Compensation Policy

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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. 

•       Any financial loss the customer 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.  

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.     Unauthorized / Erroneous Debit: 

•       If the bank has raised an unauthorized/erroneous direct debit to an account including through Electronic Banking transactions, 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.  

•       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 will endeavor 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 or where verifications are to be done at overseas centers, 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. 

•       Erroneous transaction reported by customers in respect of credit card operations which require reference to a merchant establishment will be handled as per rules laid down by card association. 

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.  

•       Such compensation may be equivalent to the interest calculated on the amount to be debited, for the delayed period, at applicable Savings Bank rate, with minimum of Rs. 100/-, subject to a maximum of Rs.1,000/-. 

•       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 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 as per regulatory guidelines in this regard. 

3.     Uniformity in penal interest payable by banks for delays in credit/return of NEFT/NECS/ ECS transactions. 

In terms of the NEFT / NECS / ECS Procedural Guidelines of RBI, as also the relevant circulars / instructions issued by RBI from time to time, member banks need to afford credits to beneficiary accounts or return transactions (unaccredited for whatever reason) to the originating / sponsor bank within the prescribed timeline. Any delays in doing so attract penal provisions specified therein. In order to ensure standardization of the benchmark rate used and bring in uniformity in penal provisions across the retail payment products, RBI has made the following modifications: 

3.1    NECS / ECS-Credit 

Destination Bank would be held liable to pay penal interest at the current RBI Repo Rate plus two per cent from the due date of credit till the date of actual credit for any delayed credit to the beneficiaries’ account. 

Penal interest shall be credited to the Beneficiary's Account even if no claim is lodged.” 

3.2    NEFT  

•       In the event of any delay or loss on account of error, negligence or fraud on the part of an employee of the destination bank in the completion of funds transfer pursuant to receipt of payment instruction by the destination bank leading to delayed payment to the beneficiary, the destination bank shall pay compensation at current RBI Repo Rate plus two per cent for the period of delay for credit to the beneficiary’s a/c. In the event of delay in return of the funds transfer instruction for any reason whatsoever, the destination bank shall refund the amount together with interest at the current RBI Repo Rate plus two per cent till the date of refund." 

•       During the NEFT operating hours, originating banks should endeavor to put through the requests for NEFT transactions received by them, either online or across the counters, preferably in the next available batch but, in any case, not exceeding two hours (from the business hours next day), from the time of receipt of the requests. In the likelihood of any delay / possible delay in adhering to this requirement, the originators / customers should be informed of the delay / possible delay and the reasons for the same. 

•       In terms of the RBI ECS (Credit Clearing) procedural guidelines which clearly stipulate that if a destination bank branch is not in a position to credit a particular transaction for reason like "Account Closed/ transferred"; "No such Accounts"; "Account description does not tally"; etc. it should report the same and forward it to the Service Branch/ Main Branch on the same settlement day. 

4.     Payment of Cheques after Stop Payment Instructions: 

In case a cheque has been paid after stop payment instruction 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. 

5.     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, may consider upfront credit against such instrument by purchasing the cheque/instrument, provided the conduct of the account has been satisfactory in the past.  

•       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 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. 

6.1    Payment of Interest for delayed Collection of Local Cheques 

Regional Offices to decide the time schedule of the respective branches for clearing. If the cheque is deposited before the cut-off time, it will be sent for clearance on same day, for which the clearance period will be T+1 working days. Cheques deposited after cut off time will be sent for clearing on next day, for which clearance period will be T+2 working days. Rubber stamps are to be in place with “too late for today’s clearing” written on it and should be available at branches for putting on the counter foil. Boards to be displayed on the Cheque Drop Box along with the timings for clearing. The compensation to the customers is payable in case of delay in clearance of local cheques beyond the cut  off time decided in all types of accounts at Savings Bank interest rate. 

6.2    Payment of Interest for delayed Collection of Outstation Cheques: 

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 specified in banks cheque collection policy. 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. 

