ACCORDING to latest reports, Bangladesh Bank has apparently asked Scheduled Banks and Non-Bank Financial Institutions (NBFIs) not to close incomplete KYC (Know Your Client) accounts which were opened before April 30, 2002 as some banks have recently taken steps to seal the accounts, violating the banking rules and regulations. A circular was issued by BB to the Managing Directors and Chief Executive Officers of all banks and NBFIs on saying that the clients were allowed to deposit with their incomplete KYC accounts but they were not able to withdraw funds from the accounts in line with the central bank directives. Data available from the news article shows that BB issued a circular to the banks and NBFIs in 2005 asking them to complete the KYC account information by March 31, 2010. Formalities and data indicate that incomplete KYC accounts after March, 2010 were treated as dormant accounts and the account holders are allowed to deposit only with the accounts and if the account holders applied to the branches of the banks and NBFIs to fill up the KYC accurately, the dormant accounts could be normalized or made operative. But some banks and NBFIs took matters into their own hands and recently closed the dormant accounts to avoid the KYC procedures, which showed their lack of professionalism and violation of central bank directives as well. Such behaviour can only be considered irresponsible and rash on part of the banks and NBFIs as they defied BB’s directives directly and took control of finances away from hard-working people, without any valid reason. As long as the bank account holder is not involved in any illegal finance related activity and has provided necessary documentation at the beginning of opening the account (and maintained the account) it is highly unethical and wrong to completely freeze his/her account just because he/she didn’t submit any new document or information required by the bank. Provisions are already in place to make the account dormant (where only deposits can be made) so that the account holder is notified and can rectify any error in not providing documentation on time. It is not the account holder’s fault if the bank fails to collect required information when the account is being opened and freezing or closing such active accounts is harmful as it adversely affects the livelihood of the earning account holders. In this digital day and age, collecting information has almost become child’s play and banks should incorporate more advanced and readily available means to notify and obtain information from the clients. Freezing or closing accounts is not the only pragmatic solution to the impending problem. Everywhere in the world it can be seen that banks cannot freeze any account for any other reason otherwise stipulated in the contract or unless there is an order from a court of law. It is time the irresponsible banks and NBFIs are held accountable for their almost illegal actions and others should also be made aware that no one can defy laws.
