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.
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
1. For an Unauthorised / Erroneous Debit :
If there is 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
of the unauthorized/ erroneous debit resulted in a financial loss to 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.
Bank will compensate the financial loss, supported with documentary evidence, to the extent
of actual amount that 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. A few instances of
such cases of unauthorized debits and/ or erroneous debit or credit entries and their possible
impacts on the interest of the customers are enumerated below:–
Return of telephone/ electricity bill, school fees where payment after the due date may result
in deprivation of rebate/ discount/ commission and/ or imposition of fine/ penalty etc. In such cases Bank will compensate the actual amount of rebate/ discount/ commission/fines/penalty
etc., as the case may be.
Due to wrong debit in a S.B. account the balance in the same may be less by that sum for
the purpose of calculation of interest. To compensate the loss, the amount wrongly debited
will be credited with value-dated effect.
Consequent upon unauthorized/ erroneous debit, due to fall in minimum balance in the
account resulting in levying of service charges, if any, will be refunded to the customer.
Where amount deposited towards repayment/ installments in a loan account is not credited,
additional interest is accrued on account of that amount. In such cases, the amount of
excess interest so charged will be refunded in the loan account as compensation.
In case of a running borrowal account, if an amount deposited by the customer is not
credited in that account by mistake of the Bank additional interest pertaining to that amount
accrues in the account. On detection of such error, the amount is to be immediately
credited in the account with value dated effect.
In case of borrowal accounts, the cheque deposited by the customer for collection through
local clearing if not sent by the branch for reason whatsoever, additional interest accrued in
the account arising out of non-credit of the amount of the cheque will be compensated by
crediting the amount with value dated effect.
Time limit for verification of the entry reported to be erroneous by the customer.
In case of 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
1-A. Erroneous Debits arising on account of fraudulent or other Transactions
(i) In case of any fraud, if the Bank is convinced that an irregularity / fraud has been committed by its staff towards any constituent, Bank would at once acknowledge its liability and pay the just claim. However, such claims for restitution would be disposed of as per the powers delegated to authorities at various levels by the Bank as per Bank’s Vigilance Department circularized instructions from time to time.
In cases where the Bank is at fault, the customer would be compensated without demur in
accordance with this policy.
In cases where neither the Bank nor the customers is at fault, but the fault lies elsewhere in
the system, the Bank would compensate the customers. The concerned controlling offices
will forward such claims with their views/ comments to Inspection Department, Head Office
for their placing the same before the Board of Directors of the Bank for their direction/
2. ECS direct debits/other debits to accounts :
Bank, in the event of failure to meet the direct debit/ ECS debit instructions of the
Customer in time, will compensate to the extent of any financial loss that the customer
would incur on account of delay in carrying out the instruction/failure to carry out the
instructions. Bank will refund the amount of service charges debited in the customer’s
account in excess/ in violation of schedule of service charges when pointed out by the
customer after proper scrutiny. Bank will also compensate the consequential financial
loss, if any, to the customer for debit of excess service charges after proper verification/
scrutiny of agreed terms and conditions.
3. Payment of Cheques after Stop Payment Instructions :
In case a cheque has been paid after stop payment instruction is acknowledged by the
Bank, the amount of the cheque will be credited by the Bank along with value-dated effect
within 2 working days of the customer intimating the transaction to the Bank. Bank will
compensate the financial loss, to the extent of actual amount that the customer might incur,
after ascertaining and being satisfied about the amount of such loss.
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 may 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 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
5. Remittances in India :
5(A) Time Frame for Collection of Local Cheques:
The cheques deposited by customers upto three hours before the respective clearing
schedules will be sent to the clearing house on the same day. However, branches are
authorized to fine-tune the time frame by reducing the time limit for deposit of cheques for
sending the same for clearing on the same day in the greater interest of the individual
customers depending upon the prevailing local clearing schedule. The time norms for
deposit of cheques for sending the same to the clearing house on the same day will be
displayed in the branch premises as well as on the cheque drop boxes for information of the
Interest for delayed collection of local cheques shall be paid at savings bank rate for
the corresponding period of delay.
5(B) Time frame for collection of outstation cheques:
For cheques and other instruments sent for collection to centres within the country the
following time norms shall be applied:
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 of 7 days.
Metro Centres and State Capitals (other than those of North Eastern States and Sikkim):
Maximum period of 10 days.
In all other Centres: Maximum period of 14 days.
Cheques drawn on foreign countries: For cheques payable at foreign centres, the services
of correspondent banks will be utilized in countries/centres where the correspondent bank
has its presence. Cheques drawn on foreign banks at centres where correspondent bank does not have direct presence will be sent directly to the drawee bank with instructions to
credit proceeds to the respective Nostro Account of the Bank maintained with the
correspondent banks. Bank will 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.
The above time norms are applicable irrespective of whether cheques/instruments are
drawn on the Bank’s own branches or branches of other banks.
Payment of Interest for delayed Collection of Outstation Cheques:
Bank will pay interest to the customer on the amount of collection instruments in case
there is delay in giving credit beyond the time period mentioned hereinafter. 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:
For the period of delay upto 14 days beyond 7/10 days as the case may be in collection of
outstation cheques : At savings bank rate.
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 was to be credited to an overdraft/loan
account of the customer, interest will be paid at the rate applicable to the respective loan
account. For extraordinary delay, interest will be paid at the rate of 2% above the rate
applicable to the respective loan account. Payment of interest as stated above would be
applicable only for instruments sent for collection within India.
5(C) Payment of penal interest for delayed credit/refunds of NEFT transactions:
In case of delay in crediting the beneficiary customer’s account or in returning the
uncredited amount to the remitter in case of NEFT, Bank shall pay penal interest at the
current RBI LAF Repo Rate plus two percent for the period of delay/till the date of refund as
the case may be to the affected customers suo moto, without waiting for claim from