7.     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 corresponding period or Saving Bank rate, whichever is higher. 

•       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. 

•       A separate clearing session is introduced by RBI for clearing of residual Non CTS-2010 standard instruments. The frequency of clearing of such cheques is presently once in a week. The collection of instrument may be delayed by 7 days. Accordingly the compensation will be calculated as above.   

8.     Compensation for loss of instrument in Transit 

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: 

9.     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.  

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 (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 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. 

10.    Issue of Fresh Demand Draft in case DD Lost/Misplaced/stale and Compensation for delays Fresh draft will be issued within a fortnight from the date of receipt of such request from the purchaser thereof. For delay beyond the above stipulated period, interest at the rate applicable for Fixed Deposit of Corresponding period will be paid as compensation to the customer for such delay. 

11.    Violation of the Code by banks agent 

In the event of receipt of any complaint from the customer that the bank 's representative/ courier 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, the bank is committed to investigate the matter and endeavor to communicate the findings to the customer within 7 working days from the date of receipt of complaint and wherever justified, compensate the customer for financial loss, if any, as contemplated under this policy. 

12.    Transaction of "at par instruments" of Co-operative Banks 

Bank will not honor 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 nonpayment/delayed payment of cheques in the absence of adequate funding arrangement. 

13.    ATM Failure 

It is mandatory for bank to reimburse the customer, the amount wrongfully debited on account of failed ATM within a maximum period of seven (7) working days from the receipt of the complaint. For any failure to re-credit the customer's account within seven (7) working days from the date of receipt of the complaint, bank shall pay compensation of Rs.100/- per day to the aggrieved customer, provided the claim is lodged with us i.e. the ATM card issuing bank within 30 days of the transaction.  

This compensation shall be credited to the customer's account automatically without any claim from the customer, on the same day when bank affords the credit for the failed ATM transactions. Details of charge back in case of ATM transaction by a customer of the bank when he uses other bank ATM may be included. 

14.    Lenders liability; Commitments to borrowers: 

The bank has adopted the principles of lenders of liability. In terms of the guidelines for lenders liability, and the Code of Bank's Commitment to customers adopted by the bank, the bank would return to the borrowers all the securities/documents/title deeds to mortgaged property within 15 days of repayment of all dues agreed to or contracted. The bank will compensate the borrower for monitory loss suffered, if any due to delay in return of the same. In the event of loss of title deeds of mortgage property at the hands of the bank the compensation will cover out of pocket expenses for obtaining duplicate documents plus a lump sum amount as decided by the bank. 

The bank will compensate the borrower for any delay in return of the securities/documents/title deeds as below: o In the event of delay beyond 15 days, Rs.100/- per day to be paid to borrower from 16th day. 

o      In the event that the Bank is certain that the original documents/ securities/title deeds are lost, 

OR 

o      Even after 3 months, if Bank is unable to return the title deeds/documents/securities to the concerned, then it is deemed that the same is lost and a compensation of Rs.10,000/- plus out of pocket expenses for obtaining duplicate documents/securities by the borrower is to be paid.” 

15.    Liability of Customers in Electronic Banking Transactions such as Internet Banking and Mobile Banking 

 15.1 Strengthening of systems and procedures: 

Electronic Banking transactions can be divided into the following two categories: 

1.     Remote / online payment transactions (transactions that do not require physical payment instruments to be presented at the point of transactions e.g. internet banking, mobile banking, card not present (CNP) transactions), Pre-paid Payment Instruments (PPI), and 

2.     Face-to-face / proximity payment transactions (transactions which require the physical payment instrument such as a card or mobile phone to be present at the point of transaction e.g. ATM, POS, etc.) 

