Bombay HC stays PSU banks’ action against Anil Ambani; says RBI master directions are ‘not a mere paper Tiger’
2 min read
The Bombay High Court has stayed all present and future actions by three banks seeking to declare the accounts of Anil Ambani and Reliance Communications Ltd as fraud, citing violations of the RBI’s Master Directions.
| Photo Credit:
VIVEK BENDRE
The Bombay High Court granted interim relief to Anil Ambani in proceedings linked to Reliance Communications group companies on Wednesday, restraining public sector banks from taking coercive measures. The court emphasized that lenders cannot treat the Reserve Bank of India’s Master Directions as optional guidelines, stressing they are legally binding norms that banks must adhere to.
Justice Milind N Jadhav stayed actions by Bank of Baroda, IDBI Bank, and Indian Overseas Bank—including show-cause notices and fraud classification orders—after noting procedural breaches in invoking RBI norms against Ambani and RCom. The forensic audit report (FAR) from October 15, 2020, which formed the basis for the banks’ actions, was deemed incomplete and invalid as it lacked signatures from a qualified Chartered Accountant.
The court asserted that lenders could not rely on such a flawed audit to initiate proceedings, stating: “The FAR cannot justify the show-cause notices or subsequent coercive steps.” It further clarified that classifying accounts as fraud solely based on non-compliant audits violates legal standards.
In sharp remarks, Justice Jadhav underscored RBI guidelines as mandatory, criticizing banks for delays and procedural lapses: “The Master Directions are not a paper tiger to be revived at convenience after years of inaction.” The order highlighted systemic failures, noting how timely action under RBI frameworks could have averted the situation.
Describing the scale of alleged financial discrepancies—including ₹31,580 crore in diverted loans—the court stressed banks’ accountability to protect public funds. “Banks hold public savings in trust. When they bypass due process, they jeopardize both individual trust and the broader economy,” the judgment stated.
Published on December 24, 2025
