When Banks Required to Disclose Customer Information

When Banks Required to Disclose Customer InformationBank has an obligation to take utmost care in keeping secrecy about the account of its customers. But sometimes, banks might require disclosing the customers’ information that might require a law or permitted by the banker’s practices and usages.

Disclose of information required by law

A banker is under a statutory obligation to disclose the information relating to his customer’s account when the law specifies required to do so.

The banker would, therefore, be justified in disclosing information to meet the following statutory requirements:

  • Under the income tax act.
  • Under the company acts.
  • Disclose to the police.
  • Under the foreign exchange regulation act.

Disclose permitted by the banker’s practices and usages

The practices and usages customary amongst bankers permit the disclosure of certain information under the following circumstances:

With express or implied consent of the customer

The will be justifiable in disclosing any information relating to his customers account with the letters of consent. The consent of customers may be expressed or implied.

To protect his own interest.

The banker may disclose the state of his customer’s account to protect his own interest legally.

Banker reference

Banker follows the practice of making necessary esquires about the customers, their sureties or the acceptors of the bills from other bankers.

This is an established practice amongst the banker and is justifiable because an implied consent of the customer is presumed to exist.

Duty to the public to disclose

The banker may justify disclosing any information relating to his customer’s account when it is his duty to the public to disclose such information; such a situation is:

  1. When a bank asked for information from government officials concerning the commission of a crime.
  2. Where the bank considered that the customer is involved in activities prejudicial to the interest of the country.
  3. Where the bank’s book reveals that the customer is contravening the provision of any law.
  4. Where sizable funds are received from foreign countries by a constituent.

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