Banks may ask you for your religion details

BENGALURU/MUMBAI: Soon, banks may introduce a new column in ‘know your customer’ (KYC) forms for their depositors and clients to mention their religion.

This requirement has arisen in the wake of the recent changes made to Fema Act regulations, which extend the benefits of opening NRO accounts and holding property to select religious minorities, excluding Muslims.

Eerily similar to the Citizen (Amendment) Act, the amendments by the Reserve Bank of India to the Foreign Exchange Management Regulations, issued in 2018 are limited to migrants who are from minority communities — Hindus, Sikhs, Buddhists, Jains, Parsis and Christians — from Pakistan, Bangladesh and Afghanistan and hold long-term visas (LTVs). These LTV holders can buy residential property and open bank accounts in India.

The rules exclude atheists, Muslim migrants as well as those from other neighbouring countries such as Myanmar, Sri Lanka and Tibet. RBI said it had no comments to an emailed questionnaire sent by TOI.

The amendment to Schedule 3 of the Fema (Deposit) regulations states: “A person being a citizen of Bangladesh or Pakistan belonging to minority communities in those countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians who is residing in India and has been granted a Long Term Visa (LTV) by the central government is permitted to open with an authorized dealer only one NRO Account. The said NRO account shall be converted to a resident account once the person becomes a citizen of India within the meaning of the Citizenship Act, 1955.”

The Fema (Acquisition and Transfer of Immovable Property in India) Regulations, says, “A person being a citizen of Bangladesh, Pakistan or Afghanistan belonging to minority communities in those countries — Hindus, Sikhs, Buddhists, Jains, Parsis and Christians and granted an LTV, may purchase only one residential immovable property in India as dwelling unit for self-occupation and only one immovable property for carrying out self-employment.”

A source in the finance ministry said that the changes were made last year, when the focus for many financial pundits, bureaucrats and politicians was on the financial implications. “No one would have expected a religious discriminatory clause in rules relating to banking.”

Prior to the amendment, a foreign national, irrespective of his religion and the country of origin, could open FA resident accounts for longer durations and NRO accounts for a short-period of six months. With regard to residential property, earlier the regulation was foreign citizens — who reside in India for more than six months — and who are not citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan can purchase residential property in India.

“It is news to me that the Fema Act —primarily a financial regulation — has a religious cause,” said the CEO of a public sector bank. “For KYC forms for savings and current accounts, we do not ask for religion. We ask for nationality while opening FA and NRO accounts,” said a top banker from another PSB.

Emails to 10 public and private sector banks showed that religion is not a criterion till date for opening an account.

Banking analysts on Dalal street, who did not want to be quoted, said that the regulation was a surprise, as its an unheard-of bar or norm based on religion for investment. Activists and lawyers say this is unconstitutional. “This is absolutely scandalous and unconstitutional. There is no basis for discrimination by religion under Article 14. You can prohibit investment in a particular activity - like earlier they didn't want foreign migrants to get involved with plantation and agriculture. But this is outrageous,” said Rabindra Hazari, a lawyer at the Bombay high court.

Kannan Gopinathan, who recently resigned from the IAS in protest against the blockade in Kashmir, said, the change in rules were is in line with the policies of the current government. “How can they define religion or faith, which is fluid and dynamic? People can become atheists or convert to Buddhism - there is no practical applicability. It will just serve as a tool for humiliation and making Muslims feel second-class in every way.” He feels there are concerted efforts, like through CAA and Fema, to bring in laws to segregate and isolate people destroy India’s democratic fabric.