CHEQUE COLLECTION POLICY

Introduction

As a part of normal banking operations, the Bank undertakes collection of cheques

deposited by its customers, some of which could also be drawn on non-local bank branches.
Such cheques are called outstation cheques. In order to facilitate faster collection of
outstation cheques, the Reserve Bank of India started a special clearing styled “Speed
Clearing” by leveraging the core banking solutions implemented in banks.

To bring about public awareness on speed clearing, we have revised the policy to reflect the
features of this collection system. The policy is mandated under RBI‟s Master Circular on
Customer Service (DBR No. Leg. BC. 21/09.07.006/2015-16 dated 01.07.2015).

The details of the revised policy, as proposed by Retail Banking Operations (RBO), which will
supersede all the earlier instructions of the Bank are as under;

Aspects of the Cheque Collection Policy

1. Collection of cheques and other instruments payable locally at centres within India and
abroad
2. Our commitment regarding time norms for collection of instruments
3. Policy on payment of interest in cases where the Bank fails to meet time norms for
realization of proceeds of outstation instruments
4. Our policy in dealing with collection instruments lost in transit

1. Arrangements for collection

A. Local Cheques

All cheques and other negotiable instruments payable locally would be presented through
the clearing system prevailing at the center. Cheques deposited at branch counters and in
collection boxes within the branch premises before the specified cut-off time will be
presented for clearing on the same day. Cheques deposited after the cut-off time and in
collection boxes outside the branch premises including ATMs and Cheque Deposit Kiosks will
be presented in the next clearing cycle. As a policy, the bank would give credit to the
customer account on the same day on which the final clearing settlement takes place or at
the most the next working day of their presentation in clearing. Withdrawal of amounts so
credited would be permitted as per the cheque return schedule of the clearing house

Branches situated at centres where no clearing house exists, would present local cheques on
drawee banks across the counter and it would be the Bank’s endeavour to credit the
proceeds at the earliest.

To enhance the efficiency of paper based clearing system, the Cheque Truncation System
(CTS) was implemented in the National Capital Region (NCR). Since July 2008, all the
member banks of the New Delhi Bankers‟ Clearing House are participating in the CTS. CTS
was subsequently implemented in Chennai and Mumbai in a grid model where various
states/cities under the grid participate through the grid. Accordingly, the pan 2 India CTS
operations shall be now handled through three grids only viz., South/West/North.

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With the introduction of the imaging and truncation of cheques, the physical movement of
instruments would be stopped and the electronic movement of images and data of
cheques would speed up the process of settlements and ultimately alter the clearing cycles.
The number of clearing cycles could be increased and it would be possible for customers to
realize the proceeds of cheques early. Thus the realization time of proceeds for a cheque
presented in clearing would be decreased and the customer would be able to derive the
benefit of earlier credit of funds. Grid clearing would ensure erasing of boundaries and
eliminating the process of intercity clearing, thus enabling the realization of cheques across
cities along with the local cheques.

Thus the benefits could be summarized as:

i. Faster clearing cycle

ii. Better reconciliation/verification process
iii. Better Customer Service. Enhanced Customer Window
iv. T+0 for Local and intercity clearing cheques
v. The jurisdiction of Clearing House can be extended to the entire country – No
Geographical Dependence
vi. Minimizes Transaction Costs.
vii. Reduces operational risk by securing the transmission route.
viii. Grid clearing enables centralization of CTS activities bringing in economies of scale and
cost effectiveness

2. Timing for acceptance

Cheques would be accepted during the business hours of the branch across the counter as
well as the drop boxes. The acknowledgement should be given to the customer where the
cheque is deposited across the counter. Alternately, cheques can be deposited at the drop-
boxes at the ATMs / CDKs round-the-clock.

Collection timings for local cheques drawn on other banks (local clearing)

The cut-off time for sending cheques for collection would be worked out for each
location/branch based on cut-off time afforded by clearing house at each location. The cut-
off timings would be displayed at branches/ATM drop boxes for customers.

