POLICY ON COLLECTION OF CHEQUES/INSTRUMENTS
1. Introduction
In view the technological development in payment and settlement systems and the qualitative changes in operational systems and processes that have been made/advised by the Reserve Bank of India, all the member banks are revising/modifying their cheque collection policy. In order to extend the benefit of 100% Core Banking Solution (CBS) to our customers and to implement the ¿Anywhere¿ banking concept in its true spirit, we propose revision/modification of our existing Cheque Collection Policy. 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 improved performance. The bank is committed to increased use of technology to provide quick collection services to its customers and the policy is based on principles of transparency and fairness in the treatment of customers. This policy document covers the following aspects:
. Collection of cheques and other instruments payable locally, at centres within India and abroad.
. Broad time frame for acceptance of instruments for collection.
. Our
commitment regarding time norms for collection/realisation of such
instruments.
. Guidelines for payment of compensation/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 respective
centre.
In general, cheques received within three hours from the time
of commencement
of business hours of the branch, on working days, from Monday to Friday and
cheques received within 30 minutes of the commencement of the business on
Saturdays shall be sent for clearing on the same day. However, the time may
vary depending upon the:
(a) Local cheque
clearing timings
(b) Time required for
traveling to the Clearing House/Main Clearing branch/Service Branch
(c) Availability of
conveyance facility.
Cheques deposited after the cut-off time and in collection boxes outside the branch premises including off-site ATMs shall be presented in the next clearing cycle. As a policy, the bank would give credit to customer¿s account on the day of clearing settlement. 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) shall be extended to the 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 shall 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.
In order to extend the benefit of Core Banking Solution, the following arrangement is made for collection of cheques.
(a) For Cheques drawn on our Bank branches, tendered by the customers of the Bank, during business hours: The amount of cheques drawn on any of our branches, tendered during the business hours of the branch, shall be credited on the same day (subject to availability of
sufficient funds in the drawer¿s account and the cheque is properly drawn)through Intersol transaction. In case of cheques drawn on outstation centres or centres outside the clearing zone, applicable collection charges shall be collected.
The amount of cheques drawn on any of our branches, tendered after business hours of the branch, shall be credited on the next working day (subject to availability of sufficient funds in the drawer¿s account and the cheque is properly drawn).
(b) Collection of cheques tendered by the customers of other branches: In order to implement anywhere banking concept in its true spirit, Customers of our Bank are permitted to tender either local or outstation cheques, for collection at any of our branches. The branch where the cheque is tendered should handle the cheque as per the procedure for collecting local/outstation cheques through Intersol. In case of outstation cheques,collection charges shall be levied depending on the type of the account, as enumerated below:
(C) Speed clearing:
Speed clearing refers to collection of outstation cheques through the
local clearing. Outstation cheque collection through collection basis takes
around one to two weeks depending on the corresponding / drawee bank for this
purpose. Under Speed clearing, it would be two to three working days.
Speed clearing
aims to reduce the time taken for realization of outstation
cheques.
The Bank can thus now locally pay outstation cheques of branches
covered under CBS without having to physically send the cheque to the
branch of
the drawee bank for clearing. Speed Clearing¿ is operational at all MICR
Centres.
Cheques, which are drawn on CBS-enabled banks' branches, are eligible
for being presented in Speed clearing. Pay Orders, Demand Drafts, Government
instruments and cheques drawn on a bank or bank branch, which is not a part of
the Speed clearing System, are not eligible for collection under Speed
clearing.
A. Charges for cheques drawn on our Bank
(a) For cheques payable with in the same clearing
zone and
the beneficiary¿s account is also with in the same clearing
zone:
No charges
(b) For cheques deposited and payable with in the same
clearing zone and the beneficiary¿s account is outside the clearing
zone:
Prevalent collection charge shall be collected by the
collecting/remitting branch depending on the type of the account.
B. Charges for collection of outstation cheques drawn on
our Bank or Other Bank:
Prevailing collection charges shall be collected based on
the type of
account irrespective of whether the beneficiary¿s account is with in the same
clearing zone or not.
In view of the above, time frame for collection of cheques drawn on
any of our branches may be fixed as the same day for cheques presented during
business hours and next working day for cheques received after business hours.
