POLICY ON COLLECTION OF CHEQUES/INSTRUMENTS- 2014-15
The cheque 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 treatment of the customers. This policy document covers the following aspects.
2. ARRANGEMENTS FOR COLLECTION
2.1 : Local Cheques:
2.5 Prohibition on collection of account payee cheques for crediting the proceeds to third party account:
3. Time frame for collection of local / outstation cheques / instruments:
- All cheques and other negotiable instruments payable locally would be presented through the clearing system prevailing at the centre. Cheques deposited at branch counters, Post, Courier and in collection boxes within the branch premises before the specified cut off time will be presented for clearing on the same day. Cheques deposited after the cut-off time and in collection boxes outside the branch premises including offsite ATM (after introduction of the facility) will be presented in the next clearing cycle. As a policy, bank would give credit to the customer's 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 and 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 bank across the counter and it would be the bank's endeavour to credit the proceeds at the earliest.
- Our bank branches will display the cut off time up to which the cheques received will be sent for clearing on the same day including those cheques dropped in the cheque collection box provided inside the branch premises.
- As the cut off time limit for acceptance of cheques for collection depends on the clearing cycle of the respective centre, cut off time limit at each centre will be fixed, depending on the clearing arrangement at that place and the same will be displayed at the branches.
(Circles are advised to fix a cut off time limit at each centre depending on the clearing arrangement at that place and advise their branches to display the same in their branches - Approved by Board vide SPDW CSS BD 19 2010 USB dt. 12/03/2010)
- Bank shall permit usage of the shadow credit afforded to the customers’ account immediately after closure of relative return clearing and in any case, withdrawal shall be allowed on the same day or maximum within an hour of the commencement of business on the next working day, subject to usual safeguards.
- Issue of multicity/payable at all branches cheques by CBS enabled banks:
Considering the availability of processing infrastructure for clearing outstation cheques at all clearing locations across the country and to bring about further efficiency in cheque clearing, bank shall issue only “payable at par/multi-city” CTS 2010 standard cheques to all eligible customers Since such cheques (payable at par) are cleared as local cheques in clearing houses, customers shall not be levied extra charges.”
- 2.1(g) I. Cheque return charges shall be levied only in cases where the customer is at fault and is responsible for such returns. An illustrative, list of returns, where the customers are not at fault are indicated in the annexure.
- 2.1 (g) II. Cheques that need to be re-presented without any recourse to the payee, shall be made in the immediate next presentation clearing not later than 24 hours (excluding holidays) with due notification to the customers of such re-presentation through SMS alert, email etc.,
2.2 : Outstation cheques :
Cheques drawn on other Banks at outstation centres will be normally collected through our bank's branches/ offices at these centres. Where our Bank does not have a branch of our own, the instruments would be preferably collected through any branch of Public Sector Bank other than the drawee bank at that place, if there is no branch of public sector bank, through any scheduled bank or branch of any bank at that place. In the absence of the above, the cheque would be sent directly to the drawee bank. The bank would also use the National Clearing Service offered by the Reserve Bank of India at centres where such collection services exists.
Cheques drawn on bank's own branches at outstation Centres will be collected using the inter-branch arrangements in vogue. Branches connected through central processing arrangements shall provide same day credit to its customers in respect of outstation instruments drawn on any of its branches in the CBS network.
Credits in respect of cheques drawn between bank's own Core Banking Branches will be done on the same day on receipt of the cheque subject to availability of connectivity between the branches. In case of other Banks where core banking is enabled, cheques with stipulation of payment at par at all its Core Banking Branches are presented to the local branch / clearing section of the said bank, else the cheque will be sent for collection to the mentioned drawee bank branch.
2.2.1 : Speed Clearing:
Speed Clearing facility has been introduced at the MICR centers implemented by RBI, for the outstation cheques accepted for collection drawn on other Banks having CBS inscription on the face of the Cheque / CBS unique Account Number.
Outstation cheques drawn on Banks participating in Speed clearing at specified locations will be collected and treated at par as if they were local cheques. All terms and conditions applicable for local clearing instruments will also apply to Speed Clearing. However, the charges for collection of speed clearing cheques, shall be applicable as prescribed by the Bank from time to time.
