mumbai the reserve bank will shortly come out with revised guidelines on fraudulent account classification to take into account the recent apex court order that asked lenders to ensure natural justice to a defaulter before labelling him a fraudsterthe sc has given a judgement saying natural justice has to be provided to a borrower before declaring him a fraudsubsequently hearing a review petition filed by sbi the apex court clarified that there was no need to give a personal hearing mukesh jain the deputy governor in charge of banking supervision told reporters during the postpolicy presser here on thursdaythough state bank moved the court with a review petition seeking to know whether the march 27 order only applied prospectively and not affect past decisions the court led by chief justice dy chandrachud on may 13 refused to review the order but clarified that a personal hearing meant only that a defaulter should be given adequate notice and an opportunity to make a representation and also that the order would apply only prospectivelyjain further said the rbi is reviewing the entire guidelines on the fraud classification in consultation with various stakeholders and will come out with our guidelines very shortlybut nevertheless the sc judgement is applicable to all the regulated entities irrespective of rbis guidelines he saidin an order on march 27 the apex court had said banks should provide a reasonable opportunity of hearing to borrowers before declaring an account as fraudupholding a 2020 order of the telangana high court a bench of chief justice dy chandrachud and justice hima kohli had said the classification of an account as a fraud not only resulted in reporting the crime to investigating agencies but also had other penal and civil consequences for the borrowersthe principles of natural justice demand that the borrowers must be served a notice and given an opportunity to explain the conclusions of the forensic audit report it saidconsistent with the principles of natural justice the lender banks should provide an opportunity to a borrower by furnishing a copy of the audit reports and allow the borrower a reasonable opportunity to submit a representation before classifying the account as fraud a reasoned order has to be issued on the objections addressed by the borrower the bench saidthe judgement was delivered on pleas relating to the reserve bank frauds classification and reporting by commercial banks and select fis directions 2016 which were challenged before different high courts primarily on the ground that no opportunity of being heard is envisaged to borrowers before classifying their accounts as fraudulentelaborating on the consequences when a borrowers account is declared fraud the apex court said this virtually leads to a credit freeze for the borrower who is debarred from raising finance from financial markets and capital marketsthe top court said 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 191g of the constitutionsince debarring disentitles a person