Cheque Collection Policy
ESAF Small Finance Bank (hereinafter referred to as “the Bank”) emphasizes on creating a society with equal opportunities and has access to sustainable financial services which help in economic development. Customer Service is a key focus area of the Bank. The Bank focusses on consistent improvement in customer experience and quality of operations.
Keeping in view the regulatory guidelines, the Bank has formulated a comprehensive and transparent cheque collection policy.
This cheque collection policy of the Bank reflects its on-going efforts to provide better service to its 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.
The key objectives of the policy are as under:
- Lay down norms for credit for Local/ Outstation cheques and other instruments
- Institutionalize a mechanism for monitoring the dishonour of high-value cheques.
- Lay down procedures to be adopted in case of loss of cheques or delay in collection of cheques and other instruments payable locally at centres within India
- Devise the mechanism for cheque return or re-presentation of cheques
The policy will apply to all customers of the Bank and it covers all the cheque collection instruments offered/ distributed by the Bank. It also captures the roles and responsibilities of bank employees, scope of activities, scope of operations and the monitoring mechanism of the activities of the cheque collection.
The Bank shall have the following governance structure for the approval and implementation of this policy.
The Manco is a Committee of the Board consisting of members of the Board of Directors of the Bank and the Head of Departments/Business. This Committee shall, inter alia, perform the following functions:
- Review this policy and make recommendations to the Board
- Review the implementation of this policy and periodically align it to the leading market practices and regulatory requirements
- Review business initiatives and strategy and business performance.
- Review the key regulatory and risk concerns as well as the adequacy of the risk management process and upgradation thereof
- Review the broad concerns in customer servicing and complaints.
New Product Approval Committee
The Committee shall approve any new processes associated with cheque clearing or dishonour in alignment with this policy and other regulatory requirements. The Committee shall approve such processes keeping into view the suitability and appropriateness of the customers for such product.
Head- Retail Liabilities
The Head- Retail Liabilities shall prepare the Cheque Collection policy in consultation with Process Excellence & QMS t, Risk & Compliance, Operations and IT Departments, which shall be put forward to the Supervisory Committee and thereafter to the Board for approval. This policy shall seek to cover the broad types of cheques, collection and dishonour procedures. The Head- Retail Liabilities shall ensure the review of the policy on an annual basis. Any supplementary processes to the procedures/ mechanism as laid down in the policy shall be approved by the New Product Approval Committee.
The branch staff shall issue CTS – 2010 standard cheque books over the counters at the request of the customer to the customer or his/ her authorised representative. However, they shall exercise appropriate care while issuing large number of cheque books.
The branch staff may issue cheque books with larger number of (20/25) leaves if a customer demands the same and also ensure that adequate stocks of such cheque books (20/25 leaves) are maintained with all the branches to meet the requirements of the customers. However, the staff shall also obtain approval from the Cluster Manager – Liabilities.
All cheque forms should be printed in Hindi and English. The Bank shall honour the cheques written by the customer in Hindi, English or in the concerned regional language
The Bank shall accept cheques for payment even if the date mentioned on the cheque is a date in Hindi or the date is as per the National Calendar (SakaSamvat), if the cheque is otherwise in order. The Bank shall ascertain the Gregorian calendar date corresponding to the National Saka calendar in order to avoid payment of stale cheques.
The Bank shall offer the facility for acknowledgement of cheques at regular collection counters as well as cheque drop boxes. The Bank shall not however force the customer to drop the boxes at the drop box. The Bank shall also display a notice in English, Hindi and the regional language at the drop box that customers shall have the option to tender the cheques at the counter and obtain acknowledgement on the pay-in-slips.
The Bank shall not decline to accept outstation cheques deposited by its customers for collection. The Bank shall not collect any account payee cheques for any person other than the payee constituent mentioned in the cheque.
All cheques and other negotiable instruments payable locally would be presented through the clearing system prevailing at the centre.
The Bank shall accept cheques during the working hours of the Bank. The Bank shall install cheque drop boxeswhere the cheques can be deposited round the clock.
For the cheques drawn on other Banks, the cut-off time for collection will be worked out on the basis of the time afforded by the clearing houses of that location. The timings will be displayed at the Bank branches.
