'Go Approach RBI' : Supreme Court Refuses To Entertain PIL Seeking Investigation Into Fraudulent Loan Transactions

The Supreme Court today refused to entertain a public interest litigation seeking constitution of an Expert Committee to investigate fraudulent loan transfers and directions for a national framework to regulate loan transactions.A bench of Justices Surya Kant and Joymalya Bagchi dismissed the case as withdrawn after the petitioner sought liberty to make a representation before the Reserve Bank of India.During the hearing, the petitioner's counsel submitted, "People are given personal loans which go much over their income, the EMIs go much over their income...". However, the bench was categorical that the issues lie in RBI's domain."It's the domain of the subject experts...RBI is the expert, go and approach them...", said Justice Kant. Accordingly, the case was disposed of.Briefly put, the PIL was filed impleading the Union Ministry of Finance, the Reserve Bank of India and other banks/financial service providers, seeking regulation of loan transactions and investigation into fraudulent transfers. It demanded constitution of an Expert Committee, comprising experts from the banking, financial and insurance sectors, to conduct the investigation and give suggestions.Further, the PIL prayed that the Union call for a report from the respondent-authorities about the specific violations incurred by them in relation to the personal loan ecosystem and the steps taken to address the same. Other reliefs sought included -- Direction to the Union and RBI to formulate comprehensive guidelines in accordance with recommendations of the Expert Committee to prevent any such future agreements/ transactions, to formulate and implement a national regulatory framework capping the number of unsecured personal loans per individual and mandating real-time inter-lender credit tracking;- Direction to RBI to set up a Public Registry of Lending Applications and Approvals (PRLAA) to be integrated with CIBIL and Credit Information Companies for real time alerts;- Mandate for all scheduled banks to implement a cooling-off period between successive personal loans;- Independent audit of loan sanctioning in 12 cited cases, followed by loan restructuring or moratoriums for affected borrowers;- Declaration that the actions of respondent-Banks were violative of RBI regulations and initiation of disciplinary and financial penalties;- Direction to RBI to publish within 30 days, a public-facing online portal/database listing all RBI-registered investment advisors, NBFCs, LSPs, and digital loan facilitators, along with complaint mechanisms against them to prevent impersonation and regulatory misuse;- Direction to RBI to frame comprehensive guidelines under Section 35A of the Banking Regulation Act, 1949, to introduce a national Debt Exposure Capping Mechanism for individual borrowers across all scheduled banks and NBFCs.Case Title: JUSTEEN BARWA Versus UNION OF INDIA AND ORS., W.P.(C) No. 583/2025Click Here To Read Order

'Go Approach RBI' : Supreme Court Refuses To Entertain PIL Seeking Investigation Into Fraudulent Loan Transactions

Debby Jain

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