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The
Committee on Procedures and Performance Audit on Public Services (CPPAPS)
set up to evaluate and oversee the observance of a voluntary code of
conduct by the banks has felt the need to benchmark the extant level
of public service in the banking sector. Consequently RBI with the
banks decided to set up, as a collaborative effort, an autonomous
body, Banking Codes and Standards Board of India (BCSBI). The body
envisages to provide a framework for a minimum standard of banking
services, which individual customers can legitimately expect.
Towards this end, BCSBI has advised member banks to place a
Compensation Policy before their respective Boards and display the
policy at all their branches.
I.
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 timeframe for collection of outstation cheques, payment of interest on delayed collection of outstation cheques, payment of interest on delayed collection of outstation cheques/instruments, with effect from 1st 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 : 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. 2.ECS
Direct debit/other debits to accounts The
bank will undertake to carry out direct debit/ECS debit instruction
of customers in time. 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 instruction/failure to carry out the instructions.
The
bank would debit the customer’s account with any applicable
service charge as per the schedule of charges notified by the bank.
In case the bank levies any charge in violation of the arrangement,
the bank will reverse the 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. 3.
Payment of Cheques after Stop Payment Instruction: In
case a cheque has been paid after stop payment instructions 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: The
Bank would not compensate the customer for delays in collection of
cheques designated in foreign currencies, sent to foreign countries
as the bank would not be able to ensure timely credit from overseas
bank. It is the bank’s experience that time for collection of
instruments drawn on banks in foreign countries differ from country
to country and even within a country, from place to place. The time
norms for return of instruments cleared provisionally also vary from
country to country. The Bank however, would consider upfront credit
against such instruments by purchasing the cheque/instrument,
provided the conduct of the account has been satisfactory in the
past. However, the bank will compensate the customer for undue
delays in affording credit once proceeds are credited to the Nostro
Account of the bank with its correspondent. Such compensation will
be given for delays beyond one week from the date of credit to
Nostro Account/due date after taking into account normal cooling
period (as applicable to respective countries) notified from time to
time. The compensation will be worked out as under: a)
@ 2% above
the savings a/c rate, for amount upto Rs.10 lacs for delay beyond 10
days from the date of receipt of remittance advice. In case of
amount exceeding Rs.10 lacs for delay beyond 3 days (including
Saturday) from the date of receipt of credit advice in sending
remittance advice to the beneficiary. b)
Compensation
for any possible loss on account of adverse movement in foreign
exchange rate. 5.
Payment of Interest for delayed Collection of Outstation Cheques : As
part of 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 in
the Bank Policy on Collection Cheques / Instruments. 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 10/14 days as the case may
be in collection of outstation cheques. b)
Where the delay is beyond 45 days interest will be paid at
the rate applicable to for term deposit for the respective
period. c)
In case the 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. e)
Only additional verifiable expenses incurred by a customer in
this regard will be
compensated. It may be noted
that interest payment as given above would be applicable only for
instruments sent for collection within India. 5.1
Cheques/Instruments lost in transit/in clearing process or at paying
bank’s branch: In
the event of 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
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 (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. d)
The bank shall compensate the financial loss suffered by the
customers due to loss of instrument, after the duplicate instrument
has been obtained and proceeds collected thereof. However, the
interest component of the compensation shall be restricted to a
maximum of 90 days. 6.Violation
of the Code by banks agent: In
the event of receipt of any complaint from the customer that the
bank’s representative /courier or any other agent has engaged in
any improper conduct or acted in violation of the Code of Bank’s
Commitment to Customers which the bank has adopted voluntarily, bank
shall take appropriate steps to investigate and to handle the
complaint and to compensate the customer for financial losses, if
any. 7.
Transaction of “at par instruments” of Co-operative Banks by
Commercial Banks The RBI has expressed concern over the lack of transparency in the arrangement for payment of “ at par” instruments of cooperative banks by commercial banks resulting in dishonour of such instruments when the remitter has already paid for the instruments. In this connection it is clarified that the bank will not honour cheques drawn 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, accident, Fires, natural disasters or other
“act 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. Notwithstanding
any thing contained hereabove, the Bank shall not pay any
compensation in the following cases:
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