6. What are the circumstances under which a banker would be justified in disclosing the accounts of its customer?

The relationship between a banker and a customer is primarily fiduciary and confidential. One of the essential duties of a banker is to maintain the secrecy of a customer’s account. However, this confidentiality is not absolute and is subject to certain legal exceptions where disclosure is permitted or required.

This principle is recognized under common law, supported by the Bankers’ Book Evidence Act, 1891, and reinforced through judicial decisions. Let us now explore in detail the circumstances under which a banker is legally and ethically justified in disclosing customer account information.

Legal Nature of Confidentiality in Banking

The duty of confidentiality stems from the fiduciary relationship between a banker and customer, reinforced by various case laws including:

• Tournier v. National Provincial and Union Bank of England (1924)
  This landmark case established four broad exceptions where disclosure is justified:
  1. Under compulsion of law
  2. In the public interest
  3. In the bank’s interest
  4. With the express or implied consent of the customer

Circumstances Justifying Disclosure of Customer Account Information

1. Disclosure Under Compulsion of Law
When a statutory or judicial authority requires disclosure, the banker must comply. Examples include:

• Under court orders, including summons and subpoenas
• Under Income Tax Act, Prevention of Money Laundering Act (PMLA), or Banking Regulation Act
• When required by police, CBI, or Enforcement Directorate under legal authority

2. Disclosure in Public Interest
If the banker reasonably believes that non-disclosure may harm the public, such as when:

• The customer is suspected of terrorist financing, money laundering, or fraud
• Disclosure is necessary to prevent a crime
• Reporting to authorities under Suspicious Transaction Reporting (STR) obligations

3. Disclosure in Bank’s Own Interest
When it is necessary to protect the bank’s legal or financial interests, such as:

• To initiate legal action against a customer for loan default or fraud
• To defend itself in a court case or regulatory inquiry
• During a credit risk evaluation before granting a loan or credit facility to another party

4. Disclosure with Customer’s Consent
When the customer has given explicit or implied consent, including:

• For loan references or creditworthiness verification
• When the customer issues a letter of authority or power of attorney
• While giving bank statements to auditors, legal representatives, or tax consultants

5. Disclosure to Credit Rating Agencies
Banks are permitted to share credit data with authorized credit information companies (CICs) such as:

• CIBIL (Credit Information Bureau of India Limited)
• Equifax
• Experian
• CRIF High Mark

Such disclosures help in building a customer’s credit score and are deemed to have implied consent.

6. Disclosure to Guarantors or Co-Borrowers
When a loan is secured with a guarantor, the bank may inform the guarantor about:

• The borrower’s default
• Status of repayment

This ensures the guarantor’s accountability and is a valid justification.

7. Disclosure Under Bankers’ Book Evidence Act, 1891
When banking records are required as evidence in a legal proceeding, the bank may:

• Submit copies of ledger accounts, statements, or transaction logs
• Share documents with the court or investigative agencies

Legal Safeguards Against Unauthorized Disclosure

• The bank must ensure that disclosures are made only to authorized persons.
• Customer consent must be well-documented if relied upon.
• Unauthorized disclosure may lead to:
  • Loss of reputation
  • Legal action for breach of confidentiality
  • Penalties under data protection laws

Quick Reference Table (Mnemonic Code: “CLIP-GC”)

Code	Disclosure Ground	Description
C	Compulsion of Law	Disclosure required by courts or government authorities
L	Legitimate Bank Interest	Disclosure to protect the bank’s own interest
I	Implied or Express Consent	Disclosure with customer’s permission
P	Public Interest	Disclosure to prevent fraud or protect public welfare
G	Guarantor/Co-borrower Disclosure	Disclosure for accountability of third-party obligors
C	Credit Agencies (CICs)	Disclosure to credit bureaus for credit scoring