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Bank's Cheque Collection Policy
Bank's Cheque Collection Policy
Keeping in view the technological progress in payment and settlement systems and the qualitative changes in operational systems and processes that have been implemented by the banking industry in general, it is imperative for the Bank to draw up a Cheque Collection Policy.
The Bank’s Cheque Collection Policy is periodically reviewed, taking into account the guidelines issued by Reserve Bank of India (RBI) and NPCI from time to time.
The Cheque Collection Policy takes adequate care to ensure that the interests of all customers are fully protected and this has been integrated with the Deposit Policy formulated by the Bank in line with the IBA’s model Cheque Deposit policy.
The Bank’s Cheque Collection Policy document has been formulated as a comprehensive document taking into account our technological capabilities, systems and processes adopted for clearing arrangements and other internal arrangements for collection through different methods.
To document the principles under which the Bank will conduct the business of collection of cheques for its customers within the framework of the directives of RBI.
To document the system for collection of cheques to ensure that the system is more efficient.
This Cheque Collection Policy of the Bank will be a reflection of the Bank’s on-going efforts to provide better service to our customers and set higher standards for performance.
APPLICABILITY OF THE POLICY
This Policy is applicable to all branches & Departments of the Bank and to all staff involved in the process of cheque collection on behalf of the customers.
SCOPE OF THE POLICY
The principles underlying the processes for collection of local/outstation instruments and instruments drawn on foreign countries, interest payment for delayed collection etc. is incorporated in the Policy.
The Policy is for the period 2020-2023 and will be valid till the next policy is approved by the Board.
BROAD CONTOURS OF CHEQUE COLLECTION POLICY
The Policy is based on the principles of transparency and fairness in the treatment of customers.
The Bank is committed to enhanced use of technology to provide quick collection service to its customers.
This Policy document covers the following aspects:-
i. Arrangements for Collection of cheques and other instruments payable locally as well as outstation at centers within India and abroad.
ii. Bank’s commitment regarding time norms for collection of instruments.
iii. Policy on payment of interest in cases where the Bank fails to meet time norms for realization of proceeds of outstation instruments.
iv. Bank’s policy on dealing with collection instruments lost in transit.
ARRANGEMENTS FOR COLLECTION
1. Local Cheques
All CTS compliant cheques and other negotiable instruments payable under a grid system will be presented through the clearing system prevailing at the center.
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.
Cheques deposited after the cut-off time and in collection boxes outside the branch premises including off-site ATM will be presented in the next clearing cycle.
The Bank will give credit to the customer’s account on the same day, on which the clearing settlement takes place.
In case of Banks, who have obtained extension for their Inward cheque process, then the clearance of the cheques of such Banks, will be granted on next working day, after the cheque-return process is completed for that day.
NPCI circular, indicating the name of the banks taking concession for returning their unpaid cheques, be forwarded to all the branches and also to COCPCs. This will enable the branches to reply to the customers query for late clearance of their cheques.
Withdrawal of amounts so credited, will be permitted only after the cheque-return process is completed.
Bank branches, situated at centers where no clearing house exists, will present local cheques on branches of the drawee banks across the counter and it will be the Bank’s endeavor to credit the proceeds at the earliest.
CTS grids has been implemented at three locations; Delhi, Chennai and Mumbai. The clearing of various cities has been linked to the CTS grid at these three locations. Reserve Bank of India will continue to issue directions to include clearing of additional cities to the three grid locations.
Reserve Bank of India has discontinued Non-CTS clearing with effect from 1st January 2019.
The timings for the acceptance of cheques will be as follows:
i. Cheque will be accepted during business hours of the Bank’s branch. Alternatively, cheques can be deposited at ATM centers in the drop-box, CDMs, round the clock.
ii. The cut-off time for sending cheques for collection will be worked out for each location/branch based on the cut-off time afforded by the clearing house at each location.
iii. The cut-off timings will be displayed at branches/ATM for the benefit of each customer.
2. Outstation Cheques
The Bank will not decline to accept outstation cheques deposited by its customers for collection.
