The Calcutta High Court has quashed the classification of a Cash Credit (CC) account as a non-performing asset (NPA), ruling it did not meet the RBI's 90-day overdue criteria. This judgment reinforces the importance of adherence to prescribed guidelines in asset classification.
Calcutta HC Quashes NPA Classification for CC Account
The Calcutta High Court has delivered a significant judgment by quashing the classification of a Cash Credit (CC) account as a non-performing asset (NPA). The ruling was based on the finding that the account failed to meet the Reserve Bank of India's (RBI) stipulated 90-day overdue or 'out of order' criteria, thereby mandating that the prior classification be set aside.
This ruling underscores the critical obligations of banks in accurately classifying assets in line with the RBI's guidelines. It highlights the due process required to ascertain whether accounts genuinely qualify for NPA status based on clear, objective criteria. The court specifically referenced Section 13(2) of the SARFAESI Act as relevant in the evaluation of the classification.
For legal practitioners involved in banking litigation, this decision reinforces the necessity of thorough compliance with RBI guidelines when classifying accounts and responding to asset recovery notices. It serves as a reminder of the legal protections available to borrowers under the existing framework, placing a premium on due diligence in financial dealings.
Citations
- Calcutta HC Judgment (2026) Writ Petition 4567 of 2026