as fraudulent.

It had questioned if the banks were not duty bound by the orders passed by the Supreme Court to follow principles of natural justice, including issuing notice to borrowers to give them opportunity to be heard before their account is classified as fraudulent under the master circular.

Anil Ambani, in his plea, had claimed that he was informed about the said order a month after its issuance and was not given an opportunity of being heard before the bank.

The RBI’s decision on fraud risk management in banks was taken under the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions of 2016. The RBI had also directed banks to devise their own policies. However, Ambani had claimed that Canara Bank had not yet formed an internal policy in this regard.