Banks can’t freeze accounts if Know Your Customer papers not submitted

.......The court also noted that the Reserve Bank of India also specifically provides for opening of accounts by low income group people who are unable to provide KYC documents. Banks are required to open accounts for such persons on the basis of an introduction from an account holder who has complied with all the KYC procedures and whose account is with the bank for at least six months with satisfactory transactions. The low income group account holders, whose accounts are opened in this manner, have a restriction that the total balance in their accounts cannot exceed Rs 50,000, and the total credit deposits cannot exceed Rs1 lakh per year. The court observed that in the present case, the account had been opened long back, yet the account had been illegally frozen. The court warned that if a bank freezes an account for non-compliance of KYC documents, appropriate action could be initiated against it either by the Reserve Bank or the Banking Ombudsman, so are required to safeguard the interests of all account holders......

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