New Delhi, April 9 -- In a crucial ruling for the banking sector, the Supreme Court clarified that banks are not required to provide borrowers a personal or oral hearing before classifying their accounts as fraudulent. On Tuesday, the court held that a written process is enough to satisfy principles of natural justice.

Mint explains the case, the ruling, and what it means for fraud detection by banks and for borrowers.

The case before a two-person Supreme Court bench arose from appeals filed by banks, including State Bank of India and Bank of India, against orders of the Calcutta and Delhi High Courts. These courts had set aside fraud classifications on the ground that borrowers were not given personal hearings.

In these cases, banks h...