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Introduction
Technological progress in payment and settlement systems and the qualitative
changes in operational systems and processes that have been undertaken by various players in the
market have enabled market forces of competition to come into play to improve efficiencies in
providing better service to the users of the system. It will be the bank's endeavour to offer
services to its customers with best possible utilization of its technology infrastructure.
Withdrawal of the Reserve Bank of India instructions to banks on time frame for collection of
outstation cheques, payment of interest on delayed collection of outstation, cheques/instruments,
with effect from 1
st November 2004, had offered bank further opportunities to increase its efficiency for
better performance. This Compensation policy of the bank is therefore, designed to cover areas
relating to unauthorized debiting of account, payment of interest to customers for delayed
collection of cheques/instruments, payment of cheques after acknowledgement of stop payment
instructions, remittances within India, foreign exchange services, lending, etc. The policy is
based on principles of transparency and fairness in the treatment of customers.
The objective of this policy is to establish a system whereby the bank
compensates the customer for any financial loss he/she might incur due to deficiency in service on
the part of the bank or any act of omission or commission directly attributable to the bank. By
ensuring that the customer is compensated without having to ask for it, the bank expects instances
when the customer has to approach Banking Ombudsman or any other Forum for redressal to come down
significantly.
It is reiterated that the policy covers only compensation for financial losses
which customers might incur due to deficiency in the services offered by the bank which can be
measured directly and as such the commitments under this policy are without prejudice to any right
the bank will have in defending its position before any forum duly constituted to adjudicate
banker-customer disputes.
1. Unauthorised / Erroneous Debit:
If the bank has raised an unauthorized/erroneous direct debit to an account,
the entry will be reversed immediately on being informed of the erroneous debit, after verifying
the position. In the event the unauthorized/erroneous debit has resulted in a financial loss to the
customer by way of reduction in the minimum balance eligible for payment of interest on savings
bank account or in payment of additional interest to the bank by the account holder in a loan
account, the bank will compensate the customer for such loss. Further, if the customer
has suffered any financial loss incidental to return of a cheque or failure to effect direct debit
instructions due to insufficiency of balance in such an account solely arising on account of the
unauthorized / erroneous debit, the concerned Department Head Office will examine such cases on
case-to-case basis and consider compensating the customer to the extent of such financial loss
provided sufficient documentary proof of such loss is produced.
In case verification of the entry reported to be erroneous by the customer
does not involve a third party, the bank shall arrange to complete the process of verification
within a maximum period of 7 working days from the date of reporting of erroneous debit. In case,
the verification involves a third party, the bank shall complete the verification process within a
maximum period of one month from the date of reporting of erroneous transaction by the customer and
or revert to the customer within this period appraising the position.
Erroneous transaction reported by customers in respect of credit card
operations which require reference to a merchant establishment will be handled as per Rules laid
down by card association.
2. ECS direct debit/other debits to accounts
The bank will undertake to carry out direct debit/ ECS debit instructions of
customers in time, provided the ECS mandate is duly registered. In the event the bank
fails to meet such commitments customer will be compensated to the extent of any financial loss the
customer would incur on account of delay in carrying out the instructions / failure to carry out
the instructions despite availability of funds provided sufficient documentary proof of such loss
is produced.
The bank would debit the customer's account with any applicable service charge
as per the schedule of charges notified by the bank. In the event the bank levies any charge in
violation of the arrangement, the bank will refund such charges when pointed out by the customer
subject to scrutiny of agreed terms and conditions. Any consequential financial loss to the
customer will also be compensated.
Where it is established that the bank had issued and activated a credit card
without written consent of the recipient, the bank would refund the charges.
3. Payment of Cheques after Stop Payment Instructions:
In case a cheque, payment of which had been countermanded by the drawer, has
been paid even after stop payment instruction is acknowledged by the bank, the bank shall reverse
the transaction and give value-dated credit to protect the interest of the customer. Any
consequential financial loss to the customer will be compensated as provided under para 1
above. Such debits will be reversed within 2 working days of the customer intimating the
transaction to the bank.
4. Foreign Exchange Services:
Time for collection of cheques/ instruments drawn on banks outside India
differ from country to country depending on banking and communication facilities in the respective
countries. The time norms for return of the instruments also vary similarly. Where the
cheque/instrument is handled on collection basis the bank will endeavour to collect and credit the
proceeds with least delay in accordance with our policy on collection of cheques and instruments
payable abroad. However in case of undue delays arising solely on account of improper handling of
the instrument, Bank would consider, on the merits of the individual case the payment of interest
as applicable for the domestic collections and for delay beyond one month from the date of
lodgement of the instrument
5. Remittances in India:
The compensation on account of delays in collection of instruments would be as
indicated in the bank's collection policy which is reproduced below for information:
"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".
The bank's compensation policy for financial loss suffered by the customers
due to loss of instrument after it has been handed over to the bank for collection by the customer
would also be as indicated in our collection policy. The same is extracted below for
information:
"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
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 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.
6. Violation of the Code by banks agent
In the event of receipt of any complaint from the customer that the bank's
authorised representative / courier or DSA has engaged in any improper conduct or acted in
violation of the Code of Bank's Commitment to Customers, bank shall take appropriate steps to
investigate the complaint and to compensate the customer for financial losses, if any, if the
complaint is established as correct.
7. Transaction of “at par instruments” of Co-operative Banks by
Commercial Banks
The bank will not honour cheques / other instruments on current accounts
maintained by other banks with it unless arrangements are made for funding cheques
issued. Issuing bank should be responsible to compensate the cheque holder for non
payment/delayed payment of cheques in the absence of adequate funding arrangement.
8. 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, 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.
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