RBI, the apex Banking regulator in India has issued guidelines on Internet
Banking to all Banks operating in India.
According to the guidelines, new accounts can be opened only after proper
introduction and physical verification of the identity of the customer.
The normal procedure in Banks is for the applicant and the introducer to
sign the required forms in the presence of an officer of the Bank after
which the officer would verify the signature of the Introducer.
The purpose of the Introduction is to verify the name of the applicant
and the address quoted in the application form. It is not a "Credit Verification"
nor a guarantee against any fraud that may be committed by the account
holder at a later time. (Conspiracy excluded).
Even though, Introduction is normally taken from another account holder,
it is not uncommon to accept the introduction from a prominent person in
the locality known to the Bank. The end objective of Introduction is to
enable the banker to get protection under Section 131 of the Negotiable
Instruments Act 1881. According to the banking practice as developed over
time, the Banker has to act "Without Negligence" in opening of the account
to be eligible for protection.
In the E-Banking era, the Digital Certificate of a person can be more
than an acceptable identification since the procedure adopted by the Certifying
authorities for issue of certain classes of Certificates can be more rigorous
than the usual procedure adopted by Bankers for introduction. (e.g. Certificate
issued by Thawte under web of trust).
RBI's notification that Banks should insist on "Physical verification"
before opening of an account, could in due course be considered as a "Banking
Practice" against the use of Digital Certificates as a means of introductory
It is therefore necessary for Banks to request RBI to include "Digital
Certificate" as one of the means of identification that can be used as
an Introduction, provided the Certifying Authority has added the
confirmation of identity and his Certification Practice Statement
indicates an acceptable level of prudence.