Payment & settlement
NEGOTIABLE
INSTRUMENTS ACT –1881
( Read Approved Books to know more correct
information about the Act )
Ø Implemented
w.e.f. March 01, 1882
Ø 147
Sections with 17 Chapters [ 138-142 added in 1988 w.e.f. 01.04.89 & 143 –147
added during Dec.2002]
Sec.
13 – Negotiable Instruments means and include – Promissory Note, Bills of
Exchange & Cheque.
Negotiability:
Transfer of the instrument to any person so as to constitute him holder.
Negotiation
means:
01. Transfer
without restriction
02. Transferee
taking the instrument for value and in good faith, gets better and absolute
title despite any defect in the title of transferor [ endorser]
Negotiation of Bearer cheque is
completed by delivery [47] and that of order instrument is completed by
delivery and endorsement [48]
Sec.4 – Defines Promissory Note
PN
is an instrument in writing, containing an unconditional undertaking (or
promise), signed by maker, to pay a certain sum of money, to or to the order of
certain person or to the bearer of the instrument.
Ø Parties
: Maker and Payee
Ø PN
requires to be stamped.
Ø 2
types of PNs: Demand Promissory Note and
Usance Promissory Note.
Ø PN
can be drawn payable in installments also and a provision also can be made that
on default of one installment entire amount mentioned in PN becomes payable.
Ø Currency
Notes being money, though fulfills conditions of PN are not promissory notes
and governed by Indian Currency Act [Sec21]
Sec 5 – Bill of Exchange
A
Bill of Exchange is an instrument in writing, containing an unconditional
order, signed by maker, directing a certain person to pay, a certain sum of
money only, to or to the order of certain person or to the bearer of the
instrument.
Ø Parties
: Drawer, Drawee [ Acceptor ] and Payee
Ø Where
no period is mentioned on PN or BOE for payment, is payable on demand
Ø Where
the BOE is lost, the drawer is under obligation [Sec45A] to issue a duplicate
bill.
Ø An
instrument can be made payable to two or more persons jointly or payable to one
of two or one or some several payees.
Sec
6 – Cheque :
Cheque
is a bill of exchange drawn on a specified bank and not expressed to be payable
otherwise than on demand.
Parties
to cheque : Drawer [ account holder],
drawee [ the bank where the account is maintained] an payee [person named in
the cheque]
Electronic Cheque /
Truncated Cheque
In
terms of amendments to NI Act during Dec 2002, Cheque Means - the Cheque in
Electronic form and Truncated cheque transacted during clearing process
Electronic
Cheque : Electronic cheque is a cheque which contains the
exact mirror image of a paper cheque and is generated, written and signed in a
secured system ensuring the minimum safety standards with the use of digital
signature (with or without biometrics signature and asymmetric crypto system)
Cheque Truncation
In
Truncation the cheque is scanned and electronic image, instead of physical
cheque is transmitted in clearing cycle. The cheque is truncated either by
clearing house or by the bank. Immediately on generation of an electronic image
for transmission, further physical movement of the cheque in physical form is
substituted with such image.
Restrictions
on Instruments being made payable to bearer
RBI
Act 1934 – Section 31: states that no person other than RBI or Central Govt.
can draw, accept, make or issue any bill of exchange or promissory note payable
to bearer on demand. Section 31(2) puts a restriction on making a promissory
note payable to bearer by a person other than RBI/Central Govt.
Cheques
in Practice:
Ø NI
Act does not prescribe any specific form of a cheque.
Ø Withdrawal
slips used by customers are not regarded as cheques.
Ø Withdrawals
by customer by writing an application on a plain paper, would not be unlawful
but banks do not permit due to inherent risks except under exceptional
circumstances.
Ø Cheques
drawn in different inks, scripts and handwritings : Cheques should be paid, if
otherwise in order and paying bank is in a position to read and understand the
instructions of drawer
Date
of cheque:
Cheques
without date: Not payable. However holder can
complete it.