For the cheques drawn on own branches of the Bank, the collection timings will be as follows:
- Cheques deposited across counter: Same working day
- Cheques deposited in drop boxes: Cut off timings for the respective drop box.
The Bank would give credit to the customer account on the same day on which the final clearing settlement takes place or at the most the next working day of their presentation in clearing. Withdrawal of amounts so credited would be permitted as per the cheque return schedule of the clearing house.
Branches situated at centres where no clearing house exists, would present local cheques on draweeBanks across the counter and it would be the Bank’s responsibility to credit the proceeds at the earliest.
The Bank shall not make payment of cheques bearing that date or any subsequent date, if they are presented beyond the period of 3 months from the date of such instrument.The Bank shall notify the holders of such instruments of the change in practice by printing or stamping on the cheque leaves and by issuing suitable instruction for presentment within the period of 3 months from the date of the instrument.
In respect of cheques lost in transit or in the clearing process or at the branch, the Bank shall immediately bring the same to the notice of the accountholder so that accountholder can inform the drawer to record stop payment and can also take care that other cheques issued are not dishonoured due to non-credit of the amount of the lost cheques / instruments. The Bank shall compensate the customer with respect to the cheque lost in transit or delayed clearing of cheques as per the Customer Compensation Policy of the Bank.
The Bank shall reimburse the account holder related expenses for obtaining duplicate instruments and also interest for reasonable delays occurred in obtaining the same.If the cheque/ instrument has been lost at the paying Bank's branch, the Bank shall have a right to recover the amount reimbursed to the customer for the loss of the cheque/ instrument.
For local cheques, credit and debit shall be given on the same day or at the most the next day of their presentation in clearing. In respect of local clearing, the Bank shall permit usage of the shadow credit afforded to the customer accounts immediately after closure of relative return clearing and in any case withdrawal shall be allowed on the same day or maximum within an hour of commencement of business on the next working day, subject to usual safeguards.
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).
Timeframe for collection of cheques drawn on State Capitals / major cities / other locations to be 7/10/14 days respectively.The Bank shall pay interest at the fixed deposit interest rate for the corresponding maturity. if there is any delay in collection beyond this period.
The Bank may reject cheques on account of technical reasons such as stale cheques, incorrect date, signature not matching with the account holder’s sign and such other reasons or on account of insufficient funds. For the purpose of adducing evidence to prove the fact of dishonour of cheque on behalf of a complainant (i.e. payee / holder of a dishonoured cheque) in any proceeding relating to dishonoured cheque before a court, consumer forum or any other competent authority, the Bank should extend full co-operation, and should furnish him/her documentary proof of fact of dishonour of cheques.
The Bank shall ensure that cheques/ drafts issued by clients containing fractions of a rupee are not rejected or dishonoured by them. The Bank shall ensure that appropriate action is taken against their staff who have refused to accept cheques/ drafts containing fractions of a rupee.
The Bank shall ensure that dishonoured instruments are returned/ despatched to the customer promptly without delay, in any case within 24 hours. The Bank should return dishonoured cheques presented through clearing houses strictly as per the return discipline prescribed for respective clearing house in terms of Uniform Regulations and Rules for Bankers' Clearing Houses. If the Bank is the collecting Bank, on receipt of such dishonoured cheques it shall immediately despatch it to the account holders.
In case of outward cheque return, an advice will be prepared by the Bank wherein the reason for return of the cheque will be indicated. The advice along withthedishonoured cheque will be sent to the customer by registered post/ local delivery/ across counter. The Bank shall return/ dispatch the dishonoured cheques to the customerat his / her last recorded address available with the branch. In case the cheque is drawn on any other branch of the Bank and is dishonoured, then the Bank shall send the dishonoured cheque with the memo within 1 working day from the date of dishonour.
In case of dishonour/ return of cheques, the Bank should clearly indicate the return reason code on the return memo / objection slip which should also bear the signature/ initial of the Bank officials as prescribed in Rule 6 of the Uniform Regulations and Rules for Bankers’ Clearing Houses (URRBCH).
