The Indian Express
Supreme Court: Banks & NBFCs Cannot Use Force to Seize Vehicles From Loan Defaulters
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Curated Summary
Summary
- The Supreme Court ruled that banks and NBFCs cannot use force to repossess vehicles after loan defaults.
- The Court relied on RBI guidelines that prohibit lenders from using muscle power or harassing borrowers during loan recovery.
- The Court also referred to Manager, ICICI Bank Ltd. v. Prakash Kaur (2007). It held that lenders must use legal methods to recover vehicles.
- In this case, four men allegedly took the borrower’s truck at around 1 a.m. They broke the steering lock and took the vehicle without prior notice.
- The Court held that the lender failed to follow RBI guidelines and due process. It ordered compensation for the borrower and directed the RBI to ensure better compliance with its recovery guidelines.
