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ARE the banks that you are dealing with complying with the directions of the apex court and the regulator—the Reserve Bank of India—on the prescribed time limit for encashment of local and outstation cheques, and payment of interest on delayed crediting of cheques? If not, you should insist on their doing so. In its order in the case of Atul Nanda vs Reserve Bank of India (CC No 82 of 2006, decided on August 27, 2008), the national consumer disputes redressal commission gave the following directions to the banks: (a) In case of local cheques, credit and debit shall be made the same day, or at the most the next day; and (b) for outstation cheques, the maximum period for collection shall be 7/10/14 days for state capitals/major cities/other locations, respectively. Banks shall pay interest on the amount for any delay beyond that period. The commission also said that the salient features of the policy with regard to the collection period of outstation cheques and interest payable thereon in case of delay shall be published on the notice board in a precise manner in bold/visible letters at conspicuous places in every branch. In addition, a copy of the complete policy shall be made available by the branch manager, if the consumers require the same for reading. Referring to the Payment and Settlement Systems Act, 2007 (that came into force with effect from August 12, 2008), which provides for the regulation and supervision of payment systems in India by the Reserve Bank of India, the commission said it hoped that the regulator would use the provisions of the Act to ensure compliance of its directions given in the order. Consequent to this, the RBI sent circulars to all banks on November 24, 2008, asking them to re-frame their cheque collection policies covering local and outstation cheque collection as per the time frame prescribed by the commission. "For local cheques credit and debit shall be made the same day, or at the most the next day of their presentation in clearing. Ideally, in respect of local clearing, banks shall permit usage of the shadow credit afforded to the customer accounts immediately after closure of relative return clearing, and in any case, withdrawal shall be allowed on the same day, or maximum within an hour of commencement of business on the next working day, subject to usual safeguards," the RBI said in its circular. It further said that the time frame for collection of cheques drawn on state capitals/major cities/other locations will be 7/10/14 days, respectively. If there is any delay in collection beyond this period, interest at the rate specified in the cheque collection policy (CCP) of the bank shall be paid. In case the rate is not specified in the CCP, the applicable rate shall be the interest rate on fixed deposits for the corresponding maturity. The time frame for collection specified by the national commission shall be treated as the outer limit, and credit shall be afforded if the process gets completed earlier, the RBI told banks. Again on June 2 this year, the RBI reminded banks about its earlier circular and the national commission’s order, asking them to comply. From what I have noticed, banks usually exploit the ignorance of clients about these issues and violate with impunity the directives of the regulator. So the next time you deal with your bank, arm yourself with this information and insist on the bank following it stringently. I must also mention here that as per an RBI directive, all bank branches are supposed to provide a complaint/suggestion box and also maintain a complaint book "with adequate number of perforated copies in each set, so designed as to instantly provide the complainant with an acknowledged copy of the complaint."
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