Vijaya Bank

Policy on Collection of Cheques

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that have been undertaken by a number of banks, the Reserve Bank of India had, with effect from 1 ^st November 2004, withdrawn its earlier instructions to commercial banks on (i) Immediate Credit of local/outstation cheques, (ii) Time Frame for Collection of Local / Outstation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 realization 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. Individual branches shall specify the cut off time depending upon location/local practices. 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 clearinghouse. Wherever applicable, facility of high-value clearing (same day credit) will be extended to customers. Immediate credit facility will be extended to collection of cheques deposited in CBS branches drawn on other local CBS branches of the Bank. Immediate credit facility will also be extended to collection of multicity cheques deposited in CBS branches drawn on CBS branches of the Bank at other centres. 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 provided cheques are presented during the business hours. 2.3 Cheques payable in Foreign Countries The services of any of the correspondent banks will be utilised for Collections of cheques and instruments drawn on/ payable outside India. The bank will endeavor to collect the proceeds as expeditiously as possible utilising the fast collection facilities (by whatever name they may be called) wherever available and in the same currency if the bank maintains a foreign currency account in that currency or in equivalent value in a widely quoted currency (generally US Dollars). The Bank will endeavor to credit the proceeds of the items of value equivalent upto US Dollars 2,000.00 within three business days at card rates, and at the end of two weeks of higher value items at market related rates ruling on the day of conversion, after credit of proceeds to its account and net of the correspondent's and the bank’s charges. Where the proceeds are received on conditional credit basis, provisional credit will be provided if the Branch Manager is satisfied with the credentials of the customer and if the customer agrees to refund the amount at the then ruling exchange rates along with interest if the instrument is dishonoured at a later date for any reason. As different countries have different regulations covering payment and dishonour of the instruments payable in the respective countries and in case the instrument is dishonoured as per the laws/ customs and practices of the country in which the instrument is payable, the customer is bound to refund the proceeds already credited, at market related exchange rates prevailing .on the date of recovery. 2.4 Immediate Credit of Local / Outstation Cheques / instruments payable within India : Branches / extension counters of 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 / operative credit limits of the customers without any separate stipulation of minimum balance in the account. Prepaid instruments like Demand Drafts, Interest / Dividend warrants / Refund Warrants shall be treated on par with cheques. 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 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 in respect of which credit had been afforded and were 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 credit. Bank shall levy normal collection charges and out of pocket expenses while providing 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.l 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 other centres within the country the following time norms shall be applied: Payable within India a) Cheques presented at any of the four major Metro Centres (New Delhi, Mumbai, Kolkata and Chennai) and payable at any of the other major metro centres : Maximum period of 7 working days. b) Other Metro Centres and State Capitals (other than those of North Eastern States and Sikkim): Maximum period of 10 working days. c) All other Centres : Maximum period of 14 working days. Payable Outside India Cheques drawn on foreign countries: Such instruments are accepted for collection on the 'best of efforts' basis. Bank may enter into specific collection arrangement with its correspondent bank for speedy collection of such instrument. Bank would give cre(": 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 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 Payable in India:
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 and 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. However, such interest shall be paid only on cheques sent for collection at the centre where our bank has branches. Interest for delayed collection shall be paid at the following rates: Deposit accounts : 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. Loan / Overdraft accounts 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 of interest applicable to the overdraft loan account. For extraordinary delays, interest will be paid at the rate of 2% above the rate applicable to the loan account.

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 of the lost cheques / instruments. The bank would provide all assistance to the customer to obtain 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 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 reimburse their customer for any 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. Charging of Interest on 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. 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 finds 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 recovery to the extent the bank was out of funds.

7. 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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