Policy on Collection of Cheques / Instruments
1.
Introduction:
Keeping
in view the technological progress in payment and settlement systems and the
qualitative changes in operational systems and processes that have been
undertaken by a number of banks, the Reserve Bank of India had, with effect
from 1st November 2004, withdrawn its earlier instructions to
commercial banks on (i) Immediate Credit of
local/outstation cheques, (ii) Time Frame for
Collection of Local / Outstation Instruments and (iii) Interest Payment for
Delayed Collection. The withdrawal of these mandatory guidelines was expected
to enable market forces of competition to come into play to improve
efficiencies in collection of cheques and other
instruments. This collection policy of the Bank is a reflection of our on-going
efforts to provide better service to our customers and set higher standards for
performance. The policy is based on principles of transparency and fairness in
the treatment of customers. The bank is committed to increased use of
technology to provide quick collection services to its customers. This policy
document covers the following aspects:
§
Collection of cheques and
other instruments payable locally, at centres within India and
abroad.
§
Our commitment regarding time norms for collection
of instruments.
§
Policy on payment of interest in cases where the
bank fails to meet time norms for realisation of
proceeds of outstation instruments.
§
Our policy on dealing with collection instruments
lost in transit.
2.
Arrangements for Collection:
2.1 Local Cheques
All cheques
and other Negotiable Instruments payable locally would be presented through the
clearing system prevailing at the centre. Cheques
deposited at branch counters and in collection boxes within the branch premises
before the specified cut-off time will be presented for clearing on the same
day. Cut-off time will be displayed on the notice board of branches and Cheque Drop Box. Cheques
deposited after the cut-off time and in collection boxes outside the branch
premises including off-site ATMs will be presented in the next clearing cycle.
As a policy, bank would give credit to the customer account on the same day
clearing settlement takes place. Withdrawal of amounts so credited would be
permitted as per the cheque return schedule of the
clearing house. Wherever applicable,
facility of high-value clearing (same day credit) will be extended to
customers.
Bank branches situated at centres
where no clearing house exists, would present local cheques
on drawee banks across the counter and it would be
the bank’s endeavour to credit the proceeds at the
earliest.
2.2
Outstation Cheques
Cheques drawn on other banks at
outstation centres will normally be collected through
bank’s branches at those centres. Where the bank does not have a branch of its
own, the instrument would be directly sent for collection to the drawee bank or collected through a correspondent bank. The bank would also use the National Clearing
services offered by the Reserve Bank of India at centres
where such collection services exist.
Cheques drawn on bank’s own
branches at outstation centres will be collected
using the inter-branch arrangements in vogue.
Branches which are connected through a centralized processing
arrangement and are offering anywhere banking services to its customers will
provide same day credit to its customers in respect of outstation instruments
drawn on any of its branches in the CBS network.
2.3 Cheques payable in Foreign Countries
In case of cheques payable
in Foreign Countries the services of correspondent banks will be utilised in country/centres where
the correspondent has presence. Cheques drawn on foreign banks at centres
where the bank or its correspondents do not have direct presence will be sent
direct to the drawee bank with instructions to credit
proceeds to the respective Nostro Account of the bank
maintained with one of the correspondent banks.
The applicable exchange rate for conversion of
proceeds of foreign currency cheques shall be the TT buying rate applicable to
the respective foreign currency prevailing on the date of affording credit to
the account of the party in Indian Rupees.
2.4
Immediate Credit of Local / Outstation Cheques /
Instruments
Branches / extension counters
of the bank will consider providing immediate credit for outstation cheques / instruments up to the aggregate value of Rs 15,000/-
(Rupees fifteen thousand only) tendered for collection by individual
account holders subject to satisfactory
conduct of such accounts for a period not less than 6 months. Immediate
credit will be provided against such collection instruments at the specific
request of the customer or as per prior arrangement. The facility of immediate
credit would also be made available in respect of local cheques
at centres where no formal clearing house exists.
The facility of immediate
credit will be offered on Savings Bank / Current / Cash Credit / Overdraft
Accounts of the customers. For extending
this facility there will not be any separate stipulation of minimum balance in
the account.
Under this policy, prepaid
instruments like Demand Drafts, Interest / Dividend warrants shall be treated
on par with cheques.
Immediate credit will be
afforded in respect of prepaid instruments like Demand Drafts drawn by our Bank
on our own branches.
In the event of dishonour of cheque against which
immediate credit was provided, interest shall be recoverable from the customer
for the period the bank remained out of funds at the rate applicable for
overdraft limits sanctioned for individual customers.
For the purpose of this Policy,
a satisfactorily conducted account
shall be the one
a)
Opened
at least six months earlier and complying with KYC norms.
b)
Conduct
of which has been satisfactory and bank has not noticed any irregular dealings.
c)
Where no
cheques / instruments for which immediate credit was
afforded returned unpaid for financial reasons
d)
Where
the bank has not experienced any difficulty in recovery of any amount advanced
in the past including cheques returned after giving
immediate credit.
Bank shall levy normal
collection charges and out of pocket expenses while providing immediate credit
against outstation instruments tendered for collection. Exchange charges applicable for cheque
purchase will not, however be charged.
2.5 Purchase of Local /
Outstation Cheques
Bank
may, at its discretion, purchase local/outstation cheque
tendered for collection at the specific request of the customer or as per prior
arrangement. Besides satisfactory conduct of account, the standing of the drawer
of the cheque will also be a factor considered while
purchasing the cheque.