Cheque
bearing a date being holiday: Cheque can be paid.
Cheque
bearing date in National Saka calendar [Hindu]: can be paid
Cheque
bearing impossible date: e.g. cheque dated 31st
Nov, 30th Feb can be paid on 30th Nov or 28/29th
Feb. However cheque dated 26th Jan cannot be paid on 25th
Jan.
Stale
Cheque: The validity period of cheque is expired due to
date mentioned on cheque i.e.3 months from the date.(WEF 01.04.2012)
Revalidation:
After cheque becomes stale it can be revalidated any number of times.
Ante
Dated Cheque: Cheque bearing date prior to actual
date of signing the cheque or prior to opening of account is valid and can be
paid till it becomes stale.
Postdated
cheque: Cheque bears a date not fallen due till
presentment. Such cheque becomes effective only from the date mentioned on
cheque.
Payment
of such cheque is not a payment in due course and additionally poses following
risks:
·
Drawer can stop payment
·
Death / insolvency or lunacy of
customer may happen
·
Garnishee Order may be served on
account
Holder:
[8]
The
holder means any person who is entitled in his own name to the possession
thereof. Legal right to possess is enough. A person who was entitled to receive
payment of an instrument and the instrument has been lost, will continue to be
treated as holder.
Holder in due course [9]
A
holder in due course is a person (payee or endorsee or bearer) who must have
the instrument in his possession
He
must obtain possession of it for valuable and lawful consideration (and not as
a gift) before its maturity (in case of bill)
He
must obtain it in good faith without any sufficient reason to believe that any
defect existed in the title of the person from whom he obtained it.
Holder
in due course gets a better title than the transferor even when the transferor
had defective title.
Payment of cheques and Payment in due
course
U/s
Sec 31 – statutory obligation to honour the customer’s cheques subject to
conditions:
There
are sufficient funds of the drawer available with the bank
These
funds are meant for payment of such cheques
There
is proper demand to make the payment
Payment
in Due course: [10]
Payment
would be considered in due course if:
Payment
is in accordance with the apparent tenor of the instrument
Payment
must be made in good faith and without negligence
Payment
must be made to the person in possession of the instrument
Payment
must be made under circumstances which do not afford a reasonable ground for
believing that he is not entitled to receive payment of amount mentioned
therein and Payment must be made in money
only
Protection
to Paying Bank 85[1] order cheque i.e. regularity in
endorsement, 85[2]-bearer cheque 85 A
DD, 89 – Cheque with material alteration not visible with naked eye, 128 –
payment of crossed cheques.
Negotiation:
Negotiation
means transferring an instrument from one person to another in such a manner to
convey title and to constitute the transferee the holder thereof:
Bearer
Instrument: Negotiation completes with delivery of instrument [47]
Order
Instrument: The negotiation by endorsement and delivery would be required in case
of NIs payable to order [48]
Importance
of Delivery: 46 May be actual or constructive.
Without the delivery the property will not be considered to have been
transferred.
Delivery
of instrument by legal heirs, endorsed by a
deceased person considered negotiation is not complete [57]
Endorsement [15]
·
Endorsing means signing on the face or
backside of an instrument [or even on a piece of paper called Allonge] for the
purpose of negotiating an instrument.
·
Person who signs and transfers the
instrument is called – endorser
·
Person in whose favour the endorsement
is done is called – endorsee.
·
Holder of an instrument, payee of a
cheque or promissory note and drawer of an accepted bill can endorse an NI
Types
of Endorsements
Blank
Endorsement: Endorser only signs without adding
any words, directions. This makes the instrument payable to bearer as per Sec
54.
Endorsement
in Full: Endorser signs his name and adds the name of
endorsee specifically.
Restrictive
Endorsement: Endorser adds along with
sign such as Pay to A only
Conditional
Endorsement An endorsement which stipulates
certain condition. Pay to A when he marries.
Partial
Endorsement: When endorser transfers part of
amount mentioned in Negotiable instrument.
