The Supreme Court on Tuesday criticised banks for what it called a casual approach in giving large loans to big companies, while ordinary people seeking small personal loans often face strict conditions and lengthy procedures that may sometimes amount to “borderline harassment.”
The Court observed that banks, including State Bank of India, are often casual while granting huge loans to large entities. At the same time, ordinary people applying for small personal loans are made to go through stricter conditions and complicated procedures, which in some cases may amount to harassment.
A Bench of Justices Ahsanuddin Amanullah and R. Mahadevan clarified that it was not asking banks to relax lending rules. The Court said such decisions should be left to the Reserve Bank of India and the banks. However, it added that the loan application and recovery process could be made easier and fairer for borrowers.
The observations came while the Supreme Court refused to interfere in recovery proceedings started by SBI against Bhaskar International Pvt Ltd over a defaulted loan of ₹8.09 crore.
The company had taken the loan from SBI in 2019. According to the Court, the company defaulted on the very first instalment and did not repay anything after that. Its account was declared a non-performing asset (NPA) on July 29, 2019.
SBI later started proceedings to take possession of the secured properties. Earlier this year, the Punjab and Haryana High Court directed authorities to help the bank take physical possession of the properties.
Senior counsel appearing for the borrowers argued that declaring the account as an NPA within five to six months was arbitrary and against SBI’s own policy. The company also said it was ready to repay the entire principal amount and could restart operations if given support. It claimed the bank’s recovery action was premature.
SBI opposed the plea and said the company had taken a commercial loan knowing its obligations but failed to pay even a single instalment. The bank also informed the Court that the borrowers had already approached the Debt Recovery Tribunal and sought interim relief there.
Rejecting the borrowers’ arguments, the Supreme Court said their conduct could not be ignored. The bench noted that after taking a loan of ₹8.09 crore, the company defaulted on the very first instalment and had not repaid even a single rupee to SBI.
The Court was also not convinced by the company’s later offer to settle the matter by repaying only the principal amount. It said the proposal, made in 2025 nearly six years after taking the loan, was “too little, too late.”
At the same time, the bench pointed out negligence by SBI officials in sanctioning such a large loan. The Court observed that the company could not even begin repayment and defaulted immediately, which indicated that proper assessment of the borrower’s repayment capacity may not have been done by SBI officials.
The Court also noted that the company had already approached the Debt Recovery Tribunal for relief. It said the company might be trying to take advantage of the present proceedings despite already choosing that legal route.
However, the bench gave the borrowers one final opportunity to seek interim relief before the tribunal. It directed status quo on the secured properties until June 2 and asked SBI not to take any further action during that period.
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