2.3 : Immediate Credit of Local/ Outstation Cheque/ Instruments & Payment of Interest on Delayed Collection:
The details of the facility are as under;
Eligible Persons : Individuals / joint SB / CA holders and retired employees of our Bank provided –
- The conduct of the account is satisfactory for at least 6 months.
- The Bank has not noticed any irregular dealings in the account.
- No cheques / instruments for which immediate credit was afforded returned unpaid for financial reasons.
- The bank has not experienced any difficulty in recovering any amount advanced in the past including cheques returned after immediate credit.
Eligible Amount :
- Minors' account whether individually, jointly or represented by natural guardian.
- Non Residents
- Employees (Both Officers and Workmen) of our Bank
- Self cheques, endorsed cheques and Exchange Company cheques.
It will be extended in case of dividend warrants / Interest Warrants to all the eligible account holders provided they are drawn on banks and payable on demand without any pre-condition.
- Not exceeding Rs.15000/- in respect of outstation cheques to all the eligible account holders without any specific request from the account holder.
- In respect of local cheques immediate credit of Rs.15000/- will be extended only to those eligible account holder on specific request.
TERMS & CONDITIONS:
2.4 : Purchase of local / outstation cheques:
- Affording immediate credit is restricted to an amount not exceeding Rs.15000/- per eligible account holder. If the eligible account holder has already been provided with the facility for an amount less than Rs.15000/- (i.e. maximum admissible amount) branch will consider affording further credit within the overall ceiling of Rs.15000/- provided the eligible account holder tenders the cheque. At any point of time the amount of immediate credit shall not exceed Rs.15000/- per eligible account holder.
- Individual cheques/Dividend warrants/Interest warrants (both Local and Outstation) for amounts exceeding Rs.15000/- are not eligible under the scheme for affording immediate credit.
- Facilities extended in all the branches excepting in certain specialized branches. In such cases, extending further continuation of the facility is sole discretion of the bank.
- In case the cheque is returned unpaid, interest is chargeable from the date of return of such a cheque till the recovery of the amount thereof. The rate of interest shall be charged as under:
- Where the party to whom such immediate credit has been given -
|1. Is enjoying / having other limits / liabilities
||Appropriate rate of interest after determining the size of the limit duly aggregating other limits/liabilities permitted/outstanding.
|2. Is not enjoying any other limit / liabilities
||Rate of interest as applicable to loans/ advances up to Rs.2 lacs as advised from time to time.
- Appropriate commission and postage shall be collected.
Bank may at its discretion, purchase local / outstation cheque tendered for collection at their specific request of the customer or as per prior arrangement. Besides satisfactory conduct of account, the standing of drawer of the cheque will also be a factor considered while purchasing the cheque.
4. Payment of interest on delayed collection of Outstation Cheques:
- 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 clearing norms in vogue.
- Cheques / instruments presented in high value clearing (with the minimum value of ` 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 centers within the country the following time norms shall be applied;
Such instruments are accepted for collection on the "best of efforts" basis. The Bank is committed to ensuring that instruments drawn in foreign currencies and payable outside India are collected in the quickest and most efficient manner. Towards this the bank may enter into specific collection arrangements with its correspondent banks in those countries for speedy collection of such instrument(s). Bank would give credit to the party upon realization credit of proceeds into the bank's Nostro Account with the correspondent bank after taking into account cooling periods as applicable to the countries concerned.
- Cheques presented at any of the four major Metro centers (New Delhi, Mumbai, Kolkata and Chennai) and payable at any of the other three centers, maximum period of 7 days.
- Metro Centres and State capitals (other than those of North Eastern States and Sikkim) maximum period of 10 days.
- In all other centers, maximum period of 14 days.
- Cheques drawn on foreign countries:-
The above time norms are applicable irrespective of whether cheques/ instruments are drawn on the bank's own branches or branches of other banks.
As part of the compensation policy of the bank, the bank will pay interest to the customers on the amount of the 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 banks own branches or another banks for the purpose of payment of interest on delayed collection.
Interest for delayed collection shall be paid at the following rates:
- Savings Bank rate for the period of delay beyond 7/10/14 days as the case may be in collection of outstation cheques.
- Where the delay is beyond 14 days interest will be paid at the rate applicable to for term deposit for respective period.
- In the 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.
- In the event the proceeds of cheque under collection was to be credited to an overdraft/loan amount of the customer, interest will be paid at the rate applicable to 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 banks' branch:
- Interest payment as above would be applicable only for instruments sent for collection within India.