Sans
Recourse Endorsement Signature of endorser with words pay
to A without recourse to me.
Facultative
Endorsement: Where endorser waives the condition of notice of dishonour.
Crossing
of Cheque
·
Crossing is applicable in case of
cheques only [ does not cover Bill of exchange and Promissory Note]
·
Crossing is either general crossing
[123] or special crossing [124]
General
Crossing: Two parallel transverse lines on the face with
or without words, such as ‘& Co’, ‘not negotiable’, ‘payees account only’
etc. These words without lines will not constitute crossing. [Lines are
important and not the words] These cheques are payable to a banker
Special
Crossing: Cheque bears across its face, an addition of the
name of the banker, either with or without the words not-negotiable. These
cheques are payable to the specific banker whose name appears on the face of
the cheque. [Name of the bank is important and not the words/lines]
Not
Negotiable Crossing:[130] – A person taking a cheque crossed generally or
specially bearing in either case the words ‘not negotiable’ shall not have and
shall not be capable of giving a better title to the cheque than that of the
person from whom he took it ‘had’. Such crossing does not restrict further
transfers but the endorsees do not get better title than the endorsers.
Account
payee crossing [direction to collecting bank] – NI act does not define it. It
is result of custom, use and practice and legal decision.
Law
does not prohibit but cheques with such crossings cannot be endorsed.
Presumptions
with regard to Negotiable Instruments:[118]
Ø NI
was made, drawn, accepted, endorsed and negotiated or transferred for
considerations
Ø It
bears the date on with it was made or drawn
Ø It
was accepted within a reasonable time after its date and before maturity
Ø Every
transfer of NI was made before maturity
Ø Endorsements
appearing on NI were made in the order in which they appear thereon
Ø It
was duly stamped and stamp duty cancelled, when NI stands lost
Ø Holder
is holder in due course.
Dishonour
of cheques [138-142] wef 01.04.1989
Drawer
of cheque, which is returned unpaid because of insufficiency of funds or
stopping the payment of cheques, is deemed to have committed criminal offence
under section138.
The
pre-requisites for prosecution –
Ø Cheque
should have been issued to discharge of a liability. Cheque given a gift, will
not fall in the framework.
Ø Cheque
should be presented timely i.e. within validity period of cheque
Ø The
payee or holder in due course should give notice demanding payment within 30
days of his receiving information of dishonour which should be for reason such
as insufficiency of funds, refer to drawer, payment stopped.
Ø The
drawer can make payment within 15 days of receipt of notice and if he fails to
do so, prosecution could take place.
Ø The
complaint can be made only by the payee or holder in due course.
Ø The
complaint should be made within one month of the cause of action
Ø No
court inferior to that of Metropolitan Magistrate or Judicial Magistrate of first
class will try the office
Ø An
offence is punishable with imprisonment for a term which may extend to 2 year
or with fine which extend to twice the amount of cheque or both.
Ø In
case of compounding of offence court can impose a fine up to Rs.5000 and
imprisonment up to one year.
CALCULATION
OF DUE DATE of BILL OF EXCHANGE
Ø Is
required for Usance Promissory Note and Usance bill of exchange
Ø While
calculating the due date 3 days of grace are required to be added
Ø If
drawer has either already mentioned the due date or due date is already
calculated by the drawer then the grace period is not to be given
Ø In
case of usance promissory note on each installment three days of grace are to
be added
Ø In
case of Commercial Paper and Certificate of Deposits even though they are
usance P/N, days of grace not be given.
Ø Principles
for calculating the due date
Ø Usance
period is mentioned in complete months while calculating due date corresponding
date of the respective month is to be taken and there after 3 days of grace to
be added
Ø If
the concerned date is not available, then last date of the month is to be
taken.
Ø If
the usance period is stated in days, then while calculating the due date, 1st
day is to be excluded and last day to be included.
Ø If
the maturity date falls on public holiday/Sunday, the bill will become payable
on next preceding business day. Public holidays are declared under Sec 25 of NI
Act.
