COMPENSATION POLICY

1. Introduction 1.1  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.   1.2 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. 1.3 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. 2. Unauthorised / Erroneous Debit 2.1 Genuine claims arising out of erroneous and unwanted direct debits made to the customer’s account due to frauds/mistake or fault in the system will be disposed of expeditiously. 2.2 In case of any fraud, if the branch is convinced that an irregularity/ fraud has been committed by staff towards any constituent, branch will at once acknowledge its liability and pay the just claim. 2.3 In case where the branch is at fault, branches will compensate the customer without demur. 2.4 In cases where neither the branch nor the customer is at fault, but the fault lies elsewhere in the system, branches will compensate the customers as per this policy. 2.5 Once a prima facie forgery is established or an error/fault is detected payment will be made to the account promptly against an indemnity. In such cases bank will give value-dated credit and interest at the prevailing rate applicable for fixed deposit of 1 to 3 years will be paid for the relevant period to compensate for financial loss suffered by the customer incidental to return of a cheque or failure to debit instructions due to insufficiency of balance on account of unauthorized/erroneous debit. No other financial loss will be compensated. 2.6   In case of OD/CC accounts if the error is on account of Bank’s mistake compensation will be paid at the rate applicable to respective borrowal account in which the error has occurred. 2.7 Such cases will be settled within a period of one month from the date the complaint is lodged with the Bank. However, in cases where activities like thorough investigation of the case, obtaining an opinion from a signature expert etc. are involved will be settled within a period of four months from the date the complaint is lodged with the Bank.  2.8 The authority to settle the claim is vested only with Senior/Top Executives functioning in Controlling Offices/Central Office and as such no claim will be settled at Branch level.’ 3. ECS direct debits/other debits to accounts 3.1 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 interest at the prevailing rate applicable for fixed deposit of 1 to 3 years will be paid for the period of delay to compensate financial loss the customer would incur on account of delay in carrying out the instruction/failure to carry our the instructions. No other financial loss will be compensated. 3.2 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.  In such cases interest will be paid at the prevailing rate applicable for fixed deposit of 1 to 3 years for the relevant period so as to compensate any consequential financial loss to the customer. No other financial loss will be compensated. 3.3 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. 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. Such debits will be reversed within 2 working days of the customer intimating the transaction to the bank. Any consequential financial loss to the customer will be compensated as provided under para 2 above.    5. Foreign Exchange Services 5.1 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 one week from the date of credit to Nostro Account/ due date after taking into account normal cooling period stipulated. 5.2 The compensation in such cases will be worked out as follows: 5.2.2 Interest for the delay in crediting proceeds as indicated in the collection policy of the bank.  5.2.3 Compensation for any possible loss on account of adverse movement in foreign exchange rate. The compensation will be the difference between the RBI reference rate between the dates the credit should have been passed on to the customer and the date the credit is actually passed on. 6. Remittances in India 6.1 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: “Payment of Interest for delayed Collection of Outstation Cheques: As part of the compensation policy of the bank, 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 above.  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: Fixed deposit rate prevailing at the time of payment of interest for the period of delay beyond 7/10/14 days as the case may be in collection of outstation cheques. e.g. If a cheque payable at Chennai is deposited at Mumbai on 1st January 2007 and credited to the customer’s account on 11th January 2007, the actual period of delay will be 3 days. Interest will be payable for the period of 3 days at the rate of interest applicable for equivalent period of deposit. Since the actual number of days is less than 7 days, the applicable rate of interest will be the corresponding rate of interest for minimum tenure of term deposit i.e. 7 – 14 days. In case of extraordinary delay, i.e. delays exceeding 30 days (excluding normal period of collection) interest will be paid at the rate of 2% above the corresponding Term Deposit rate. e.g. If a cheque payable at Chennai is deposited at Mumbai on 1st January 2007 and credited to the customer’s account on 11th February 2007, the actual period of delay will be 34 days consisting of 30 days normal delay and 4 days abnormal delay. Interest will be payable for the period of 30 days at the rate of interest applicable for equivalent period of deposit and for the period of 4 days at 2% over and above the interest applicable for delay. The applicable rate of interest will be the corresponding rate of interest for the period of 34 days. 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.” 6.2 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: “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 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 accountholder in respect of instruments lost in transit in the following way: Expenses incurred for obtaining duplicate instruments will be paid @2% of the amount of instruments subject to maximum of Rs.500. Interest will be paid for a maximum period of 30 days at the rate applicable for relevant period of fixed deposit prevailing at the time of payment of interest. In case the customer demands, the bank would also compensate the customer any charges incurred by the drawer for recording stop payment of the lost cheque/instrument upon production of receipt.” 7. 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 as being done in case of cheques /instruments lost in transit/ in clearing process or at paying bank’s branch. 8. Transaction of “at par instruments” of Co-operative Banks by Commercial Banks The RBI has expressed concern over the lack of transparency in the arrangement for payment of “at par” instruments of co-operative banks by commercial banks resulting in dishonour of such instruments when the remitter has already paid for the instruments. In this connection it is clarified that the 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. 9. Remittances under RBI Remittance Facilities Scheme (RFS) 2007 9.1 The RBI Remittance Facilities Scheme (RFS) 2007 is operative for transfer of funds between centers where Reserve Bank of India has its own offices or branches or has established currency chests of its Issue Department managed by its agencies or by treasuries and sub-treasuries. The various parties entitled to remittances under the Scheme are Central & State Governments, Local Funds listed in the Treasury Rules/Codes of the Central Govt./respective State Govts., Commercial Banks, Co-operative Banks, Financial Institutions & members of the staff of RBI. The different modes of remittances recognized under the scheme are Telegraphic Transfer, Mail Transfer, Drafts and Electronic Funds Transfer. 9.2 As per RBI stipulations for TT/EFT/NEFT remittances, the credit should ideally be given to the beneficiary’s account on the same day of making the remittance, provided the request for remittance is tendered within the prescribed time frame set for same day credit. In any case, the credit should latest be given by the next working day. Thus, the period of delay would be the time taken from the prescribed date of settlement to the actual date of credit to the beneficiaries account. 9.3 For remittances effected under the scheme through DD, the period of delay would constitute from the date of presentation by the beneficiary for collection of the DD + 2 full working days, to the actual date of credit. 9.4 For any delayed credit of remittance under the scheme, the then prevailing RBI repo rates shall be levied as compensation for the delayed period of credit. These directives would be applicable for the remittance transactions effected under the RFS from June 01, 2008.  Other remittances falling under various payment system products would not be eligible for the same. 10. Delay in return of securities/documents/title deeds to mortaged property 10.1 All the securities/documents/title deeds to mortaged property will be returned to customer within 15 days of the repayment of all dues agreed to or contracted. If any right to set off is to be exercised for any other claim bank will give due notice with full particulars about other claims and retain the securities/documents/title to mortaged property till the relevant claim is settled/paid. 10.2 In case of delay in return of securities/documents/title deeds to mortaged property beyond 15 days of repayment of all dues agreed or contracted compensation will be paid at the rate of Rs.100/- per day for period beyond 15 days. 11. Delay in crediting failed ATM Transactions For failed ATM transactions at other bank ATMs credit will be given within 12 working days from the date of receipt of complaint from customer. In the event of non-crediting failed ATM transactions at other bank ATMs within 12 working days from the date of receipt of complaint from customer compensation at the rate of Rs.100/- per day after 12 working days will be credited to customer’s account. 12. 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.