Cheques drawn on other banks at outstation centers will normally be collected through our Bank’s branches at those centers.
Where the Bank does not have a branch of its own, the instrument will be directly sent for collection to the branch of a drawee bank or collected through a correspondent bank / a bank where a collection arrangement exists, if any.
Cheques drawn on the Bank’s own branches covered under CBS network at outstation centers will provide same day credit to its customers.
As a policy --
i. The OBC cheques will be sent for collection to the postal address of the drawee bank within a day of receiving of the cheques by the branches /COCPC clusters through registered post /courier
ii. In cases wherein the cheques contain incomplete address of the drawee bank’s branch, the COCPC cluster / branch will obtain the full postal address and then after receipt of the same will send it by registered post to the drawee bank.
iii. The Bank will debit the customer’s account with applicable service charges, as per the tariff schedule notified by the Bank from time to time. The charges notified will be all inclusive and no additional charges such as courier charges, out of pocket expenses, etc, will be recovered from the customer.
3. Cheques payable in Foreign Countries
a. The services of correspondent banks will be utilized in countries/centers where the correspondent banks have a presence.
b. Cheques drawn on foreign banks at a centre in which the Bank’s correspondents do not have a presence, will be sent directly to the drawee bank with instructions to credit proceeds to the respective Nostro account of the Bank maintained with one of the correspondent banks depending on the currency of the instruments.
c. In case of remittances, value date will be the date of provisional credit to the Bank’s Nostro account.
d. Cooling period of major currencies which is in vogue presently varies from 15-21 days.
e. Credit will be given to the customer on due date i.e. value date plus expiry of the normal cooling period.
Third party endorsements
RBI has prohibited banks from crediting “Account Payee” cheque to the Account of a person other than the payee constituent named therein. The Bank will not collect cheques for any person other than the payee constituent.
However in case of cooperative credit societies to mitigate their difficulties, Bank at their option, shall collect account payee cheques drawn for an amount not exceeding rupees fifty thousand to the account of their customers who are co-operative credit societies, provided the payees of such cheques are the constituents of such co-operative credit societies. While collecting the cheques Bank shall obtain a clear undertaking in writing from the co-operative credit societies concerned that, upon realization, the proceeds of the cheques will be credited only to the account of the member of the co-operative credit society who is the payee named in the cheque, subject to the fulfillment of the requirements of the provisions of Negotiable Instruments Act, 1881, including Section 131 thereof. The Bank shall subject the society to the usual KYC norms and enter into an agreement with the society that the KYC documents in respect of the society’s customers are preserved in the society's records and are available to the Bank for scrutiny. The Bank shall however, be aware that in the event of a claim by the true owner of the cheque, the rights of the true owner of the cheque are not in any manner affected by these instructions and Bank will have to establish that they acted in good faith and without negligence while collecting the cheque in question. The branches should take necessary approval for the above arrangement from CENMAC with Zonal Head and Head SBU Retail Banking recommendations. An annual review of the arrangement shall also be placed by the respective branches before CENMAC.
TIME FRAME FOR COLLECTION OF LOCAL / OUTSTATION CHEQUES / INSTRUMENTS
Centers where Saraswat Bank has its branch/ has a collection Arrangement
(in working days)
Cheque presented at any of the Major Metro centers (Mumbai, New Delhi, Chennai or Kolkata) and payable at any of the other three major metro centers
Cheques payable at Metro centers (Mumbai, New-Delhi, Chennai or Kolkata) and State Capitals (other than those of North Eastern States and Sikkim) - but presented elsewhere.
Cheques payable at Other centers
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.
For cheques and other instruments sent for collection to centers within the country the following time norms will apply:
(Working days exclude 2nd & 4th Saturdays, Sundays and bank holidays at the respective center)
TIME FRAME FOR CHEQUES DRAWN ON FOREIGN COUNTRIES
Such instruments will be accepted for collection on the ‘best of efforts’ basis.
In case of cheques sent for collection abroad through the Bank’s Correspondents, the time frame under final credit service for crediting the amount to the customer will be 10 working days from the day of lodgment after recovering necessary charges.