Material Alteration
Material
alteration is an alteration of an negotiable instrument which brings basic
change in the operation/characteristic of the instrument [ i.e. mandate] and
liabilities of the parties thereof, whether the change be beneficial or
detrimental.
Alterations
would be taken as material when it relates to date, sum payable, time of
payment, place of payment, rate of interest, addition of new party, tearing
material part of NI, date of endorsement.
Alterations
which are not material: such as crossing an uncrossed cheque, filling the date,
converting a general crossing into a special crossing etc.
Only
the drawer of a cheque can correct material alterations.
Protection:
Payment of a material altered cheque is not considered a payment in due course
and bank will have to make good the loss if any. Sec 89 protects a
banker only if the material alteration is not apparent i.e. it is done in such
a way that it cannot be detected with reasonable care, prudence and scrutiny.
NEGOTIABLE INSTRUMENTS ACT -
Negotiable Instruments Act - Important
Sections with contents title
4 – Promissory note definition
5 - BOE definition
6 – Cheque definition
7 – Drawer, drawee, acceptor defined
8 – Holder
9 – Holder in due course
10 – Payment in due-course
11 – Inland instruments
12 – Foreign instruments
13 – Negotiable instruments
14 – Negotiation defined
15 – Endorsement defined
16 – Endorsements in blank and full
17 – Ambiguous instruments
18 –Amount in words & figures if differ
19 – Instruments payable on demand
20 – Inchoate instruments
21 – Instruments payable at sight
24 – Calculation of maturity of bills/DPN
25 – Bill maturity on a holiday
26 – Capacity of the minor
31_ to honour cheques
36 – Every prior party to NI is liable thereon to
a holder in due course until instrument is duly satisfied
47 – Bearer cheque
48 - Order cheque negotiation
49 – Conversion of blank endorsement in full
50 - Restricted endorsement
51 - All joint holders should sign for negotiation
52 - Sans recourse endorsement
53 – Holder of a NI derives title from a holder in
due course has the right thereon of that holder in due course
56 - Partial endorsement
58 – Stolen cheque
60 - NI can be endorsed until its payment is made
65 – Hours of presentment
80 – Rate of interest
85(a) – Payment of order instrument
85(b) – Payment of bearer cheque
87 – Material alteration
89 – Protection to paying banker – obliterating of
crossing and material alterations
99 – Noting
100 – Protesting
118 - Presumptions of NI
123 – Cheques crossed generally
124 – Cheques crossed specially
125 – Who can cross?
126 – Effect of crossing
128 - Protection to paying banker in case of
crossed cheques
129 - Liability to true owner in case of crossed
cheques
130 - Not negotiable crossing
131 – Protection to collecting banks
138 – Dishonour of a cheque for insufficiency of
funds
139 – Presumption in favour of holder
140 – Defence not allowed in prosecution U/S 138
141 – Offence by company U/S 138
142-147: are sections related to summary trial.
CHEQUE TRUNCATION:
Truncation is
the process of stopping the flow (movement) of the physical cheque. In this
process, the physical instrument will be truncated at some point en-route to
the drawee branch. Instead, an electronic image of the cheque, captured by the
presenting bank, is sent to the drawee branch along with the relevant
information like the MICR fields, date of presentation, presenting banks etc.
Uniqueness of the cheque: The image is transmitted to
the drawee branch through the Clearing House with digital signatures and
physical endorsement of the presenting bank. In addition, drawers could use
holograms, barcoding or such other features, to add to the uniqueness of the
images.
Implementation
of Cheque truncation: To start with RBI proposes to
implement the project on a pilot basis in the National Capital Region (NCR),
New Delhi. Banks are to decide the point of truncation. RBI will install an
interface with its system (Clearing House Interface - CHI) at the service
branches of those banks, which are members of the New-Delhi Bankers Clearing
House. The digitally signed images from presenting banks would flow to the
interface (CHI) provided by RBI, from where the images would flow to the
Clearing House and would reach the service branches of the drawee branches
clearing house interface. The service branches have to ensure that these images
move across their branches to ensure their processing.