3. Time Frame for Collection of
Local / Outstation Cheques / Instruments:
For
local cheques presented in clearing credit will be
afforded as on the date of settlement of funds in clearing and the account
holder will be allowed to withdraw funds as per return clearing norms in
vogue.
Cheques /
Instruments presented in high value clearing (with the minimum value of Rs.1 lac) shall be credited on the same day (applicable only in
areas covered by high value / same day clearing).
For cheques and other instruments sent for collection to centres within the country the following time norms shall
be applied:
a)
Cheques presented at any of the four major Metro Centres (New Delhi,
Mumbai, Kolkata and Chennai) and payable at any of
the other three centres : Maximum period of 7
working days.
b)
Metro Centres and State Capitals (other than those of North Eastern
States and Sikkim): Maximum period of 10 working days.
c)
In all other Centres :
Maximum period of 14 working days.
d)
Cheques drawn on foreign countries :
Cheques drawn on
foreign countries are accepted for collection on the “best efforts” basis.
Depending on various factors credit may be afforded within 30-45 days.
The above time norms are
applicable irrespective of whether cheques/instruments
are drawn on the bank’s own branches or branches of other banks.
4. Payment
of Interest for delayed Collection of Outstation Cheques:
As
part of the compensation policy of the bank, the bank will pay interest to its
customer on the amount of collection instruments in case there is delay in
giving credit beyond the time period mentioned above. Such interest shall be paid without any
demand from customers in all types of accounts.
There shall be no distinction between instruments drawn on the bank’s
own branches or on other banks for the purpose of payment of interest on
delayed collection.
Interest
for delayed collection shall be paid at the following rates:
a)
Savings Bank rate for
the period of delay beyond 7/10/14 working days as the case may be in
collection of outstation cheques.
b)
Where the delay is
beyond 14 working days interest will be paid at the rate applicable to for term
deposit for the respective period.
c)
In case of extraordinary
delay, i.e. delays exceeding 90 days interest will be paid at the rate of 2%
above the corresponding Term Deposit rate.
d)
In the event the
proceeds of cheque under collection was to be credited to an overdraft/loan account of the
customer, interest will be paid at the rate applicable to the loan
account. For extraordinary delays,
interest will be paid at the rate of 2% above the rate applicable to the loan
account.
It
may be noted that interest payment as given above would be applicable only for
instruments sent for collection within India.
5. Cheques
/ Instruments lost in transit / in clearing process or at paying bank’s branch:
In
the event a cheque or an instrument accepted for
collection is lost in transit or in the clearing process or at the paying
bank’s branch, the bank shall immediately on coming to know of the loss, bring
the same to the notice of the accountholder so that the accountholder can
inform the drawer to record stop payment and also take care that cheques, if any, issued by him / her are not dishonoured due to non-credit of the amount of the lost cheques / instruments.
The bank would provide all assistance to the customer to obtain a
duplicate instrument from the drawer of the cheque.
In
line with the compensation policy of the bank the bank will compensate the
account holder in respect of instruments lost in transit in the following way:
a)
In case intimation
regarding loss of instrument is conveyed to the customer beyond the time limit
stipulated for collection (7/10/14 working days as the case may be) interest
will be paid for the period exceeding the stipulated collection period at the
rates specified above.
b)
In addition, bank will
pay interest on the amount of the cheque for a
further period of 15 days at Savings Bank rate to provide for likely further
delay in obtaining duplicate cheque/instrument and
collection thereof.
c)
The bank would also
compensate the customer for any reasonable charges he/she incurs in getting
duplicate cheque/instrument upon production of
receipt, in the event the instrument is to be obtained from a bank/ institution
who would charge a fee for issue of duplicate
instrument and also charges if any, for recording Stop Payment on production of
receipt.
6. Force Majeure:
The
bank shall not be liable to compensate customers for delayed credit in case of
natural disasters or other “Acts of God” etc beyond the control of the bank
preventing it from performing its obligations within the specified service
delivery parameters.
7. Acts beyond the control of the Bank:
The
bank shall not be liable to compensate customers for delayed credit in case of
unforeseen event including but not limited to civil commotion, sabotage,
lockout, strike or other labour disturbances,
accident, fires, war, damage to the bank’s facilities or of its correspondent
bank(s), absence of usual means of communication or all types of
transportation, etc beyond the control of the bank preventing it from
performing its obligations within the specified service delivery parameters.
8. Charging of Interest on cheques
returned unpaid where Instant Credit was given:
If a cheque
sent for collection for which immediate credit was provided by the bank is
returned unpaid, the value of the cheque will be
immediately debited to the account. The customer will not be charged any
interest from the date immediate credit was given to the date of return of the
instrument unless the bank had remained out of funds on account of withdrawal
of funds. Interest where applicable would be charged on the notional overdrawn
balances in the account had credit not been given initially.
If the proceeds of the cheque were credited to the Savings Bank Account and was not withdrawn, the amount so credited will not qualify
for payment of interest when the cheque is returned unpaid.
If proceeds were credited to an overdraft/loan account, interest shall be
recovered at the rate of 2% above the interest rate applicable to the
overdraft/loan from the date of credit to the date of reversal of the entry if
the cheque/ instrument was
returned unpaid to the extent the bank was out of funds.