In other cases, the time frame for crediting will be 21 working days from the day of lodgment.
The instruments will be sent to the Correspondent Banks, by the respective Forex centers on the same day / next working day.
The Bank has entered into specific collection arrangement with its correspondent banks for speedy collection of such instruments. Bank will 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.
Note: The time-limits indicated above would be taken as the outer limit for collection of local cheques / instruments & instruments payable in foreign currencies. Due to limited network of our branches and our dependence predominantly on correspondent banks / drawee banks for collection of outstation instruments the above time periods may vary.
The collection period of outstation cheques and interest payable thereon in case of delay will be displayed on the notice board in every branch.
IMMEDIATE CREDIT OF LOCAL / OUTSTATION CHEQUES / INSTRUMENTS
Branches of the Bank will consider providing immediate credit for outstation cheques/instruments up to the aggregate value of Rs. 7500/- tendered for collection by individual account holders subject to satisfactory conduct of such accounts for a period not less than 6 months and taking into consideration the average balance maintained in the account.
Immediate credit will be provided against such collection instruments at the specific request of the customer or as per prior arrangement after assessing the risk profile of the customer.
The facility of immediate credit will 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 / current / overdraft accounts of the customers after assessing the risk and the profile of the customer. For extending this facility, there will not be any separate stipulation of minimum balance in the account.
Under this Policy, prepaid instruments such as demand drafts, interest / dividend warrants will be treated on par with cheques.
For the above purpose, a satisfactorily conducted account will be the one:-
i. Opened at least six months prior and complying with KYC norms, and
ii. Conduct of which has been satisfactory and the Bank has not noticed any irregular dealings, and
iii. No cheques / instruments for which immediate credit was afforded returned unpaid for financial reasons and the Bank has not experienced any difficulty in recovery of any amount advanced in the past including cheques returned after giving immediate credit.
iv. The account should be in Indian Rupees.
v. The facility shall be extended to a customer at his / her base branch only.
vi. Cheques shall not be postdated / out of date / nearing out of date (to avoid risk of return in clearing). The cheque must be deposited at least 7 working days from the date of expiry of the cheque
vii. The account shall not have had any cheque return charges – both for Inward & outward clearing in last three months preceding the Immediate credit request
Normal collection charges and actual out of pocket expenses will be charged while providing immediate credit against outstation instruments tendered for collection.
PURCHASE OF LOCAL / OUTSTATION CHEQUES / INSTRUMENTS
Bank may, at its discretion, and as permitted by the regulatory authorities 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.
INTEREST PAYMENT FOR DELAYED COLLECTION
As per the Compensation Policy of the Bank, in cases of delay in collection of outstation cheques and other instruments beyond the above mentioned stipulated time norms, the Bank will pay interest to its customer at the saving bank rate on the amount of the collection instruments.
There will 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.
If the proceeds are not realized /credited to the customers' accounts or the unpaid instruments are not returned to customers within the period specified from the date of their lodgment, and if the delay is abnormal (i.e. above 30 days) Bank will pay interest at the rate as applicable for appropriate tenor of fixed deposit for the period of delay beyond the specified period for collection of outstation instruments.
Such interest will be paid without any demand from customers in all types of accounts.
The interest payment as given above will be applicable only for instruments sent for collection within India.
As regards cheques sent for collection to the drawee bank for payment, in the absence of our branch/cheque collection arrangement, Bank will pay interest to our customer @ savings rate for the period of delay in crediting the proceeds beyond the collection period. However, Bank shall claim reimbursement of the same from the drawee bank since the delay has occurred due to failure of the drawee bank to remit the proceeds promptly to our Bank; however, our Bank will share and notify our customer on demand that the delays are due to the drawee bank.
CHEQUES / INSTRUMENTS MISPLACED OR LOST IN TRANSIT, IN CLEARING PROCESS OR AT PAYEE BANK 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 will 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.
In case if a cheque in foreign currency is misplaced/ lost, the IBD Dept shall also advise the correspondent / drawee bank all particulars of lost cheques / instruments for exercising caution.