For local cheques the time lines for local clearing will apply. The account holder is allowed to
withdraw funds after the cut-off time as per return clearing norms in vogue at the centre.

3. Collection timings for local cheques drawn on own branches of bank (Transfer cheques)

1 Cheques deposited across the Same day ( available only on week days)
counter and in the Branch drop
Box
2 Cheque Deposit in ATM drop box Within a period of 2 working days after
pickup

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4. Outstation Cheques

Cheques drawn on other banks at outstation centers will normally be collected through
bank’s branches at those centers. Where the bank does not have a branch of its own,
the instrument would be directly sent for collection to the drawee bank or collected
through a correspondent bank.

Cheques drawn on the Bank’s own branches at outstation centers will be collected using
the inter-branch arrangements in vogue. As a part of the anywhere banking services of
the Bank, customers will be provided same day credit for cheques drawn on the Bank’s
own branches subject to limits/charges prescribed by the Bank from time to time.

The definition of outstation cheques excludes demand drafts, banker’s cheques, interest
warrants and dividend warrants drawn on the Bank itself .

5. Speed clearing

Speed clearing refers to collection of outstation cheques through the local clearing.
Outstation cheque collection through collection basis takes around one to two weeks
depending on the corresponding/drawee bank for this purpose. Under Speed clearing, it
would be two to three working days. Speed clearing aims to reduce the time taken for
realization of outstation cheques.

The Bank can thus now locally pay outstation cheques of branches covered under CBS
without having to physically send the cheque to the branch of the drawee bank for
clearing.

Instruments of all transaction codes (except Government cheques) which are drawn on
CBS-enabled bank branches are eligible for being presented in Speed Clearing.

The list of speed clearing centres and details of the participating bank branches are
available at the RBI site with the following URL address:

http://rbidocs.rbi.org.in/rdocs/content/Docs/10002_LSCC.xls.

6. Cheques payable in Foreign Countries

Foreign currency cheques would be accepted during business hours of the Bank branch.

Foreign currency cheques payable at foreign centers will be collected using services of
correspondent banks. Cheques drawn on foreign banks at centers where the Bank or its
correspondents do not have direct presence will be sent directly to the drawee bank
with instructions to credit proceeds to the respective Nostro Account of Axis Bank
maintained with one of the correspondent banks.

The cheque collection would take place within following parameters :

i. The mode of collection for foreign currency cheques / instruments would depend on the
currency, drawee location and the amount of the instrument and the same would be
informed to the customer.

ii. At present, the Bank avails 'Final Credit Service' for USD denominated
cheques/instruments from our Correspondent Bank in USA under which final credit 4 is
received (without recourse). Credit for the foreign currency cheque is received in the

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 Nostro Account by the 24th working day and the customer’s account is credited on the
next working day of the value date of the Nostro credit.

iii. The Bank also avails of „Cash Letter Scheme‟ from our Correspondent Banks for foreign
currency cheques/instruments denominated in USD, EUR, CAD, GBP, DKK, SKK, AUD and
CHF currencies. Correspondent Banks provide provisional credit related to the instruments
lodged under this scheme to the Bank’s Nostro account on the condition that the
Correspondent Bank can debit the Nostro account on receipt of any cheque return
subsequent to affording the provisional credit. To safeguard against the risk of utilizing the
funds which could subsequently be debited from the Nostro account, the Bank retains
the received credit in Nostro accounts for certain cooling period as applicable to the
countries concerned (ranging from 12 to 18 days, as governed by local regulations) prior
to crediting the customer’s account.

iv. Foreign currency cheques that cannot be lodged under „Final Credit Service‟ or „Cash
Letter Scheme‟ will be attempted to be sent directly to the drawee bank with instructions
to credit proceeds to the respective Nostro Account of Axis Bank maintained with one of
the correspondent banks. Such cheques are sent under direct collection only if the
drawee bank has a centralized facility of cheque collection. For cheques sent on direct
collection, there is no specific time frame committed to the customer for receiving credit
into the account. Similarly, for cheques sent for direct collection, apart from the Bank’s
applicable cheque collection charges, there may be further deductions from the
proceeds of the cheque by the drawee bank and correspondent bank, the quantum of
which cannot be ascertained at the time of lodging the cheque. The customer’s
account is credited on the next working day of receipt of funds in the Bank’s Nostro
account held with a correspondent bank.

