The Calcutta High Court has directed the RBI to reconsider an NBFC's surrender plea, emphasizing the need for a fair hearing before rejection based on meeting performance benchmarks.
Calcutta HC Directs RBI on NBFC Surrender Plea
The Calcutta High Court has ruled that the rejection of an NBFC's application for surrendering its registration solely based on meeting performance benchmarks is unsustainable unless an opportunity for a hearing is provided. This landmark ruling underscores the importance of procedural fairness in regulatory practices.
The court's directive highlights that the Central Bank must take into account the completeness of due process before making significant decisions that can affect the standing of financial entities. It further emphasizes the necessity of transparent communication and fair hearings in matters that heavily impact operational viability.
Legal professionals representing NBFCs should closely examine this ruling and prepare their clients for scenarios where procedural fairness may come into play, particularly in cases involving regulatory decisions regarding registrations and compliance.
Citations
- Calcutta HC Order (2026) High Court
