Banks Casual In Giving Huge Loans To Big Entities, But Very Demanding In Small Loans To Ordinary Persons : Supreme Court

The Supreme Court recently remarked that banks in general have become very casual in granting huge sum as loans to big companies but when it comes to ordinary people, they impose heighted level of scrutiny often amouting to "borderline harassment".

These observations were made by a bench comprising Justice Ahsanuddin Amanullah and Justice R. Mahadevan in a case where the petitioner company, Bhaskar International Private Limited, was given a loan of Rs. 8,90,000 by the State Bank of India without proper assessment as to the repayment. 

The petitioner company failed to pay the very first installement of the loan amount and defaulted for six years before the SBI moved to take over of possession of their properties. 

The bench said the SBI was clearly neglient in their assessment as to the repayment capacity of the petitioner but refused to entertain the plea: "We indicate that it is coming to the notice of the Court that the banks in general, including respondent no.1-SBI is casual in granting loans of huge amounts to bigger entities but at the same time, very demanding apropos small loans where ordinary people come for personal requirement(s), yet subjecting them to more stringent conditions and a tedious process, which may amount to, in certain cases, borderline harassment."

To briefly state, the petitioner was given loan in 2019 but it defaulted the very first installment after which the account was declared as a non-performing asset.

The SBI sought to take over the immovable properties of the petitioner and an order in this aspect was passed by District Magistrate in 2024 in favour of the bank. It then moved the High Court for the execution of the order, which in January 2025 allowed in accordance with law. Against this order, the petitioner company moved the Supreme Court.

During the hearing, Senior Advocate Nachiketa Joshi(for the company) submitted that the declared of account as NPA is arbitrary because the petitioners had made an offer to repay the entire principal amount but the same was not accepted.

Opposing this, Additional Solicitor General Archana Pathak Dave(for the SBI) argued that the conduct of the petitioner doesn't inspire confidence. Moreover, they had moved the Debts Recovery Tribunal against the execution of the magistrate's order. 

The bench,while pointing out the conduct of the petitioner,said its too late to offer to repay the principle amount after 6 years of default. It more specifically stated that the conduct of the SBI can't also be ignored because there is a neglience on their part in granting loan to a company which was not capable of repaying the amount.

"In the present case, we find that there has been negligence on the part of the SBI and its officials in granting/sanctioning a huge loan of Rs.8,09,00,000/- to the petitioner no.1-Company for the reason that the petitioners could not even start repaying and defaulted at the very first instance. Tentatively, this is a clear indicator that a proper assessment was not made of the capacity of the borrower(s)-petitioners to repay the loan by the concerned officials of SBI."

The bench dismissed the SLP but as a last indulgence, granted status quo on propertities for two weeks for the petitioner to seek interim relief before the DRT.

It further clarified that their observation should not be misunderstood as suggesting easing of norms and requirements for granting loans. But it added that the procedure adopted for the ordinary people can be eased a bit:

"Whilst recording our displeasure at such workings, we leave it for a more fit case where specific orders may be called for against such practices of the banks in general, including respondent no.1-SBI. Lest we be misunderstood, be it noted that we are in no way suggesting easing of norms and requirements for loan facilities, which is best left to the Reserve Bank of India and the bank(s) concerned, but the procedure so adopted can certainly be made easier and fairer for loan-seekers/applicants and thereafter at the stage of recovery also."

The Court stated that policy in regards to concession and incentives on loan should be framed in a manner giving maximum benefit to the person at the lowest rung of the social/financial strata. It asked ASG Dave to use her good offices and convey the suggestions to the SBI.

Case Details: M/S BHASKAR INTERNATIONAL PRIVATE LIMITED & ORS. v STATE BANK OF INDIA & ORS.|Special Leave to Appeal (Civil) No.3313/2025

Click Here To Read Order

Appearances: For Petitioners Mr. Nachiketa Joshi, Sr. Adv. Mr. Amit Sharma, Adv. Mr. Sai Shashank, Adv. Mr. Sandeep Singh, AoR Mr. S. Prasada Rao, Adv. Mr. Madhuraj Singh Inda, Adv.

For Respondent(s) Mrs. Archana Pathak Dave, Sr. Adv. Mr. Siddharth Sangal, AoR Ms. Richa Mishra, Adv. Ms. Mrinalini Tandon, Adv. Ms. Kashish Tewatia, Adv. Mr. Samar Vijay Singh, AoR Ms. Sabarni Som, Adv. Mr. Aman Dev Sharma, Adv. Mr. Gaj Singh, Adv. Mr. Pushkar Sharma, Adv. Mr. Sachin Sharma, Adv.