8.2 Dealing with incidents of frequent dishonour of cheques/ payment instructions of value of 1 crore and above
The Bank shall introduce a condition for operation of accounts with cheque facility that in the event of dishonour of a cheque/ payment instruction valuing Rs. 1 crore and above drawn on a particular account of the drawer on four occasions during the financial year for want of sufficient funds in the account, no fresh cheque book shall be issued.
If a cheque is dishonoured for a third time on a particular account of the drawer during the financial year, the Bank shall issue a cautionary advice to the concerned constituent drawing his attention to aforesaid condition and consequential stoppage of cheque facility in the event of cheque being dishonoured on fourth occasion on the same account during the financial year. The Bank shall issue similar cautionary advice if it intends to close the account.
In case the cheque is returned due to no fault of the customer, the Bank shall not levy any cheque return charge.
The Bank shall levy cheque return charges only in cases where the customer is at fault and is responsible for such returns. In cases where the cheques need to be re-presented without any recourse to the payee, such re-presentation should be made in the immediate next presentation clearing not later than 24 hours(excluding holidays) with due notification to the customers of such representation through SMS alert, email etc.
The Bank, at its discretion, may purchase local cheque tendered for collection as per the customer’s request or as per any prior arrangement. The Bank shall in addition to the satisfactory conduct of account consider the standing of the drawer of the cheque as a factor while purchasing a cheque. All branches will follow the internal guidelines as per the extant delegation of authority given on purchase of cheques.
The Bank shall not be liable if any transaction does not fructify or may not be completed or for any failure on part of the Bank to perform any of its obligations contemplated hereunder if performance is prevented, hindered or delayed by a Force Majeure event (defined below) and in such case its obligations shall be suspended for so long as the Force Majeure. "Force Majeure Event" means any event due to any cause beyond the reasonable control of the Bank, including without limitations, unavailability of any communication systems, breach, or virus in the processes or payment or delivery mechanism, sabotage, fire, flood, explosion, natural disasters or other "Acts of God", war, damage to the bank's facilities or of its correspondent bank(s), civil commotion, strikes or industrial action of any kind, riots, insurrection, war, acts of government, computer hacking, unauthorized access to computer data and storage devices, computer crashes, malfunctioning in the computer terminal or the systems getting affected by any malicious, destructive or corrupting code or program, mechanical or technical errors/failures or power shut down, faults or failures in telecommunication etc. which prevents it from performing its obligations within the specified service delivery parameters.
The branches shall report to the Head Office the data in respect of each dishonoured cheque for amount of Rs.1 crore and above and Rs 1 crore and below as separate MIS.The branches shall send a report to the Head office on cheque related frauds detected, number of valid and invalid ones on a quarterly basis.
The Bank shall separately consolidate data in respect of cheques drawn in favour of stock exchanges and dishonoured irrespective of the value of such cheques as a part of their MIS relating to broker entities, and the same shall be reported to the Head Office
The Bank employee shall report to his senior official in case the employee finds any discrepancy in the cheque, with a view to reduce the risk of fraud. The Bank shall report to the Board and RBI on immediate basis information regarding the case, action and resolution taken
The Bank shall place before their Audit/ Supervisory Committee, every quarter, consolidated data in respect of incidents of frequent dishonour of cheques of value of Rs. 1 crore and above and cheques of value less than Rs. 1 crore.
The Bankwill preserve the physical instruments in their custody and the images of cheques received under CTS securely for a period of 10 years as required under Procedural Guidelines for CTS. Further, the Bank shall retain such documents as may be required for 8 years from the date of cessation of relationship with customer, so as to permit reconstruction of the customer transactions.
This Board approved policy will be reviewed as and when required or at least on an annual basis for incorporating changes in handling Cheques and regulatory updates, if any.
Last date of review: DD/MM/YYYY
- Master Circular on Customer Service in Banks dated July 1, 2015
- RBI Notification on Discontinuation of the requirement for Paper to Follow (P2F) for Central Government cheques under Cheque Truncation System dated December 31, 2015
- RBI notification on Procedure for Dishonour of cheques dated June 26, 2003
- IBA Model Cheque Collection Policy
- BCSBI Code of Commitment to Bank’s Customers