The RBI guidelines states that the systems and procedures should make customers feel safe about carrying out electronic banking transactions. To achieve this, the following should be put in place: 

i.      Appropriate systems and procedures to ensure safety and security of electronic banking transactions carried out by customers; 

ii.      Robust and dynamic fraud detection and prevention mechanism; 

iii.     Mechanism to assess the risks (for example, gaps in the bank’s existing systems) resulting  from unauthorized transactions and measure the liabilities arising out of such events; 

iv.     Appropriate measures to mitigate the risks and protect themselves against the liabilities arising there from; and 

v.     A system of continually and repeatedly advising customers on how to protect themselves from electronic banking and payments related fraud. 

15.2 Reporting of unauthorised transactions by customers to banks: 

Branches must ask their customers to mandatorily register for SMS alerts and wherever available register for e-mail alerts, for electronic banking transactions. The SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered. The customers must be advised to notify the branch of any unauthorized electronic banking transaction at the earliest after the occurrence of such transaction, and the longer the time taken to notify the bank, the higher will be the risk of loss to the bank / customer. To facilitate this, Bank has provided 24x7 access through multiple channels via website, e-mail, a dedicated toll-free helpline, reporting to home branch, etc. 

Further, a direct link to report unauthorized electronic transactions has been provided through SPGRS portal on home page of the Bank’s website and immediate auto response will be sent to the customers acknowledging the complaint along with the registered complaint number. To determine the extent of customer’s liability, the complaint lodging process will record the time and date of delivery of the message and receipt of customer’s response, if any, to them. The Branches should not offer facility of electronic transactions, other than ATM cash withdrawals, to customers who do not provide mobile numbers to the Bank. On receipt of report of an unauthorized transaction from the customer, branches must take immediate steps to prevent further unauthorized transactions in the account. 

15.3 Limited Liability of Customers in Unauthorized Electronic Banking Transactions: 

       (a)   Zero Liability of a Customer -  

A customer’s entitlement to zero liability shall arise where the unauthorized transaction occurs in the following events: 

i.      Contributory fraud / negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer). 

ii.      Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorized transaction. 

   (b) Limited Liability of a Customer –  

A customer shall be liable for the loss occurring due to  unauthorized  transactions in the following cases: 

i.      In cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorized transaction to the bank. Any loss occurring after the reporting of the unauthorized transaction shall be borne by the bank. 

 

ii.      In cases where the responsibility for the unauthorized electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and when there is a delay of (four to seven working days after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned in Table 1, whichever is lower. 

Table 1

Maximum Liability of a Customer under paragraph (b) (ii)

Type of Account

Maximum liability

(Rs.)

Basic Saving Bank Deposit Accounts

5,000

All other SB accounts

Pre-paid Payment Instruments and Gift Cards

Current/ Cash Credit/ Overdraft Accounts of MSMEs

 

Current Accounts/ Cash Credit/ Overdraft Accounts of

Individuals with annual average balance (during 365 days

preceding the incidence of fraud)/ limit up to Rs.25 lakh

Credit cards with limit up to Rs.5 lakh

10,000

All other Current/ Cash Credit/ Overdraft Accounts

 

Credit cards with limit above Rs.5 lakh

25,000

Further, if the delay in reporting is beyond seven working days, the customer has to bear the liability in full, under such circumstances. 

 Overall liability of the customer in third party breaches, as detailed in paragraph 15.3 (a) (ii)  and 15.3 (b) (ii)  above, where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, is summarized in the Table 2: 

Table 2

Summary of Customer’s Liability

Time   taken to        report             the             fraudulent

 

transaction from the date of receiving the communication

Customer’s liability (Rs.)

Within 3 working days (T+3)

Zero liability

Within 4 to 7 working days (T+ 4 till 7)

The transaction value or the amount mentioned in Table 1, whichever is lower

Beyond 7 working days 

 Full Liability

 

The number of working days mentioned in Table 2 shall be counted as per the working schedule of the home branch of the customer excluding the date of receiving the communication. 