The above arrangement is for customers maintaining account with our own
branches and for account to account transfer within our bank only.
In case of dishonour of cheques for insufficiency of funds,
applicable
charges shall be collected from the drawer of the cheque. The same procedure
shall be followed for cheques dropped in cheque collection boxes provided in
the branches/Money Plant ATM site. (Concerned link branch shall handle such
cheques). Cheques deposited in collection boxes outside the branch premises
including off-site ATMs shall be presented in the next clearing
cycle.
However, while collecting cheques for NRE account holders, collecting
branches shall ensure the eligibility of funds for credit to NRE accounts, as
balance in such accounts is repatriable.
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 directly to the drawee
bank with instructions to credit proceeds to respective Nostro Account of the
bank maintained with one of the correspondent banks. The maximum period for
affording the credit to the beneficiary¿s account for the cheques drawn in
foreign currency is 45 days.
However, the possibility of using latest technology like image
transmission (cheque 21) etc. for speedy collection of cheques wherever
possible is being explored by the Central Processing Centre. Exchange rates
shall be applied as per FEDAI guidelines in vogue.
2.4 Immediate Credit of Local / Outstation Cheques /
Instruments
Branches / extension counters of the bank shall 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 shall 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.
Prevalent cheque collection charges and actual postage if any
would be
collected for affording immediate credit. To avail this facility the
negotiable
instrument:
a)
should be
in order
in all respects
b)
should not be
drawn/issued by exchange companies
c) should not be
drawn by the account holder himself seeking immediate credit (in case of
cheques drawn on other Banks)
d)
should be in
favour of the account holder seeking for immediate credit
The facility of extending immediate credit shall not be afforded to
the following category of accounts/customers:
a)
Accounts in the
name of minors.
b)
Non-residents.
c) Dormant
accounts.
d)
SB Sugama (No
frill account)
Cheques/drafts tendered after business hours shall be dealt with on
the next working day.
In the event of dishonour of cheque against which immediate
credit was
provided, interest shall be recovered from the customer as detailed in
para no.
8 below, in addition to the aforesaid charges, if any.
In such cases, extending further facility to the customer is at the
sole discretion of the Bank 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.
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 shall 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 shall be
afforded as on
the date of settlement of funds in clearing and the account holder shall be
allowed to withdraw as per return clearing norms in vogue. However, credit of
local cheques is given on the same day or at the most the next working day of
their presentation in the clearing.
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 drawn on other banks and 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 and depending on various
factors credit may be afforded within 45 days.
4.
Payment of Interest for delayed Collection of
Local/Outstation Cheques:
As part
of the compensation policy of the bank, the bank shall 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 including local cheques 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 drawn on other banks.
b)
If the delay is
beyond 14 working days, interest will be paid at the rate applicable to term
deposit for the respective period.
c) In case of
extraordinary delay, i.e. delay exceeding 90 days interest shall be
paid at the
rate of 2% above the corresponding Term Deposit rate.
d)
In the event of
the proceeds of cheque under collection were to be credited to an
overdraft/loan account of the customer, interest shall be paid at the rate
applicable to the loan account. For extraordinary delay, interest shall 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.
4.1 If the delay in realisation of the cheque is on
account of clearing bank/paying bank, then for the unjustified delay by the
clearing bank/paying bank, no compensation/interest will be paid. However, the
customer will be informed about the delay so as to enable the customer to take
appropriate action or refer it to the Banking Ombudsman.
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 dishonored 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 shall
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 shall
be paid for the period exceeding the stipulated collection period at the rates
specified above.
b)
In addition, bank
shall 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 shall be
immediately debited to the account. The customer shall 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 were not withdrawn, the amount so credited shall 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.
The above
is excluding the prescribed cheque return charges and
service charges.
9.
Procedure for handling dishonoured Cheques
(a). For
Cheques tendered at the base branch:
The cheque shall be returned to the customer as early as possible. If
he is a customer visiting the branch regularly either personally or
through his
representative the cheque shall be delivered to him/his representative across
the counter on the very next day if not on the same day.
In other cases, the cheque will be dispatched to him within three day
through Regd. Post / Courier at the cost of the customer.
(b). For cheques tendered at non-base branch:
The cheque shall be returned to the customer through the base branch.
The non-base branch shall hereby send the cheque to the base branch.