- The payment of interest for the delay in collection of outstation instruments are not applicable to non-negotiable instruments viz. Prize winning lottery tickets and proceeds of matured Deposit receipts of other banks, etc.
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 account holder so that the account holder 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 customers 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;
5.1 : Receiving payment based on an electronic image of a truncated cheque:
- In case intimation regarding loss of instruments is conveyed to the customer beyond the time limit stipulated for collection (7/10/14 days as the case may be) interest will be paid for the period exceeding the stipulated collection period at the rates specified above.
- 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.
- The bank would also compensate the customer for any reasonable charges he / she incurs in getting duplicate cheque / instruments upon production of receipt in the event the instrument is to be obtained from a bank / institution who would charge fee for issue of duplicate instrument and also reasonable charges incurred for stopping payment of the cheque.
- a. Cheque truncation system- Sec 131 of Negotiable Instrument Act 1881(amendments)
- b. Onus of due diligence shifted to the presenting bank in CTS environment
Cheque truncation is the process of eliminating the flow of physical cheque issued by a drawer to the Drawee branch. The physical cheque will be truncated and electronic image of the cheque are captured for processing. The physical cheques are retained at the presenting bank itself. The captured image along with data are exchanged across the banks.
Legal status of the cheque truncation is derived from amendments made to the Negotiable Instrument Act, 1881 by virtue of Negotiable Instruments (Ammendments and Miscellaneous Provision) Act,2002 where by among others the section 6,64,81,89 and 131 of the NI Act,1881 are also suitably amended to incorporate the validity of the truncated image of the cheque. We invite the attention to the amendment to section 131 where in the existing explanation is renumbered as explanation 1 and the following explanation is inserted
Explanation II-It shall be the duty of the banker who receives payment based on an electronic image of a truncated cheque held with him, to verify the prima facie genuineness of the cheque to be truncated and any fraud, forgery or tampering apparent on the face of the instrument that can be verified with due diligence and ordinary care.
In view of the above amendment, the presenting bank takes responsibility for exercise of due diligence. The branches while sending cheques to CTS scaning centre should ensure the following
- To exercise due diligence on all instruments
- To cheque the apparent tenor of the instruments
- To ensure verification under Ultra Violet Lamp (UVL)
- To scrutinize the cheques for material alteration
- To ensure genuineness and validity of instruments
- To ensure that pay in slip is properly filled up with 13 digit correct account number and name
The scanning centre while scanning the instruments should inter alia also ensure the following
6. Force Majeure :
- To check the apparent tenor and genuineness of the instruments
- To ensure verification of instruments under UV Lamp
- To ensure instrument confirms to features of CTS 2010 standard
- To ensure physical feel of the instrument meets the usual paper standard used for cheque
- To ensure no material alteration visible to naked eye
The bank shall not be liable to compensate customers for delayed credit due to some unforeseen event (including but limited to civil commotion, sabotage, lockout, strike and other labour disturbances, accidents, fires, natural disasters or other "Acts of God", war, damage to the banks' facilities or of its correspondent Banks) absence of the usual means of communication or all types of transportation, etc beyond the control of the Bank prevents it from performing its obligation within the specified service delivery parameters.
7. 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 were 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.
8. Cheque payable in foreign countries :
Cheques payable at foreign centers where the bank has branch operations will be collected through that office. The services of correspondent banks will be utilized in country/centers where the correspondent has presence. Cheques drawn on foreign banks at centers 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.
8.1 Collection of USD Denominated Clean Instruments :
Clean instruments denominated in currencies other than Indian Rupees such as Euro, Pound Sterling, US Dollar, Yen, etc., are called foreign currency cheques/clean instruments. Since such instruments are not payable in India they are, therefore, required to be sent to the country concerned for realization of proceeds. The time norms for collection and return of the instruments vary from country to country and place to place within a country.
Clean instruments / Cheques payable at foreign centers where our bank has branch operations (or banking operations through a subsidiary, etc.) will be collected generally through that office/branch. The services of correspondent banks will be utilized in country/centers where the correspondent has a presence. Cheques drawn on foreign banks at centers 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 Nostro Account of the bank maintained with one of the correspondent banks.