Services by
RBI : RBI's services include system development and installation at the
clearing house, interfaces at the banks' end, network, handholding, awareness
propagation and training.
Process
flow in the Cheque Truncation System (CST):
(a) The
presenting bank will capture the data & images of the cheques using their
internal Capture System (which should meet the specifications and standards
prescribed for data and images).
(b) The banks
will send the captured images and data to the Central Clearing House for onward
transmission to the payee/ drawee banks. For that purpose, RBI will be
providing the banks software called the Clearing House Interface (CHI) that
will enable them to connect and transmit data in a secure way and with
non-repudiation to the Clearing House (CH).
(c) The
Clearing House will process the data and arrive at the settlement figure for
the banks and send the required data to payee/drawee banks for processing at
their end.
(d) The
drawee/payee banks will use the same CHI for receiving the data and images from
the Clearing House. It will be the responsibility of the drawee bank Capture
System to process the inward data and images and generate the return file for
unpaid instruments.
Preservation
of the paper cheques: The physical instruments are
required to be stored for a statutory period. It would be obligatory for
presenting bank to warehouse the physical instruments for that statutory
period. In case a customer desires to get a paper instrument back, the instrument
can be sourced from the presenting bank through the drawee bank.
Electronic Clearing Service (ECS)
ECS is a retail payment system that facilitates
bulk payments, that facilitate payments from one-to-many and receipts that are
from many-to-one. The two components of this system are ECS(credit) and ECS
(Debit). This facility is now available at 78 major centers in the country.
ECS (Credit):
It facilitates the bulk payments whereby the account of the institution
remitting the payment is debited and the payments remitted to beneficiaries’
accounts.
This facility is mostly used for making bulk
payments, like payment of dividend to investors, payment of salaries of
employees by institutions etc. For this purpose, the company or entity making
the payment has to have the bank account details of the individual
beneficiaries.
ECS (Debit):
It facilitates the collection of payments by utility companies. In this system
the accounts of the customers of the utility company, in different banks are
debited and the amounts are transferred to the account of the utility company.
The company providing this facility has to receive the mandate to collect funds
from its customer. On receipt of the mandate, the company advises the
consumer’s bank to debit the payment due from the account on the due dates. A
copy of the advice is also sent to the customer.
The clearing and settlement transactions through
ECS occur at the respective centers. A centralized facility is available at RBI
Mumbai to receive the ECS (credit) files meant for credit at other 15 RBI centers.
The volume of transactions processed through ECS
clearing systems has been registering substantial growth during the last few
years. The monthly average volume of transactions through ECS has increased
manifold.
DEALING
WITH FREQUENT DISHONOUR OF ECS (IC 8592
dt 18/03/2010)
ECS business has picked up very much, however on
the other hand the practice if issuance of mandates by customers without
maintaining adequate funds undermines the credibility of such mandates. This is
regarded as unhealthy trend which is to be curbed. As such RBI directs that where customer is
using ECS facility that in the event of dishonor of ECS instructions, drawn on
a particular account of the drawer on three occasions during the financial year
for want of sufficient funds in the account, the presenting bank must delete
this ECS instruction from the list. The
bank may also consider closing account at its discretion.
However in respect of advances accounts such as
cash credit account, overdraft account, the need for continuance or otherwise
of these credit facilities and the cheque facility relating to these accounts
should be reviewed by appropriate authority higher than the sanctioning
authority.
Banks henceforth while accepting the mandate for
ECS issue a letter advising the above condition.
When ECS instruction is returned for second time
on a particular account of the drawer during the financial year, bank will
issue a cautionary adv ice to the concerned constituent drawing his attention
to aforesaid condition and consequential closure of the account in the event of
ECS instruction being dishonored on third occasion on the same account during
the financial year.