The Bank will 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 account holder in respect of instruments lost in transit in the following way:-
i. 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 savings rate.
ii. In addition, the Bank will pay interest on the amount of cheque for a further period of 15 days at Savings Bank rate to provide for likely further delay in obtaining duplicate cheque / instrument & collection thereof.
iii. The Bank will compensate the customer for any reasonable charges he/she incurs in getting duplicate cheque/instrument upon production of a receipt (maximum Rs.500/-), in the event the instrument is to be obtained from a bank/ institution who would charge a fee for issue of a duplicate instrument.
iv. In case the cheque is lost by the Bank, the charges for “stop payment” instructions will not be levied on the customer.
v. However when a cheque/instrument is claimed to have been deposited by the customer in the Drop-Box, but the Bank’s records do not show receipt of such a cheque with the Bank, the Bank cannot decide on the compensation amount for the lost cheque in the absence of details of cheque like date, amount, drawee bank / branch / drawee centre etc., In such cases, the customer will have to corroborate a claim for lost cheque with full facts, inter-alia including confirmation/enquiries from the drawee person / banks about genuineness of the claim and, on this basis, if it is established that the customer has, in fact, tendered the cheque in the Drop-Box, the Bank will consider payment of compensation in terms of the Compensation Policy.
CHARGING OF INTEREST ON CHEQUES RETURNED UNPAID WHERE INSTANT CREDIT WAS GIVEN
When 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 customer’s 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, will be charged on the notional overdrawn balances in the account, had the credit not been given initially.
When the proceeds of the cheque credited to the savings / current bank account are not withdrawn, no interest is payable by the customer in case the cheque is returned unpaid. However, interest will be recovered at the rate of PLR + 2% from the date of credit to the date of reversal of the entry to the extent the Bank is out of funds.
In case of proceeds credited to an overdraft / loan account, interest will 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 to the extent the Bank was out of funds.
DISHONOUR OF CHEQUES
Intimation of dishonour of cheques to customers
The Bank will ensure that the dishonored instrument is delivered to the customer promptly without any delays.
Customers will be informed of the dishonor of instruments by telephone or directly on their visit to the presenting branch. In case of OBC, after recovering of cheque return charges by COCPC clusters, the returned cheque instruments will be handed over to the presenting branch by the COCPC clusters.
In case of local cheques, the cheque return charges will be recovered by branches.
The presenting branch is expected to contact the customer and hand over the same/forward the cheque to the home branch. The customer will be handed over the physical cheque by the presenting branch / home branch only after production of the counter foil of the pay-in-slip & identity proof.
Cheque return charges will be levied only in case where the customer is at fault and is responsible for these returns. For cheques that have been returned for no fault of the customer, no cheque return charges will be levied.
Outward clearing cheques that need to be re-presented without recourse to the payee, will be made in the next presentation clearing not later than 24 hours (excluding holidays) by the concerned cluster.
WITHDRAWAL OF FUNDS
The Bank will strictly follow the procedure laid down by RBI in its Circular dated 13.08.2012 and the Bank will continue to permit customers to withdraw funds credited to customer’s account (via cheques deposited) immediately after outward cheque return process is completed.
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 indicated in the code of banks commitment to customers adopted by the Bank and published on website.
The Bank will not be liable to compensate customers for delayed credit if some unforeseen events (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.
Bank's Cheque Collection Policy
Fair Practice Code for Lenders
Banking Ombudsman Scheme
Customer Compensation Policy
Policies on Lending to MSMEs and Rehabilitation of MSMEs
Collection of Dues and Repossession Policy
Code of Banks Commitment to Customers-2018
Customer Right Policy
Policy on Customer Grievance Redressal
Customer Protection Policy 2020-22
RTGS, NEFT and IMPS Timings
Bank's Policy on Resolution Framework 2.0 Small Businesses & Individuals
Bank's Policy on Resolution Framework 2.0 MSME Restructuring
Policy on Appointment of Statutory Auditors
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