The clean instruments denominated in USD and payable in USA are generally known as USD denominated cheques/instruments.
i) Type of Instruments :
Clean instruments like personal cheques, Travelers cheques, Demand Drafts, Cashier orders, Pay Orders, Bankers' cheques, International Money Orders or any other such instruments, payable abroad may be submitted for collecting the proceeds of the instrument.
ii) Risk perceived in collection of USD Denominated Instruments :
As per US Laws materially altered cheques, where the beneficiary's name has been changed and/or the amount of the cheques raised, the drawee bank is obliged to reimburse the drawer within 12 months for wrongfully paying the cheque.
In such cases the Correspondent Bank mandatorily claim the amount from us and debit Nostro account. Hence, the proceeds of the clean instruments credited to customer's account are subject to right to debit in case of return of instruments.
iii) Products offered by us for USD denominated instruments :
a. Secured Collections Service :
b. Cash Letter Service :
- Under this facility the risks mentioned above can be mitigated.
- Under this facility, our correspondent bank provides guaranteed final credit without recourse within a confirmed time period.
- For such facility our correspondent bank, charges additional service charges for giving credit without recourse.
- Time period for collection of the proceeds are as under:
||If the cheque/instrument is drawn on bank located in New York
||Six business days after receipt of cheque/instrument at Correspondent bank's processing center at New York
||Correspondent bank charges
||If the cheque/instrument is drawn on bank located outside New York
||Fifteen business days after receipt of cheque/instrument at Correspondent bank's processing center at New York
||Correspondent bank charges
- Amount of the cheque should not exceed USD300, 000.
- Traveler Cheques/Treasury cheques/postal money order is not covered under this facility.
- All the clean instruments/cheques lodged by customers for amounts USD 5000 and above, have to be necessarily collected under this facility.
- It takes approximately between 10 to 18 days for affording the credit to the customer's account.
c. Instant Credit :
- It is recommended that all the clean instruments drawn in USD & payable in USA be collected under 'Secured Collections Service', to enable the customers to get a final credit instead of a conditional credit.
- For USD denominated clean instruments for amounts up to USD 5000, the customers have the option of collecting the proceeds under Cash Letter Service.
- As per this facility our correspondent gives credit to our Nostro account on sending the cheques in clearing system. However, the conditional credit is given to the customer's account only after the expiry of the cooling period.
- Approximate time period for collecting the proceeds of the cheque
||If the instrument/cheque is drawn on bank located in New York
||Six business days from the value date for the instrument/cheques payable at New York
||If the instrument/ cheque is drawn on bank located outside New York
||10 business days from the value date for instrument/cheques payable outside New York but within USA
- It approximately takes around 15 days for affording the credit to the customer's account.
IV) Compensation :
- Subject to the satisfactory track record of the customer etc, the credit may be given to the customer's account, with out completion of the cooling period, on citing the pass sheet credit for clean instruments denominated in USD up to USD 5000, sent under the facility of Cash Letter Service.
8.2 POLICY ON COLLECTION OF CHEQUES DENOMINATED IN FOREIGN CURRENCY OTHERN THAN USD
1. Collection of instruments drawn in Home Currencies of the Drawee Centre (other than US Dollar):
- Customers would be compensated for delay in crediting the proceeds of foreign currency instruments payable abroad / in India and sent on collection basis.
- Such compensation would be paid at the rate of interest applicable to NRE SB accounts in respect of NRI-clients and domestic SB account in the case of resident-customers, for the delays beyond prescribed period for various transactions which are as under:
- Personal cheques/drafts payable in the country of currency – if proceeds are not credited within 21 days.
- Personal cheques / drafts payable in the country other than in the currency of the country – If proceeds are not credited within 45 days
The instruments payable at the country of its currency i.e. like GBP instruments payable in UK is sent to the Nostro Correspondent Bank at the drawee centre for collection of the same. As per this arrangement, the amount of the instrument is credited to our Nostro account immediately upon its presentation for payment to drawee bank by the Correspondent Bank, through clearing or collection. Though amount is credited to our Nostro account, immediately the same is only on conditional basis and not a final credit. Such instruments are treated as realized, only upon completion of the prescribed waiting period, as the paying bank has a time limit for returning the instrument for reasons like insufficiency of funds in the drawer's account, forged instruments, etc.