v. The credit entry to the customer’s account would be value dated based on the value
date of credit of funds in the Nostro Account of the Bank.

vi. The Exchange Rate (Telegraphic Transfer Buying Rate) prevailing as on the date of
application of fund and credit to customer account will be applied.

vii. In case of return of cheques, the debit entry in the customer’s account would be value
dated based on the value date of debit of funds in the Nostro Account of the Bank. The
exchange rate risk in such instances will be borne by the customer.

viii. The charges applicable would depend on the mode of collection under which the
cheque / instrument is sent for collection and as mentioned in the Bank’s Schedule of
Charges.

ix. For foreign currency cheques sent on collection, correspondent bank charges and
courier charges as incurred will be additionally levied, wherever applicable.

7. Compensation for delayed credit

For cheques / instruments sent on collection basis, the Bank will value date the collection
once the proceeds have been credited to the Nostro Account of the Bank with its
correspondent bank.

In case of delay beyond the date when the amount is due for credit, compensation is
payable for any adverse movement of exchange rate.

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 The compensation on account of delay in collection of instruments in foreign currency
would be paid in Indian Rupees as per the Bank's Customer Compensation Policy for the
period calculated from two working days after the date when the amount is due for
credit up to the actual date of credit to the customer’s account. For the sake of clarity,
the day when the amount is due for credit is calculated as below:

i. Cheques/Instruments lodged under „Final Credit Service‟ or sent for direct collection from
the drawee bank: The working day in India which immediately follows the value date of
the credit in the Nostro account pertaining to the foreign currency cheque.

ii. Cheques/Instruments lodged under „Cash Letter Scheme‟: The working day in India
immediately following the completion of the applicable cooling period for the foreign
currency cheque.

8. Immediate Credit of local/outstation/foreign currency cheques/instruments

No immediate credit of local cheques would be given in view of the Bank‟s efficient clearing
procedures, which ensure that delays do not occur in realization of proceeds of the
cheques. At centers where no clearing house exists cheques will be presented across the
counter and the proceeds will be credited at the earliest.

Branches / extension counters of the Bank would grant immediate credit for outstation
cheques / instruments drawn on Axis Bank centers up to the aggregate value of Rs.15,000/-
(maximum limit outstanding per account at any one point of time) tendered for collection of
individual account holders subject to satisfactory conduct of such accounts for a period not
less than 6 months.

Immediate credit will be provided at the sole discretion of the Branch Head after carefully
verifying the satisfactory conduct of the account, creditworthiness of the customer and the
genuineness of the need of the customer.

The facility will be offered on savings bank/current/cash credit accounts of the customers.

Under this policy, prepaid instruments like demand drafts, interest/dividend warrants shall be
treated on par with cheques.

Rs. 250/- will be charged on each such case as a flat fee over and above the normal
collection charges.

For the purpose of this policy, a satisfactorily conducted account shall be the one, which
fulfils all of the following: -

i. Opened at least six months earlier and complying with KYC norms.
ii. Conduct of which has been satisfactory and bank has not noticed any irregular dealings.
iii. Where no cheques / instruments for which immediate credit was afforded returned
unpaid for financial reasons.
iv. Where the Bank has not experienced any difficulty in recovery of any amount advanced
in the past including cheques returned after giving immediate credit.
v. Maintenance of Average Quarterly Balance (AQB) stipulation for at least 2 preceding
quarters.

