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DUTY OF SECRECY
- A Bank is legally obliged to keep the affairs of his customer secret.
- Section 13 of the Banking Companies (Acquisition & Transfer of Undertaking) Act, 1970 requires nationalised banks not to divulge any information relating to the affairs of constituents except in circumstances in which they, in accordance to the law or practice customary among bankers, are required to do so.
CIRCUMSTANCES WHERE DISCLOSURE IS AUTHORISED BY LAW
- Order of Court
- Disclosure as per Income Tax Act, 1961.
- Criminal Procedure Code, 1973.
- Foreign Exchange Management Act.
- Companies Act, 1956.
- RBI Act, 1934.
CIRCUMSTANCES WHERE DISCLOSURE IS PERMITTED AS PER BANKING PRACTICE
- Disclosure to another Bank.
- Disclosure as per express or implied consent to the customer.
- Disclosure in public interest.
- The obligation to maintain secrecy continues even after the account is closed.
Disclosure under Banking Practices:
- It is customary among bankers that they obtain necessary information about parties from other bankers where these parties are maintaining accounts, in order to ascertain their financial position and credit worthiness. Disclosure under this clause would be fully justified and implied consent of the customer is presumed to exist.
- While disclosing information under Bankers reference, following precautions must be observed.
- Opinion must be based on the dealing with the customer and not on market report or rumors.
- Disclosure should be by a general statement and not by actual figures. It should be so balanced that it should be neither too low nor to high in its sense.
- Disclosure must be impartial and without prejudice.
- Information should be as per IBA format in general terms such as:
Very Small Means |
(Rs.0.10 lac or less) |
Small Means |
(Rs. 0.10 to 0.25 lac) |
Moderate Means |
(Rs. 0.25 to 0.50 lac) |
Moderate to Fair Means |
(Rs. 0.50 to 1 lac) |
Fair Means |
(Rs. 1 to 2 lac) |
Fairly Good Means |
(Rs.2 to 3 lac) |
Good Means |
(Rs. Rs.3 to 10 lac) |
Very Good Means |
(Rs. 10 to 25 lac) |
Large Means |
(Rs. 25 to 50 lac) |
Very Large Means |
(Over Rs. 50 lacs) |
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