Cheque returned by bank for non compliance of kyc
Shirish
(Querist) 23 April 2014
This query is : Resolved
I am having a/c in the bank for last 15 yrs. I had released cheques for my family mediclaim, school fees and electricity bill.Bank has returned all cheques because of non-compliance of KYC norms, which I had submitted without taking acknowledgement. Now, my Mediclaim policy is lapsed in spite of giving cheque well before due date. I had requested bank manager to release the cash at least to make the above payment... saying it is not in his hand since every order is come from head office.
I Need your advice in this matter earliest
for further action. Thank you.
Devajyoti Barman
(Expert) 23 April 2014
Bank is only following RBI guidelines. You must have been informed about such compliance but you ignore the same at your risk.
So now submit the KYC FORM and get the fund disbursed for your utility.
Lapse of mediclaim Policy is a collateral damage for which you can not blame anybody except yourself.
Guest
(Expert) 23 April 2014
If the transactions were not of very high value or of frequent occasions, the bank should not have returned the cheques.
However, for your information, KYC is a regulatory and legal requirement.
Regulatory:
In terms of the guidelines issued by the Reserve Bank of India (RBI) on November 29, 2004 on Know Your Customer [KYC] Standards
–
Anti Money Laundering [AML] Measures: All banks are required to put in place a comprehensive policy framework
covering KYC Standards and AML Measures.
Legal:
The Prevention of Money Laundering Act, 2002 (PMLA) which came into force from July 1, 2005 (after “rules” under the Act were formulated and published in the Official Gazette) also requires Banks, Financial Institutions and Intermediaries to ensure that they follow certain minimum standards of KYC and AML as laid down in the Act and the “rules” framed there under.
So, better make your bank account free from any problem by observing the guidelines.
Rajendra K Goyal
(Expert) 23 April 2014
Well advised, agree with the experts, complete the formalities and get the account in operation.
P. Venu
(Expert) 24 April 2014
The banks action is highhanded and amounts to deficiency in service. You can approach the Consumer forum or make a complaint to the RBI.
T. Kalaiselvan, Advocate
(Expert) 25 April 2014
The bank cannot return the cheque for non compliance of KYC especially with an old and regular customer. This matter can be brought to the notice of the High officials of the bank or even to the Banking Ombudsman, if there is no proper response, the bank can be dragged to consumer forum for deficiency of service. The Bankers could have very well intimated you about the KYC compliance by calling you to the bank but they have no right to dishonor the cheque for this reason.
P. Venu
(Expert) 25 April 2014
http://www.rbi.org.in/scripts/FAQView.aspx?Id=82:-
"12. If I refuse to give information on KYC asked for by the bank, what action the bank can take against me?
Where the bank is unable to apply appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, the bank can consider closing the account or terminating the banking/business relationship after issuing due notice to the customer explaining the reasons for taking such a decision."
Obviously the extant norms give no authority to the bank to dishonour the cheques issued.
dr g balakrishnan
(Expert) 18 October 2014
If returned cheques attract sec 138/142 of negotiable instruments Act 1881, if the beneficiary of cheque files criminal complaint, what is the remedy would be a question before law
so laws are made under conflict of laws principle, so justice William Benson on US SC observed...' Law is not ultimate end in itself but it is some kind of what law maker thinks what is right.
In SARFAESI Act case Madras hgh court observed in 2010 that law is some regulayion. if sec 13 is not dealt properly sec 14 cannot be applied ;
so all these regulations are some safeguards but at the same time very harmful;
even sec. 138/142 is some regulation and it cannot be a great well tested law.
Law makers make laws like sec in income tax Act like sec 271(1)(c) in case of mens rea issues but revenue simply uses without rhyme or reason.
though tax commissioners are punished by heavy penalties, still the revenue misuses the sections to the disadvantage of tax payers.
Law or rules are some kind of regulation subject to correction by courts depending on issues involved.
our law makers being novices unlike British our law making seems there are several holes!
dr g balakrishnan
(Expert) 18 October 2014
KNOWING WHAT'S RIGHT IS NOT MUCH UNLESS YOU DO WHAT'S RIGHT AS PRESIDENT OF U S A MR. THEODORE ROOSEVELT OBSERVED.
WHEN IMPLEMENTER CALLED SO CALLED 'EXECUTIVES' meaningfully work...the bank manager could have called this man t=your cheques have come but i may return if you do not immediately come and fill the so called KYC form,that alert would have saved the troubles is it not!
problem is man has become some automaton only today no application of mind but for this automaton work pay heavy salaries and perquisites !
how great indian governance system is?
only savior is courts but you choke courts with cases no judges to deliver judgements!
dr g balakrishnan
(Expert) 18 October 2014
india simply failed by the too much regulations, laws, mostly insipid, how can you expect every citizen knows all your God forsaken laws so deeply?
similarly indian constitutional amendments which have crossed more than 100, without understanding the implications, in about 65+ years of independence;
see USA has only 26, means US congress is very careful in making laws unlike great indians is proved beyond doubt.
why not courts are not levying penalties on law makers and application experts called public servants is indeed a million $ question faced by indians today!
prabhakar singh
(Expert) 18 October 2014
I think query is restricted to terms whether or not a bank can refuse to pay or dishonor a
cheque for want of non compliance of KYC norms by the account holder.
Experts have divided opinion,perhaps rightly,because nothing is there as law in black and white.
It is a question dependent on facts of each and every case where court would enquirer into finding out party at fault,before arriving at any decision.
Parthasarathi Loganathan
(Expert) 20 November 2015
I fully endorse the expert opinion of our learned friend. Mr.Kalaiselvan. KYC compliance has got nothing to do with the payment of cheques. As a banker, I have immediately called the customer in person to comply with the KYC norms while passing any cheques drawn.
