Calcutta High Court: Criticizes HDFC Over Banerjee Account Blocking

• The Calcutta High Court criticized HDFC Bank for blocking TMC leader Abhishek Banerjee's account and cards on the same day the Supreme Court allowed him to travel abroad.
• HDFC Bank cited additional due diligence and KYC document requirements, mandating a physical branch visit for resolution.
• Justice Krishna Rao questioned the bank's insistence on a physical visit for KYC, asking about its e-KYC capabilities and comparing it to online government services.
• The court instructed HDFC Bank to inform Mr. Banerjee's advocate of the specific documents needed for submission, rather than demanding his personal presence.

The court questioned why the bank had insisted on Banerjee visiting its branch merely for KYC verification.

The Calcutta High Court recently voiced strong criticism against HDFC Bank regarding the suspension of Trinamool Congress (TMC) leader Abhishek Banerjee's bank account. This judicial intervention, which occurred on a Thursday, arose in the context of the case *Abhishek Banerjee v. Union of India*, where the court questioned the bank's operational procedures.

The controversy began when Mr. Banerjee's HDFC Bank account, along with his associated credit and debit cards, was blocked. This action by the bank notably coincided with the very day the Supreme Court had granted him permission to travel abroad for medical treatment, specifically for an eye condition. Senior Advocate Ayan Bhattacharya, representing Mr. Banerjee, informed the court that the bank's communication indicated a temporary suspension, citing the need for an 'additional due diligence exercise.' Crucially, the bank's directive stipulated that Mr. Banerjee would need to personally visit a branch to resolve the matter.

During the proceedings, HDFC Bank's counsel explained that the suspension stemmed from a requirement for certain additional Know Your Customer (KYC) related documents from Mr. Banerjee. However, Justice Krishna Rao of the Calcutta High Court expressed significant reservations about the bank's insistence on a physical visit for what appeared to be a routine KYC verification process. The judge directly questioned the bank's adherence to modern digital practices, asking, 'Your bank is not on e-KYC?'

Justice Rao further highlighted the discrepancy between the bank's demand and contemporary administrative norms, noting that 'Nowadays, even the government offices are doing everything online.' He suggested that if the bank's primary concern was to 'see the face of the client,' a photograph might be sufficient. The judge's remarks underscored a broader concern about the bank's customer service approach, questioning, 'This is the way the bank is doing the business with the customers?'

This ruling signals judicial scrutiny over banks' insistence on physical KYC verification when digital alternatives exist, particularly in India where e-KYC frameworks are increasingly prevalent. The Calcutta High Court's pointed questions regarding HDFC Bank's e-KYC capabilities and its comparison to online government services suggest a judicial expectation for financial institutions to embrace and effectively implement digital solutions for customer due diligence. The court's stance implies that banks should not unduly burden customers with physical visits for verification processes that can be handled remotely.

The court's directive for the bank to communicate the specific required documents to Mr. Banerjee's advocate for submission, rather than demanding a personal appearance, sets a precedent. This approach aims to streamline the resolution process and reduce inconvenience for customers, particularly when a bank account suspension legal challenge arises. It underscores the judiciary's role in ensuring that banking practices align with both regulatory requirements and customer convenience, pushing for a more digitally-forward approach to banking customer due diligence in India.

This ruling signals judicial scrutiny over banks' insistence on physical KYC verification when digital alternatives exist. Compliance officers should review their customer due diligence policies to ensure they align with modern e-KYC expectations and avoid potential legal challenges or judicial criticism.

Source: Original reporting via Bar and Bench