Banking · Banker's Duty of Secrecy
A well-established commercial bank receives a formal request from a private credit rating agency seeking detailed financial information regarding one of the bank's high-net-worth corporate clients to assign a credit rating for a proposed non-convertible debenture issue. The client has not explicitly provided written consent to the bank for this specific disclosure, although the bank believes the rating will benefit the client's fund-raising efforts. Simultaneously, the Income Tax Department issues a notice under Section 131 of the Income Tax Act, 1961, demanding the same information. Considering the banker's duty of secrecy and the established exceptions to this duty, which of the following best describes the bank's legal position regarding the disclosure of this information to both parties?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The bank should disclose the information to both parties because the duty of secrecy is superseded by the bank's own interest to ensure the client remains financially viable through external funding and tax compliance.
- 2The bank can disclose the information to the Income Tax Department as it is a disclosure under the compulsion of law, but it must refuse the credit rating agency unless specific consent is obtained from the customer.✓
- 3The bank must maintain absolute secrecy for both requests as the duty of secrecy is a fundamental contractual term that can only be breached if the customer is declared insolvent by a competent court.
- 4The bank is legally obligated to disclose information to the credit rating agency under the implied consent rule for business advancement but must refuse the Income Tax Department until a court order is produced.
Correct answer
The bank can disclose the information to the Income Tax Department as it is a disclosure under the compulsion of law, but it must refuse the credit rating agency unless specific consent is obtained from the customer.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Banking?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Banker's Duty of Secrecy MCQs →Want more practice questions on Banker's Duty of Secrecy?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Banking · Banker's Duty of Secrecy