Banks and financial institutions must strictly adhere to RBI guidelines and Supreme Court precedents during loan recovery to ensure the process is not arbitrary or coercive, thereby protecting the constitutional rights of the borrowers.

O R D E R

This writ petition has been filed seeking the following prayer:-

“to issue an appropriate writ, order, or direction, more particularly in the nature of writ of mandamus declaring the action of respondent Nos.3 to 12 in attempting to recover amounts from the petitioner in an arbitrary, illegal, and high handed manner without following the due process of law and in blatant violation fo the Reserve Bank of India Circular dated 12.08.2022 bearing No.RBI/2022-23/108, DOR, ORG.REC.65/21.04.158/2022-2023, and further declaring the inaction of respondent No.2 in enforcing the said circular as un-constitutional and violative of Articles 14,19 and 21 of the constitution of India, and consequently direct the respondent authorities to refrain from undertaking any coercive or unlawful recovery measures against the petitioner and to strictly comply with the due process of law and the aforesaid Circular in all recovery proceedings and further restrain respondent Nos 3 to 12 their agents recovery agents executives managers or any person acting on their behalf from engaging in any acts of intimidation harassment humiliation or intrusion into the privacy of the petitioner or his family members referees or friends including persistent or anonymous calls threatening messages or physical visits to the petitioner s premises and further direct respondent No 2 to enforce the said RBI Circular in letter and spirit and to initiate appropriate and stringent action against the errant officials of respondent Nos. 3 to 12 for violating legal norms and pending disposal of the writ petition direct the respondent Nos. 3 to 12 not to resort to any coercive measures against the petitioner except through lawful means and in strict adherence to the Circular dated 12/08/2022...”

2. The case of the petitioner, precisely as per the writ affidavit, is that he availed loans and Credit Cards from respondents No.3 to 12 (who are Banks and financial institutions), and he has been promptly repaying by borrowing from others, and he did not make the last few payments to the respondents No.3 to 12; and the petitioner is in difficult situation in meeting his expenses. While so, it is the grievance of the petitioner that the representatives/agents of respondents No.3 to 12 are continuously calling, and intruding into the house of the petitioner and threatening him to repay the loans, and that the procedure adopted by the respondents No.3 to 12 is not as per the RBI Guidelines for recovery of loans, and therefore the petitioner seeks a direction to the respondents No.3 to 12 to follow due process of law for recovery of loans.

3. Counter affidavits have been filed on behalf of respondent No.4-ICICI Bank, and respondent No.10-HDFC Bank and respondent No.12-Shriram Finance, essentially contending that the petitioner has availed loans/credit facility and has defaulted in monthly repayments, and that the respondents are scrupulously adhering to the RBI Circular dated 12.08.2022 for recovery of loans, and the allegations of harassment, intimidation, coercive recovery, or any unlawful conduct by the Bank staff agents are categorically denied.

4. Heard Mr. Bonthu Lokesh Phanindra Reddy, learned counsel for the petitioner, and learned Standing Counsel for respondent No.2-RBI. Perused the record.

5. At the hearing, learned counsel for the petitioner submits that this Court in W.P.No.5200 of 2024, dated 25.04.2024, by referring to the law laid down by the Hon’ble Supreme Court in ICICI Bank Ltd. vs. Prakash Kaur ¹(2007) 2 SCC 711 and ICICI Bank vs. Shanti Devi Sharma²(2008) 7 SCC 532 directed the banks and financial institutions to