In a landmark ruling, the Supreme Court of India clarified that banks, including major institutions like the State Bank of India and Bank of India, are not required to conduct oral hearings before designating accounts as fraudulent. The court stated that a written process, which includes issuing show-cause notices and receiving written replies, satisfies the principles of natural justice. This decision emerged from appeals against prior high court rulings that favored borrowers by emphasizing the need for personal hearings. The court acknowledged the impracticality of mandatory hearings, which could delay fraud detection and allow for potential misuse by borrowers. However, it mandated that banks share audit reports with borrowers, enhancing transparency in the process. The ruling is expected to streamline operations for banks, allowing for quicker fraud classifications, which is crucial for maintaining systemic stability. The Supreme Court highlighted the alarming rise in banking fraud, with RBI data showing a jump from 13,494 cases involving ₹18,981 crore in FY 2022-23 to 23,953 cases involving ₹36,014 crore in FY 2024-25. The decision is seen as a compromise, balancing the need for efficiency in fraud detection with the rights of borrowers to understand and respond to allegations against them.