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Immediate credit would also be subject to the following criteria:

i. The account should be in Indian Rupees.

ii. The cheque / DD should be drawn on a scheduled commercial bank, payable in India
(excluding a co-operative bank).
iii. The facility shall be extended to the customer at his / her base branch only.
iv. Cheques shall not be post-dated / out of date / nearing out of date (to avoid risk of
return in clearing). The cheques must be at least 14 working days from the date of expiry
of the cheque.
v. The account shall not be inoperative
vi. The amount of immediate credit, whether for a single or multiple cheques / DDs, shall not
exceed Rs. 15,000/- in an eligible account, at any point in time.
vii. There should be no partial immediate credit of a cheque / DD.
viii. The cheque shall not be the customer’s own cheque from another account i.e. not self-
drawn cheque.
ix. The facility of immediate credit would not be applicable to cheques collected under
speed clearing arrangements.
x. The policy of immediate credit would be reviewed annually considering the amount of
losses, frauds and customer issues.

No immediate credit of foreign currency cheques shall be given in view of the greatly
enhanced risk in such instruments. For low value cheques, the customer may approach the
account holding branch requesting for a waiver of the cooling period (if any) to avail of the
funds quickly.

Charging of interest on cheques returned unpaid where Instant Credit was given

In the event the cheque is returned unpaid, the value of the cheque will be immediately
debited to the account. Interest at the Bank’s Prime Lending Rate (PLR) will be charged from
the date of credit of the cheque till the date on which the customer makes good the
amount, in case of insufficient balance in the account on the date of return of the cheque.

Cheque return charges applicable will be levied in such cases.

9. Purchase of local/outstation cheques

Bank will at its discretion, purchase local/outstation cheque tendered for collection as per
prior arrangement. Besides satisfactory conduct of the account, the standing of the drawer
of the cheque will also be a factor considered while purchasing the cheque. The facility to
purchase of outstation cheque will not be applicable to cheques collected under speed
clearing arrangements.

10. Cheques returned unpaid by the payee bank

In the event of a cheque presented in local clearing or sent for collection being returned
unpaid, the instrument along with an advice providing reasons for return would be
dispatched to the account holder at his / her mailing address recorded with the Bank. The
instrument may also be handed over to the account holder or to his/her representative with
the consent of the account holder. Charges applicable as per the Bank’s Schedule of
Charges will be levied.

Cheques return charges would be levied only in cases where the customer is at fault and is
responsible for such returns. The illustrative list of reasons for returns, where the customers are
not at fault is attached as Annexure-I.

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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.

For foreign currency cheques returned unpaid, the applicable return charges by the
correspondent bank, courier charges and any other applicable charges would be debited
from the account in which the cheque has been deposited along with the value of the
instrument, if already deposited.

The customer instructing the Bank to perform services shall be bound by and liable to
indemnify the Bank against all obligations and responsibilities imposed by foreign laws and
usages. Customers depositing cheques drawn on foreign centers are expected to be aware
of usage / practices and laws related to cheques collection prevailing in drawee countries.

The cheques sent for collection by the collecting bank can be returned by the banks
located in any foreign country (after their presentation in clearing / collection) due to fraud /
financial reasons. The fraudulent cheques can be returned by the banks in foreign countries
at any time after their presentation. In case of such returned cheques, no protection is
available to the collecting bank.

Since the foreign bank recovers the amount of returned cheques earlier credited into
account of collecting bank by debiting its Nostro Account, the collecting bank would not be
able to provide any compensation to the depositor for cheques returned on fraud / financial
reasons. Further, the Bank has right to recover the proceeds of the cheques credited in the
depositor’s account (at the ruling exchange rate equivalent to foreign currency amount
debited by foreign bank to the Nostro Account of the collecting bank) along with the
interest from the date of credit of proceeds till the date on which amount is recovered.

The various articles as details in the International Chamber of Commerce, Uniform Rules for
Collection (ICC-522) will be applicable for collection of cheque.

11. Timeframe for collection of local / outstation cheques

SL No. Cheque Type Time Norms Remarks

1 Local cheque On settlement of Local cheques are payable within
funds the jurisdiction of the clearing house
and will be presented through the
clearing system prevailing at the
center.
Credit arising out of local cheques
shall be given to the customers‟
accounts immediately after closure
of the relative return clearing and
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 above norm is also subject to
the extension of return clearing
timings by the Clearing House under
exceptional circumstances, which
may lead to delay in allowing
withdrawals as advised.

