Compensation Policy
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 endeavor 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 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:
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 for the customer by way of reduction in the
minimum balance applicable for payment of interest on savings bank
deposit or payment of additional interest to the bank 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 of direct debit instructions due to
insufficiency of balance on account of the unauthorized/erroneous
debit, the bank will compensate the customer to the extent of such
financial losses.
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.
For erroneous transaction reported by customers
in respect of credit card operations that require reference to a
merchant establishment, the bank would provide explanation and if
necessary, documentary evidence to the customer within a maximum
period of 60 days.
2.ECS direct debits/other debits to accounts
The bank will undertake to carry out direct
debit/ ECS debit instructions 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 the event 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.
Where it is established that the bank had issued
and activated a credit card without written consent of the
recipient, the bank would not only reverse the charges immediately
but also pay a penalty without demur to the recipient amounting to
twice the value of charges reversed.
3.Payment of Cheques after Stop Payment
Instruction:
In case a cheque has been paid after the Bank
acknowledges stop payment instruction, the transaction shall be
reversed and given 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 banks. 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. Bank
however, would consider upfront credit against such instrument 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 21
working days from the date of credit to Nostro Account/ due date
after taking into account normal cooling period stipulated. The
compensation in such cases will be worked out as follows:
-
Interest for the delay in crediting proceeds
as indicated in the collection policy of the bank.
-
Compensation for any possible loss on account of
adverse movement in foreign exchange rate.
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:
5.1 "Payment of Interest for delayed
Collection of Outstation Cheques:
As part of the compensation policy, 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 below. 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:
-
Savings Bank rate for the period of delay
beyond 7/10/14 days as the case may be in collection of
outstation cheques.
-
Where the delay is beyond 14 days interest will
be paid at the rate applicable for term deposit for the respective
period.
-
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.
-
In the event the proceeds of cheque under collection
were 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:
5.2 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 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:
-
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 in Para 5.1 above.
-
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.
-
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 representative / courier or DSA 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
Where the bank has entered into an arrangement with a
Co-operative bank to pay its instruments 'at par', 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, 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.
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