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Bank's Cheque Collection Policy

Bank's Cheque Collection Policy

Objective
Background
Arrangements for Collection
Local Cheques
Outstation Cheques
Speed Clearing
Cheques payable in Foreign Countries
Immediate Credit of Local /Outstation Cheques/ Instruments
Charging of Interest on cheques returned unpaid where Instant Credit was given
Purchase of local/outstation cheques
Time Frame for Collection of Local / Outstation Cheques / Instruments
Interest payment for delayed collection
Cheques / Instruments lost in transit / in clearing process or at paying bank's branch
Force Majeure

OBJECTIVE:

  • 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 it has been imperative for our Bank to frame Cheque collection Policy.
  • To improve efficiencies in collection of cheques and other instruments. 
  • This collection policy of the Bank would be reflection of our on-going efforts to provide better service to our customers and set higher standards for performance. 

BACKGROUND:

  • 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 centers within India and abroad.
  • Our commitment regarding time norms for collection of instruments.
  • Our policy on dealing with collection instruments lost in transit.

ARRANGEMENTS FOR COLLECTION

LOCAL CHEQUES

  • All cheques and other Negotiable Instruments payable locally would 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 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.
  • Bank branches situated at centers where no clearinghouse 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.

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 covered under CBS network at outstation centres will provide same day credit to its customers. 
  • The bank would debit the customer's account with applicable service charge as per the tariff schedule notified by the bank. The charges notified are all inclusive and no additional charges such as courier charges, out of pocket expenses, etc, would be recovered from the customers.

SPEED CLEARING

  • Speed Clearing refers to collection of outstation cheques through the local clearing. It facilitates collection of cheques drawn on outstation core banking enabled branches of banks, if they have a net worked branch locally.
  • With Speed Clearing any outstation cheques and other instruments (except demand drafts, pay orders) drawn on CBS enabled branches of member banks are presented in local clearing at MICR centres. 
  • The criteria for instrument to be eligible for speed clearing: 1. Cheque should be in MICR format 2. Drawee branch should be on CBS platform.3. Drawee bank must participate in local clearing.
  • The Bank participates in outward as well as Inward Speed Clearing.
  • All outstation cheques drawn on the branches, eligible to be covered under the Speed Clearing Scheme of the RBI would be presented through the Speed Clearing and not be sent as outstation cheques for collection.

CHEQUES PAYABLE IN FOREIGN COUNTRIES:

  • The services of correspondent banks will be utilized in country/centres where the correspondent banks have presence.
  • Cheques drawn on foreign banks at centres our correspondents banks do not have presence will be sent directly to the drawee bank with instructions to credit proceeds to the respective Nostro Account of our correspondent banks depending on the currency of the instruments.

IMMEDIATE CREDIT OF LOCAL /OUTSTATION CHEQUES/ INSTRUMENTS:

  • Branches / extension counters of the bank will consider providing immediate credit for outstation cheques / instruments up to the aggregate value of Rs 7500.00 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 clearinghouse exists. 
  • The facility of immediate credit will be offered on Savings Bank / Current / Cash Credit Accounts of the customers. For extending this facility, there will not be any separate stipulation of minimum balance in the account.
  • Under this policy, prepaid instruments like Demand Drafts, Interest / Dividend 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:
  • Opened at least six months earlier and complying with KYC norms.
  • Conduct of which has been satisfactory and bank has not noticed any irregular dealings.
  • Where no cheques / instruments for which immediate credit was afforded returned unpaid for financial reasons 
  • Where the bank has not experienced any difficulty in recovery of any amount advanced in the past including cheques returned after giving immediate credit.
Normal collection charges and out of pocket expenses will be charged while providing immediate credit against outstation instruments tendered for collection.

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 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 were 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.

PURCHASE OF LOCAL/OUTSTATION CHEQUES:

  • 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. 

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.1 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 centres within the country the following time norms shall be applied:
    1. 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 of10 (working) days.
    2. State Capitals (other than those of North Eastern States and Sikkim): Maximum period of 15 (working) days. c) In all other Centres : Maximum period of 20 (working) days.
    3. In case of cheques sent for collection through Correspondence banks 10 (T-10) working days from the day of lodgment if day of lodgment is considered as T-O.
    4. Cheques drawn on foreign countries: Such instruments are accepted for collection on the 'best of efforts' basis.
    5. Bank has entered into specific collection arrangement with its correspondent bank for speedy collection of such instrument. 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.
[Note: The time-limits indicated above would be taken as the maximum period for collection of cheques / instruments. Due to limited network of branches and depending predominantly on correspondent banks/drawee banks for collection of outstation instruments the time periods are specified based on our experience in the past

INTEREST PAYMENT FOR DELAYED COLLECTION:

  • In all cases of delay in collection of outstation cheques and other instruments, the banks will pay interest at saving bank rate for delayed collection of outstation cheques/instruments drawn on outstation branches of other (drawee) banks and sent for 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. 

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
  • 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 account holder 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.

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 preventing it from performing its obligations within the specified service delivery parameters. 
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Saraswat-Bank
Saraswat-Bank