Karnataka High Court issues notice to RBI over PIL against ‘self-created’ bank rule

BENGALURU: The Karnataka High Court has issued notice to the Regional Director of Reserve Bank of India (RBI), Indian Banking Association, and Chief Secretary, Government of Karnataka, while hearing a public interest litigation seeking directions to RBI to help people facing hardships due to the alleged ‘self-created rules’ by the public sector as well as commercial banks, which ask customers to either open a bank account or make payment by cheque for issue of Demand Draft (DD). 

The division bench of Acting Chief Justice L Narayana Swamy and Justice P S Dinesh Kumar was hearing the petition filed by Ramesh Naik, an advocate from Tumakuru. 

“People who need to get banker’s demand drafts are suffering a lot due to the self-created rules of public sector banks of accepting no cash payments even for smaller amounts,” the petitioner said. 
The petitioner contended that this insistence of banks to accept payment only by way of cheque or asking customers to have an account for getting a banker’s demand draft for even a small amount, is in violation of the direction issued by the regulator of banking and financial companies, which is RBI.

“According to the ‘Master Direction - Know Your Customer (KYC) Direction, 2016’ issued by RBI, to all the commercial banks with respect to the ‘Issue and Payment of Demand Draft’, in item No.66 provides for the cash payment for the issue of DD for any amount below `50,000,” Naik said.