» INTRODUCTION :

This policy is framed in view RBI Circular to improve efficiencies in collection of         cheques and other instruments and is based on the Model Policy made by Indian banks' association.  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.

·        Payment of interest in cases where the bank fails to meet time norms for realization of proceeds of outstation instruments.

·        Dealing with collection instruments lost in transit.

Under this policy, prepaid instruments like Demand Drafts, Interest / Dividend warrants shall be treated on par with cheques. 

Arrangements for Collection:

2.1.      Local Cheques

All cheques etc payable locally would be presented through the clearing system prevailing at the Branch location.  Cheques deposited at branch counters and in collection boxes within the branch premises before the specified cut-off time (11am for high value instruments and 4.30pm for all other) 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 off-site ATMs) will be presented in the immediate next clearing cycle.

Bank would give credit to the customer account on the same day, when clearing settlement takes place.  Withdrawal of amounts so credited would be permitted as per the cheque return schedule of the clearing-house of respective Branch locations. 

Wherever applicable, the facility of high-value clearing (same day credit) will be extended to customers, as per the regulations of the respective clearing-houses. 

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 endeavor 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 branch and /or at branches of other correspondent bank's as per the arrangement at those centres.  Where the bank does not have a branch/or correspondent arrangement 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 through our branches.  The Bank will provide its customers same day credit in respect of outstation instruments drawn on any of its branches in the CBS network.

The Bank also to participate in ‘Speed-Clearing’ i.e. a separate clearing for collection of outstation cheques drawn on CBS-enabled branches. Under this arrangement, the depositor is given the benefit of funds the same day for all cheques drawn on CBS branches of other banks, by treating such cheques as ‘local’ cheques without subjecting them to any additional charges. All our cheques be branded / stamped – as ‘CBS’ to enable customers and collecting bank branches to be aware of such status.

All the outstation cheques drawn on non-CBS branches (hereinafter referred to as ‘outstation cheques’) received for collection during the counter hours would be processed and dispatched on the same day.

2.3              Cheques payable in Foreign Countries

Cheques payable at centres in foreign countries, where the bank has branch operations (or banking operations through a subsidiary, etc.) will be collected through that office.  The services of correspondent banks will be utilized 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. 

2.4       Immediate Credit of Local / Outstation Cheques / Instruments:

The bank will consider providing immediate credit for outstation cheques / instruments up to the aggregate value of Rs.15,000/- 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 Accounts of the individual account holders.  For extending this facility there will not be any separate stipulation of minimum balance in the account.

In the event of dishonor 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, opened at least six months earlier and complying with KYC norms and:

a)      Conduct of which has been satisfactory and bank has not noticed any irregular dealings.

b)      Where no cheques / instruments for which immediate credit was afforded earlier returned unpaid for financial reasons

c)      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 cheques tendered for collection.  Exchange charges applicable for cheque purchase will not, however be charged.

  2.5   Charging of Interest on outstation cheques returned unpaid where Instant Credit was given:

§     If a cheque send 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, with value date of the date of credit. 

§     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.

2.6       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 will be presented in high value clearing (with the minimum value of Rs.1 lac presently and drawn payable within the specified High Value Clearing Zone), when they are received at our Bank counters, upto 1 hour in advance of the HV Presentation time limit.  (Presently 11 am since the time limit is 12 noon)  The customer’s accounts shall be credited on the same day (applicable only in areas covered by high value / same day clearing) as soon as the HV Return Clearing is settled by Clearing House. Presently, there is no High Value Clearing on Saturdays. The High Value Clearing arrangement to continue up to October 2009 which will be completely phased out w.e.f. 01.11.2009 as per Mumbai Clearing House road map.

§     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 days.

b)      Metro Centres and State Capitals (other than those of North Eastern States and Sikkim): Maximum period of 10 days. 

c)      In other upcountry Centres, where courier/speed post services are available: Maximum period of 14 days.

d)      In all other centres: : Maximum period of 21 days.

§     Cheques drawn on foreign countries:  Such instruments are accepted for collection on the ‘best of efforts’ basis.  Bank have entered into a specific collection arrangement with its correspondent bank for speedy collection of instrument drawn in USD.

§     Bank would give credit to the party on credit of proceeds to the bank’s Nostro Account with the correspondent bank after taking into account cooling periods as applicable to the countries concerned. 

§     The cooling period for USD cheques would be 10 days after the date of     credit in the Nostro account and 15 days for instruments drawn in currency     other than USD.

§     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:

§     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 7/10/14/21 days as the case may be in collection of outstation cheques.

b)      Where the delay is beyond above specified days, interest will be paid at the rate applicable 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 were 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.

The bank will compensate the accountholder 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 (7/10/14/21 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 that would charge a fee for issue of duplicate instrument. 

d)      In such cases, the Bank would charge collection charges once only.

6.         Force Majeure

The bank shall not be liable to compensate customers for delayed credit if some unforeseen event {including but not limited to civil commotion, sabotage, lockout, strike or other labour disturbances, accident, fires, natural disasters or other “Acts of God”, war, damage to the bank’s facilities or of its correspondent bank(s), absence of the usual means of communication or all types of transportation, etc} beyond the control of the bank prevents it from performing its obligations within the specified service delivery parameters.

7. Return of cheques in case of Link failure

Link failure is an operational disruption and in situations of Link/connectivity/Network failure issues, the RBI instructions vide circular No. DPSS/1749 dated 02.04.09  should be followed as detailed below.

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