On receipt
of the cheque at the base branch, that base branch shall deliver the cheque to
the customer as specified in (a) above. In this case, additional actual
postage charges incurred by the non-base branch to send the cheque to the base
branch shall also be collected by the base branch.
(c). Procedure for return/dispatch of dishonoured
Cheques:
i)
The
paying branch should return dishonoured Cheques presented through clearing
houses strictly as per the return discipline prescribed for respective
clearing
house in terms of Uniform Regulation And Rules of Bankers¿ Clearing
Houses.
ii)
Cheques
dishonoured for want of funds in respect of all accounts should be returned
along with the memo indicating therein the reason for dishonour as
"insufficient funds."
(d). Information on dishonoured Cheques:
i)
Data
in respect of each dishonoured cheque for amount of Rs.1 crore and above and
below 1 crore will be made part of bank¿s MIS on constituents and concerned
branches should report such data to respective Regional Office and to the Head
Office.
ii)
Data
in respect of Cheques drawn in favor of stock exchanges and dishonoured should
be consolidated separately by the branches irrespective of the value of such
cheque as a part of MIS relating to broker entitles, and be reported to
respective Regional Office and to the Head Office.
(e). Dealing with incidence of frequent
dishonour:
A. Frequent dishonour of Cheques / ECS mandate for
amount above 1 Crore.
i)
With
a view to enforce financial discipline among the customers, branch will
introduce a condition for operation of accounts with cheque facility that in
the event of dishonour of cheque valuing rupees one crore and above drawn on a
particular account of the drawer on four occasions during a quarter
for want of
sufficient funds in the account, bank will send notice advising to maintain
sufficient balance in the account before issuing Cheques. Further the account
shall be reviewed and closely monitored.
ii)
For
the purposes of introduction of the condition mentioned at (i) above in
relation to operation of the existing accounts, branch may, at the
time of issuing
new cheque book, issue a letter advising the constituents of the new
condition.
iii)
If
a cheque is dishonoured for a third time in case of value rupees one crore and
above on a particular account of the drawer during the quarter, branch will
issue cautionary advice to the concerned constituent drawing his attention to
aforesaid condition and consequential stoppage of cheque facility in the event
of cheque being dishonoured on fourth occasion for value rupees 1 crore and
above on the same account during quarter. Similar cautionary advice will be
issued if a branch intends to close the account.
B. Frequent dishonour of Cheques / ECS
mandate for
amount below 1 Crore.
i)
At
the time of issuance of cheque - book / accepting mandate of ECS the customer
would be put on notice that it is their responsibility to ensure that adequate
funds are maintained in the account to honour their commitment of
payment.
ii)
On
reaching the number of incidents of dishonour of cheque / ECS mandate on 40
occasion during the quarter cautionary advice would be issued stating that any
more instances would disentitle the customer from availing facility of
cheque - book / ECS mandate. In respect of Cash - Credit / OD
accounts
additionally, clarification would be sought as to the circumstances
under which
adequate funds were not maintained in the account and this factor would be
given weight age at the time of renewal / review of credit
facilities.
iii)
Despite
the customer being cautioned if such incidents of dishonor persist, in the
event of dishonour of cheque valuing rupees one crore and below drawn on a
particular account of the drawer on 40 occasions during a quarter for want of
sufficient funds in the account, bank will send notice advising to maintain
sufficient balance in the account before issuing Cheques. Further the account
shall be reviewed and closely monitored.
iv)
If
considered appropriate, Bank can give adequate notice of 15 days and close the
account by recovering charges / dues if any and remitting the
remaining balance
by pay order / draft to the address on record of the Bank by registered post.
In case of cash credit/overdraft accounts, this fact shall be referred to
appropriate authority higher than the sanctioning authority.
v)
Bank
retains the right to amend / modify the policy and display of the same on
notice board of branches / on the web site would be deemed to be adequate
notice to customers of the said
change.
(f). General:
For the purpose of adducing evidence to prove the fact of
dishonour of
cheque on behalf of a complainant (i.e payee / holder of a dishonoured cheque)
in any proceeding relating to dishonoured cheque before a court,
consumer forum
or any other competent authority, branch should extend full co-operation, and
should furnish him / her documentary proof of fact of dishonour of
Cheques.
