Supreme Court Overturns Mandatory National ID for Bank Accounts, Orders Data Protection Act
The Supreme Court's joint bench has annulled Nepal Rastra Bank's mandatory requirement of a National ID for KYC updates or mobile number changes at banks and financial institutions. The court issued a mandamus to provide banking services based on other identity documents including citizenship, and directed the creation of a separate data protection act.
Kathmandu. The joint bench of the Supreme Court has overturned the mandatory provision issued by Nepal Rastra Bank that required customers to mandatorily submit a National Identity Card (NID) or its number while updating Know Your Customer (KYC) details or changing mobile numbers at banks and financial institutions.
The court issued this order on Friday while conducting the final hearing of a writ petition filed by advocate Sarita Adhikari on Ashad 8 last year, which had been postponed nine times. The joint bench of Justices Sapana Pradhan Malla and Meghraj Pokharel issued the order.
Advocate Adhikari had filed the writ petition under Article 46 and Article 133, sub-clauses 2 and 30 of the Constitution, naming the Office of the Prime Minister and Council of Ministers, Ministry of Home Affairs, Department of National ID and Civil Registration, Nepal Rastra Bank, and Nepal Investment Mega Bank Ltd. as defendants.
The petition argued that the mandatory requirement of a National ID by banks, under the coordination and direction of Nepal Rastra Bank and the Ministry of Home Affairs, had deprived millions of ordinary citizens, senior citizens, persons with disabilities, and those without technical access across the country from operating their bank accounts and accessing financial services.
The provision in Nepal Rastra Bank's Unified Directive, 2082 (Monetary Directive No. 19/082) that made the National ID or its number the sole basis for citizen identification is annulled to that extent by the certiorari order.
A mandamus has been issued to the defendants to conduct a two-channel test (dual-system test) and provide banking services based on other identity documents including citizenship certificates until a National ID or number is obtained. Following this decision, citizens without a National ID or number will also be able to easily access banking services based on citizenship and other identity papers.
The government had earlier decided to make the National ID mandatory for renewing social security allowances in phases from Shrawan 1, 2081. However, after widespread opposition, the government was forced to postpone the deadline.
Order to Enact Data Privacy Act
A directive order has been issued to the defendants to initiate the process of creating an independent act on comprehensive data protection to ensure full security of personal data, guarantee privacy, and protect digital rights. As the court has ordered the creation of a separate data protection act for the security and privacy of personal data, it is expected to establish a long-term legal foundation for the protection of citizens' personal information.
A certiorari order is issued to cancel or annul decisions or arrangements made by any public body or official exceeding jurisdiction or illegally.