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    May 12, 2013

    No cheque return charges if customer is not at fault

    Reserve bank of India gives a important point stating that if there is no fault of the customer, bank can't levy charges of cheque return. We often see banks levy charges of cheque retuen whereas no fault of ours. The cheque may be return due to several other reasons other than insufficient funds, due date and mismatch of signature.

     RBI issued a full note telling banks not to levy charges where customers are not at fault. Full note is as under.


    Delay in re-presentation of technical return cheques and levy of charges for such returns
    As you are aware, banks are expected to indicate the timeline for realisation of local/outstation cheques in their Cheque Collection policy(CCP) and charges for cheque returns to be levied in an upfront manner with due prior notice to the customers as enumerated in RBI circulars no. DPSS.CO. (CHD) No. 873 / 03.09.01 / 2008-09 dated November 24, 2008 and DBOD.No.Dir.BC. 56 /13.03.00/2006-2007 dated February 2, 2007 respectively.

    2. However,recently, instances have been brought to our notice where banks are (i) levying cheque return charges even in cases where customers have not been at fault in the return and (ii) delaying the re-presentation of the cheques which had been returned by the paying banksunder technical reasons. Both of these issues result in unsatisfactory customer service.

    3. It is, therefore, considered necessary to streamline the procedure followed by all banks in this regard. Accordingly, banks are advised to adhere to the following instructions with immediate effect:
    1. Cheque return charges shall be levied only in cases where the customer is at fault and is responsible for such returns. The illustrative,but not exhaustive, list of returns, where the customers are not at fault are indicated in the annex.
    2. Cheques that need to be re-presented without any recourse to the payee, shall be made in the immediate next presentation clearing not later than 24 hours(excluding holidays) with due notification to the customers of such re-presentation through SMS alert, email etc.

    4. Banks are accordingly advised to reframe their CCPs to include the procedures indicated in paragraph 3(i) and 3(ii) above, and may note to give publicity to their revised CCPs for better customer service and dissemination of information.

    5. The above instructions are issued under Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

    6. Please acknowledge receipt and confirm compliance.
    Yours faithfully,
    (Vijay Chugh)
    Chief General Manager

    Annex
    Illustrative but not exhaustive list of objections where customers are not at fault
    (Applicable for Instrument and Image-based Cheque Clearing as detailed in Annexure D to Uniform Regulations and Rules for Bankers' Clearing Houses)
    Code No.
    Reason for Return
    33
    Instrument mutilated; requires bank's guarantee
    35
    Clearing House stamp / date required
    36
    Wrongly delivered / not drawn on us
    37
    Present in proper zone
    38
    Instrument contains extraneous matter
    39
    Image not clear; present again with paper
    40
    Present with document
    41
    Item listed twice
    42
    Paper not received
    60
    Crossed to two banks
    61
    Crossing stamp not cancelled
    62
    Clearing stamp not cancelled
    63
    Instrument specially crossed to another bank
    67
    Payee’s endorsement irregular / requires collecting bank's confirmation
    68
    Endorsement by mark / thumb impression requires attestation by Magistrate with seal
    70
    Advice not received
    71
    Amount / Name differs on advice
    72
    Drawee bank's fund with sponsor bank insufficient(applicable to sub-members)
    73
    Payee's separate discharge to bank required
    74
    Not payable till 1stproximo
    75
    Pay order requires counter signature
    76
    Required information not legible / correct
    80
    Bank's certificate ambiguous / incomplete / required
    81
    Draft lost by issuing office; confirmation required from issuing office
    82
    Bank / Branch blocked
    83
    Digital Certificate validation failure
    84
    Other reasons-connectivity failure
    87
    ‘Payee's a/c Credited' - Stamp required
    92
    Bank excluded
    Tags-cheque return charges,cheque return charges by banks,what are cheque return charges

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