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No need to appear in person for 'Know Your Customer' checks: Guj HC

Holders of a bank account can deposit a true copy of the documents through their official representative, the high court said.

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In a recent judgement, the Gujarat high court ruled that there is no need for holders of a bank account, including those lodged in jail, to remain present before bank officials for submitting documents related to Know Your Customer (KYC) policy of banks. They can deposit a true copy of the documents through their official representative, the high court said.

This important ruling by the bench of justices Jayant Patel and Paresh Upadhyay will give great relief to all holders of bank accounts, particularly prisoners.

The bench asked the Chief General Manager (CGM) of the State Bank of India (SBI) to issue a circular to all its branches and also directed the jail authority to circulate this order to all jails in the state.

"For submission of KYC documents, the presence of the account holder is not a must and it is open to the account holder to submit the document through his authorised representative," the bench said while delivering the order.

The bench further said that the bank [SBI] had produced no circular or instruction from the RBI to indicate that original documents for KYC verification have to be produced by the account holder.

"We find that for the production of documents, a xerox copy or a photostat copy of the same can be accepted by the bank provided such a true copy is certified either by a notary public or by a gazetted officer or any competent authority who has the power to certify the copy as true copy," the court said.

The bench further said that the above modality could be followed in cases where the bank has no doubt about the genuineness of the document or genuineness of the account holder.

Regarding prisoners who are account holders, the bench said that in addition to the above, the bank can, if it desires, get the documents of the prisoner verified. For this, the bank may take the assistance of the jail authority. The court further said that until the aspect that the bank wants to verify is duly verified, the account of a prisoner cannot be frozen nor can cheque book or ATM facilities be withdrawn unless this is permissible under law.

The court gave this verdict in the case of Ashwin Parmar, who is currently lodged in Sabarmati jail. Parmar had sought temporary bail from the high court on the ground that he is required to submit KYC documents at the Chandkheda branch of the SBI. The bank had insisted that it would close or freeze his account if he did not produce the documents.

The court had then sought an explanation from the CGM of SBI and raised several queries. The bench finally rejected Parmar's plea and asked the bank to accept the documents through an authorised representative of the jailed account holder.

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