New Delhi, Sept. 18 -- The Supreme Court has directed the Reserve Bank of India (RBI) to ensure genuine compliance by banks and Non-Banking Financial Companies (NBFCs) with its guidelines on loan recovery, observing that borrowers cannot be dispossessed of hypothecated assets through force, stealth or without due legal process.

A bench of Justices PS Narasimha and Alok Aradhe issued the direction while allowing an appeal by truck owner Hari Dutta Sharma against an Allahabad High Court order.

The Court ordered Cholamandalam Investment and Finance Company Ltd to close his loan accounts and refund Rs 4.5 lakh, being the sale proceeds of his vehicle, with six per cent annual interest. It also awarded Rs 10 lakh compensation for mental agony...