2. If the instruments are returned for any reason, the Correspondent Bank will debit the account with back value [i.e., the same value date as the original pass sheet credit] and additional charges for returning the instrument unpaid. In order to safeguard, the waiting period concept is followed. Accordingly the instrument is treated as realized only after expiry of waiting period after the date of pass sheet credit entry and adjust the realization after this waiting period. This waiting period varies from country to country and where the instrument is payable which is as under:
3. Handling Instruments Drawn on EURO Land:
|GBP instruments payable in UK
||10 business days from the value date
|EURO instruments payable in Germany/Italy/ France/Netherlands
||21 business days from the value date
|Instruments in all other currencies payable at the Centres whose home currency is the currency of the instrument.
||22 days from the value date
4. Instant Credit:
- Cheques denominated in EURO currency and payable in Germany, Italy, Netherlands and France will be handled under Cash Letter Service.
- Each instrument including TCs, irrespective of its denomination, will be levied charges of EURO 1.00 per instrument for handling under Cash Letter Service.
- EURO cheques drawn on other countries will be handled only under 'under collection' basis.
- Cheques sent under collection normally take around 30 to 45 days for realization and charges are likely to be around EURO 50 per instrument.
- Unlike USD Cash Letter Service System, the Banks in Euro Land do not undertake 'no return- guaranteed payment' after a specified period. Hence cheques beyond EURO 5000 are not handled under 'Cash Letter Service' and the same are handled only under collection basis.
- Endorsement by payee on the back of the cheque in the space provided is one of the conditions for collection of Euro cheques.
Subject to the satisfactory track record of the customer etc, immediate credit may be given to the customer's account, without completion of the cooling period, on citing the pass sheet credit for clean instruments denominated in GBP and EURO up to the equivalent of USD 10000.
For all collection services the Bank will recover appropriate Service Charges as decided by the Bank from time to time and communicated to customer as displayed in the notice board of branches and indicated in the BCSBI codes (item no. 3.4 – tariff schedule) and adopted by the bank.
Illustrative list of objections where customers are not at fault
9. COLLECTION OF ACCOUNT PAYEE CHEQUE:
|Code No||Reason for Return|
|33||Instrument mutilated; requires bank’s guarantee|
|35||Clearing House stamp / date required
|36||Wrongly delivered / not drawn on us|
|37||Present in proper zone
|38||Instrument contains extraneous matter|
|39||Image not clear; present again with paper
|40||Present with document|
|41||Item listed twice
|42||Paper not received|
|60||Crossed to two banks
|61||Crossing stamp not cancelled |
|62||Clearing stamp not cancelled
|63||Instrument specially crossed to another bank|
|67||Payee’s endorsement irregular / requires collecting bank’s confirmation
|68||Endorsement by mark / thumb impression requires attestation by Magistrate with seal|
|70||Advice not received
|71||Amount / name differs on advice|
|72||Drawee bank’s fund with sponsor bank insufficient (applicable to sub-members)
|73||Payee’s separate discharge to bank required|
|74||Not payable till 1st proximo
|75||Pay order requires counter signature|
|76||Required information not legible / correct
|80||Bank’s certificate ambiguous / incomplete / required|
|81||Draft lost by issuing office; confirmation required from issuing office
|82||Bank / branch blocked|
|83||Digital certificate validation failure
|84||Other reasons – connectivity failure
|87||‘Payee’s account credited’ – Stamp required|
It is prohibited from crediting ‘account payee’ cheques to the account of any person other than the payee named in the negotiable instruments. However, since cooperative societies are not even sub-members of clearing houses, the account holders of such cooperative societies who have no bank accounts finds difficulty in collection of account payee cheques drawn in their name. In order to mitigate the difficulties faced by account holders of cooperative societies in collection of account payee instruments, bank shall collect account payee cheque for an amount not exceeding ` 50000/- to the account of cooperative societies account holders, if the payees of such cheques are the constituent of such co-operative societies. For this purpose the co-operative societies should give a clear representation in writing that, upon realisation of the proceeds of the cheque it will be credited only to the account of the member of co-operative societies who is the payee named in the instruments. The bank shall carry out proper due diligence with respect to such co-operative credit societies and ensure that KYC documents of the customers are preserved in the society’s records and are available to the bank for scrutiny.
In the event of any claim by the true owner of the instrument, the right of the true owner of the instruments are not in any manner affected and bank shall establish that such action is done in good faith and without negligence while collecting the cheque in question.