15.4 Reversal Timeline for Zero Liability/ Limited Liability of customer  

On being notified by the customer, the branch after taking approval of the competent authority shall credit (shadow reversal) the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days from the date of such notification by the customer (without waiting for settlement of insurance claim, if any). The credit shall be value dated to be as of the date of the unauthorized transaction. 

It is to be ensured that in case: 

i.      a complaint is resolved and liability of the customer, if any, established within such time, but not exceeding 90 days from the date of receipt of the complaint and the customer is compensated as per provisions of paragraph 15.3 & 15.4 above; 

ii.      where it is unable to resolve the complaint or determine the customer liability, if any, within 90 days, the compensation as prescribed in paragraph 15.3 & 15.4 is paid to the customer; and 

iii.     in case of debit card / bank account, the customer does not suffer loss of interest, and in case of credit card, the customer does not bear any additional burden of interest 

15.5  Burden of Proof:  

The burden of proving customer liability in case of unauthorized electronic banking transactions shall lie on the bank. 

15.6 Reporting and Monitoring:  

A quarterly report inter alia, including volume / number of cases, the aggregate value involved and distribution across various categories of cases viz., card present transactions, card not present transactions, internet banking, mobile banking, ATM transactions, etc. on customer liability cases with regard to unauthorized electronic banking transactions will be placed before the Customer Service Committee of the Board by the Digital Banking and Payments Department, HO. The Standing Committee on Customer Service will periodically review the unauthorized electronic banking transactions reported by customers or otherwise, as also the action taken thereon, the functioning of the grievance redress mechanism and take appropriate measures to improve the systems and procedures. All such transactions shall be reviewed by the internal auditors 

16.    Compensation for Debit Cards/Credit Cards skimming 

Card Holders should intimate the bank immediately on being aware of any loss due to skimming. Bank has obtained insurance policies to make good the amount lost because of skimming of debit cards/credit cards of customers. The lodgment of claim in this respect will depend on the terms and conditions of the policy issued by the respective insurance company.  

17.    Compensation in case of Fraud  

•       In case of any fraud, if the Bank is convinced that an irregularity / fraud has been committed by its staff towards any constituent, the Bank should at once acknowledge its liability and pay the just claim.  

•       In cases where bank is at fault, the bank should compensate customers without demur.  

•       In cases where neither the bank is at fault nor the customer is at fault but the fault lies elsewhere in the system, then the Bank will help in restoring the actual amount involved and as a gesture of goodwill and to deal with the customer fairly, will also compensate with Rs.100/- per Rs.5000/- maximum of Rs.1000/- for each instance. 

18.    Compensation for delay in Pension payment 

•       RBI has issued fresh guidelines for payment of compensation for delay in pension payment to the govt. Employees. 

•       As per extant instructions, pension (normal pension) of Central / State Govt. pensioners should be credited to their account on any of the last  four working days of each month, except the pension for March every year which will be credited on the first working day of April.  

•       As regards disbursing revised pension / arrears, pensioners should get the revised pension / arrears on the last day of the succeeding month, after the month in which the concerned 

Government announces the revision and date for implementation. In other words, each Agency Bank is getting adequate reaction time ranging from 30 to 60 days for the concerned department to obtain the revised parameters from the respective Government and set the same in the CPSS for implementing the GO in time.  

•       The concerned pensioner should be compensated for the delay beyond the due date (last date of the succeeding month subsequent to the month of issue of GO by the concerned Government) at the rate of 8%  (fixed rate) on the revised pension / arrears for the delay period. This  compensation shall be credited to the pensioner’s account automatically without any claim from the pensioner in respect of all delayed pension payments made since October 1, 2008. 

•       In case of very complicated pension cases requiring reference back to the respective Government / govt. departments, the due date would commence from the date of obtention of final clarification from the Government concerned. 

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. 

Amendment/Modification of the Policy 

The Bank reserves the right to amend/modify this Policy, as and when deemed fit and proper, at its sole discretion. Bank shall also endeavor to review the Policy at annual intervals. 

 

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