The Supreme Court of India recently dismissed a Public Interest Litigation (PIL) filed by petitioner Justeen Barwa, which sought the formation of an Expert Committee to investigate alleged fraudulent loan transactions and the development of a national regulatory framework for personal loans.
A division bench comprising Justice Surya Kant and Justice Joymalya Bagchi heard the matter on 14 July 2025, in Writ Petition (Civil) No. 583/2025. After briefly hearing the arguments, the bench permitted the petitioner to withdraw the petition, allowing him to approach the Reserve Bank of India (RBI) instead.
"It’s the domain of the subject experts… RBI is the expert, go and approach them,"— Justice Surya Kant
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During the hearing, the petitioner's counsel highlighted how borrowers were often granted personal loans exceeding their income levels, resulting in unsustainable EMIs. However, the Court was clear that these concerns fell under the regulatory purview of RBI.
The PIL had named Union Ministry of Finance, RBI, and various financial institutions as respondents. It made several critical requests:
- Constitution of an Expert Committee with members from banking, financial, and insurance sectors to investigate loan sanction practices.
- Directing the Union and RBI to draft guidelines to:
- Cap the number of unsecured personal loans per individual.
- Enable real-time credit tracking across lenders.
- Creation of a Public Registry of Lending Applications and Approvals (PRLAA), integrated with CIBIL and other credit agencies for real-time alerts.
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- Implementation of a cooling-off period between consecutive loans by scheduled banks.
- Independent audit of loan sanctioning in 12 cited cases, with possible restructuring or moratorium for affected borrowers.
- Declaration that certain bank actions violated RBI norms and should attract penalties.
- Launch of an online database listing all RBI-registered advisors, NBFCs, digital loan facilitators, and complaint redress mechanisms to curb impersonation.
- Framing of comprehensive RBI guidelines under Section 35A of the Banking Regulation Act, 1949, for a national Debt Exposure Capping Mechanism.
Despite these elaborate prayers, the Court chose not to intervene and advised the petitioner to seek redress from the RBI, the appropriate regulatory authority.
“Permission, as prayed for, is granted. The Writ Petition is accordingly dismissed as withdrawn with liberty as aforementioned.”— Supreme Court Order dated 14-07-2025
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Case Title: JUSTEEN BARWA Versus UNION OF INDIA AND ORS., W.P.(C) No. 583/2025