The Hindu Editorial Analysis : 28th March 2023

28/03/2023

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The Hindu Editorial Analysis

The Importance of Reading The Hindu Editorial: Reading The Hindu newspaper has several benefits, including improving reading skills, facilitating comprehension, staying informed of current events, enhancing essay writing, and more. For individuals aiming for a career in banking, reading editorials is crucial for vocabulary building. In this article, we will examine today’s editorials, provide practice questions, and highlight important vocabulary words.

Serve notice.

Observing that declaring a bank account as fraud could be fatal for the borrower leading to his “civil death”, the Supreme Court on Monday ruled that banks must serve a notice and grant an opportunity to borrowers to be heard before taking such a decision, instead of unilaterally declaring the account as fraud.
A bench of Chief Justice DYChandrachud and Justice Hima Kohli said that declaring an account as a fraud not only results in reporting the crime to investigating agencies, but also has other penal and civil consequences against the borrowers and principles of natural justice 21/28 followed.
The court d the order on the issue of validity of RBI (Frauds Classification and Reporting by Com- mercial Banks and Select FIs) Directions, 2016
Bankers said borrowers are being granted a hearing before being classified as wilful defaulters.
Lenders are also required to ‘red flag’ an account if suspicion is thrown up by the presence of early warning signals on lo ans of over Rs 50 crore.
Once an account has been ‘red flagged, banks must do a forensic audit and decide whether to classify it as a fraud within six months.
Lenders are now awaiting a revised circular from the RBI on loan classification.
The issue of fraud classification was first adjudicated by the high court of Telangana, which held that principles of natural justice must be read into the provisions of the Master Directions on Frauds The HC decision was assailed by the RBI and lender banks in the apex court.
“Classification of the borrower’s account as fraud under the Master Directions on Frauds virtually leads to a credit freeze for the borrower, who is debarred from raising finance from financial markets and capital markets. The bar from raising finances could be fatal for the borrower leading to its ‘civil death’ in addition to the infraction of their rights under Article 19 (Ig) of theConstitution.
Since debarring disentitled a person or entity from exercising their rights and/or privileges, it is elementary that the principles of natural justice should be made applicable and the person against whom an action of debarment is so should be given an opportunity of being heard,” the bench said.

Practice Questions:

Why are the borrowers being granted a hearing before being classified as wilful defaulters?
What does the bench of Chief Justice DYChandrachud and Justice Hima Kohli said?

Important Vocabs:

Decentralized– controlled by several local offices or authorities rather than one single one.
Vibrant– full of life and energy; exciting
Holistic– considered as a whole thing rather than a collection of parts
Modality– particular mode in which something exists or is experienced or expressed.
Convergence-when two or more things come together to form a new whole