“Go to RBI”: Supreme Court Declines PIL Seeking Probe into Fraudulent Loan Transactions

The Supreme Court declined to entertain the public interest litigation seeking a probe into fraudulent loan transactions, directing the petitioner to approach the Reserve Bank of India instead.

On 14 July 2025, the Supreme Court Bench comprising Justices Surya Kant and Joymalya Bagchi, while adjudicating a Public Interest Litigation (PIL), held that matters relating to the regulation and investigation of loan transactions fall within the exclusive domain of the Reserve Bank of India (RBI). Accordingly, the Court declined to entertain the PIL and granted liberty to the petitioner to approach the RBI instead.

The Supreme Court of India declined to entertain a public interest litigation that sought far-reaching directions concerning alleged fraudulent loan transactions and unregulated personal lending practices. The petitioner had prayed for the constitution of an Expert Committee comprising professionals from the banking, financial, and insurance sectors to investigate the matter and to propose a national framework for regulating personal loan disbursements.

The petitioner had impleaded the Union Ministry of Finance, the Reserve Bank of India (RBI), and various banks and financial service providers as respondents. The PIL sought several regulatory measures, including capping the number of unsecured personal loans per individual, mandating real-time inter-lender credit tracking, and the creation of a public registry of lending applications integrated with credit bureaus like CIBIL. It also urged the RBI to introduce a national debt exposure capping mechanism under Section 35A of the Banking Regulation Act, 1949.

During the hearing, the petitioner’s counsel raised concerns about excessive loan disbursals far exceeding borrowers' income levels, which resulted in high EMI burdens and financial stress. However, the Bench comprising Justices Surya Kant and Joymalya Bagchi was firm in its view that the subject matter fell squarely within the domain of the RBI. Justice Kant advised, “Go and approach RBI,” emphasising that the RBI, as the expert regulator, was the appropriate forum to consider such systemic issues.

Following this observation, the counsel for the petitioner sought permission to withdraw the writ petition with liberty to approach the Reserve Bank of India. The Court granted the request, and the writ petition was dismissed as withdrawn, with liberty to pursue remedies before the RBI.

Mr. Prasenjit Keswani, Sr. Advocate, with Mr. Upmanyu Tewari, Mr. Sunit Kumar Toppo, Mr. Raavi Kumar Jotwani, Mr. Alok Raj, Mr. Ayaan Thakur, Mr. Harnaman Singh, Advocates and Mr. Anubhav, AOR, represented the Petitioner.

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REEDLAW 2025 SC 07007