Policy On
Collection Of Cheques Or Instruments And Dishonour Of Cheques ( 9917 Dated 25.04.2014)
Local Cheques
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.
Speed Clearing
Speed Clearing refers to
collection of outstation cheques through local clearing.
The facility is presently
extended at 66 MICR CPC locations through Speed
Clearing System of RBI.
With Speed Clearing any
outstation cheques/instruments drawn on CBS enabled branches of member banks
are presented in local clearing at MICR centers and treated at par with local cheques.
Cheques payable in Foreign Countries
Cheques payable at foreign
centres where the bank has branch operations (or banking operations through a
subsidiary etc.) will be collected through that office.
The services of correspondent
banks will be utilised in country/centres
where the correspondent has
presence.
Cheques drawn on foreign banks
at centres where the bank or its correspondents do not have direct presence
will be sent direct to the drawee bank with instructions to credit proceeds to
the respective Nostro Account of the bank maintained with one of the correspondent
banks.
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.15, OOO/- tendered for collection by individual account holders
subject to satisfactory conduct of such accounts for a period of 6-12
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
clearing house 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;
ü Opened at least six months earlier and complying with KYC
norms.
ü Conduct of which has been satisfactory and bank has not
noticed any irregular dealings.
ü Where no cheques / instruments drawn for which immediate
credit was afforded returned unpaid for financial reasons.
ü Where the bank has not experienced any difficulty in
recovery of any amount advanced in the
past including cheques returned after giving immediate credit.
Bank shall levy normal
collection charges and out of pocket expenses while
providing immediate credit
against outstation instruments tendered for collection.
Exchange charges applicable
for cheque purchase will not, however be charged.
The facility of immediate
credit would not be applicable to cheques collected under speed clearing
arrangements.
Time Frame for Collection of Local/Outstation/Foreign
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 on T+1 or T+2
day as per return clearing norms in vogue at that centre.
For cheques and other
instruments sent for collection to centers within the
country the following time norms shall be applied:
ü Cheques/ instruments drawn on one of our branch deposited
at another
center - Same day
ü b) Cheques/instruments drawn on other bank and sent for
collection to:
·
Centres where we have a branch
- Maximum T+6 days
·
Centres where we do not have a
branch - Maximum T+10 days
Payment of Interest
for delayed Collection of Local/ Outstation Cheques and Cheques Payable
outside India
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 T+2 days in collection of
local cheques.
b) Base Rate for the period of delay beyond T+6 days in collection of
outstation
cheques sent to Bank's own branches at other centres.
c) In case of cheques sent to other bank branches for collection where delay
is
beyond T+10 days interest will be paid at the rate
applicable to term deposit
for the respective period or Savings Bank rate, whichever
is higher.
d) In case of extraordinary delay, i.e. delays exceeding 90 days interest
will be
paid at the rate of 2% above the corresponding interest
rate mentioned
above.
e) 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.
f) In case of cheques drawn on foreign countries interest at the rate of
savings
bank interest rate will be paid on the amount of cheque
collected for any
delay from the value date of credit to the Nostro Account
till the date of
actual credit to customer's account.
Cheques / Instruments lost in transit /
in clearing process or at
paying bank's branch:
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 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 Account holder 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 (T+2/T +5/T +10 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 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.
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.
Charging of interest on cheques returned
unpaid where instant credit
was given:
If 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 account.
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.
Procedure for return / dispatch of
dishonoured cheques
In any case, the dishonoured
instrument will be returned/ despatched to the customer promptly without delay
not exceeding 24 hours of dishonour.
Information on Dishonoured Cheques
Data in respect of each
dishonoured cheque for amount of RS.l crore and above will be made part of
Bank's MIS on constituents at Central Office.
Data in respect of cheques
drawn in favour of stock exchanges and dishonoured will be taken separately
irrespective of the value of such cheques as a part of Bank's MIS relating to
broker entities at Central Office.
Dealing with frequent dishonor of cheques:
In the event of dishonor
of a cheque 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 would be issued.
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