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Banks can't freeze accounts if KYC documents not supplied: HC

Last Updated: Monday, April 2, 2012 - 00:16

Ahmedabad: The Gujarat High Court has ruled that banks cannot freeze accounts nor can they stop issuing cheque book or providing ATM facility where the account holder has not supplied KYC (Know Your Customer) documents.

The court has further ruled that presence of the account holder was not a 'must' for production of documents required for KYC.

The ruling was given by division bench of justices Jayant Patel and Paresh Upadhyay last week while hearing a petition seeking temporary bail filed by one of the convicts of the 2008 Patan gangrape case, serving a life term.

The accused Ashwin Parmar had approached the high court for temporary bail on the ground that he was required to remain himself present at the State Bank of India branch to submit documents under KYC norms.

If he did not submit KYC documents, the bank would freeze his account or stop other banking facilities, he claimed. The court, however, did not appreciate the rule governing KYC norms.

"For production of the documents required for KYC, personal presence of the account holder is not a must. If such documents are submitted by duly authorised representative of the account holder, the Bank is required to accept the same," the court ruled.

"If documents of KYC are not supplied by the account holder, such account cannot be freezed nor the facility of the cheque book or ATM can be stopped by the Bank," it further stated.


First Published: Monday, April 2, 2012 - 00:16
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