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2 Outstation Working days shall not include Bank
cheques drawn 7 working days Holidays and days when clearing
on all state house is not operational. Working
capitals days will be considered at both the
ends/centers
3 Outstation
cheques drawn 10 working days Same as above
on a major city
4 Outstation Banks will have to depend on the
cheques drawn 14 working days correspondent /drawee banks for
on all other this purpose
locations.
5 Cheques sent for T+0 depending on the The realization of the credit may
collection in CTS time and location vary based on the cut off time for
clearing (branch/ATM/CDK) of the returns applicable to the
deposit of the respective grid
instrument by the
customer. The cut off
time for deposit may
vary from branch to
branch, city to city
and grid to grid. For
the instruments
outside the grid the
cheques will be
presented in speed
clearing and the grid
timelines will apply.
However, for cheques
drawn on Banks
whose presence is
limited to any
particular geography,
such instruments have
to be presented as
outstation instruments
and the timelines for
the realization will be
as mentioned in Point
No. 2 of the table

6 Cheques sent for As per the holiday Uniform holidays calendar is

CTS clearing – declared in the Grid observed across the three grids,
Uniform holidays where the grid hub centers viz.,
calendar for the Chennai/Delhi /Mumbai will be
grid working on most of the holidays,
even while other locations in the
grid are observing holidays, As
per the Uniform holidays
calendar, the grid hub centers
will be closed on notified days
and on such occasions the
credit to the customer is
afforded on the next working
day of the Grid hub.

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 The Uniform Holidays calendar
for the grid would be available
at a nearest branch

7 Cheques sent for Whenever the NON The realization of the credit may
collection in Non- CTS clearing session vary based on the cut off time for
CTS Clearing falls on a day covered the returns applicable to the
under Uniform respective grid
Holiday, the session
shall be held on the
previous working day.

Whenever the NON

CTS clearing return
session falls on a day
covered under
Uniform Holiday, the
session shall be held
on the next working
day
8 Cheque drawn Best effort basis Bank would give credit to the party
on foreign on credit of proceeds to the Bank’s
countries Nostro Account with the 10 Sr.
Cheque Type Time Norms Remarks
correspondent bank after taking
into account cooling periods as
applicable to the countries
concerned.

The timeframe specified above for collection shall be treated as the outer limit and credit
shall be afforded earlier if the process of collection gets completed earlier.

The Bank will not decline to accept outstation cheques deposited by the customers for
collection.

12. Interest payment on delayed collection of local / outstation cheques:

The Bank will pay interest to the customer on the amount of the collection instrument in case
there is delay in giving credit beyond the time period mentioned above. Such interest shall
be calculated and paid as per the Customer Compensation Policy of the Bank. The period
of delay for this calculation would be from the date of expiry of turnaround time indicated in
the table on timeframe for collection of local / outstation instrument up to the date of
realization of the instrument.

This payment would be made without any demand from customers in all types of accounts.
There will 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 except for reasons
which are beyond the control of the Bank. Interest payments would be applicable only for
instruments (drawn in INR) sent for collection within India.

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13. Cash Management Services

For customers availing Cash Management Services (CMS), collection of instruments is carried
out as per the terms of the bilateral agreement between the bank and the customers.
Penalties, if any, will be payable as per the terms of the bilateral agreement.

14. 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 account holder so that the account
holder 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.

If the cheque/instrument has been lost at the paying Bank’s branch, the collecting branch
will have a right to recover the amount, including charges / interest expenses reimbursed to
the customer for the loss of the cheque/instrument from the paying banker

The Bank would provide all assistance to the customer to obtain a duplicate instrument from
the drawer of the cheque. This would be applicable only to instruments drawn in INR payable
within India.

The Bank will compensate the account holder in respect of instruments lost in transit as
follows and will recover it from the paying bank.

 In case intimation regarding loss of instrument is conveyed to the customer after 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 applicable
savings bank rate. In addition, the Bank will pay interest on the amount of the cheque
for a period of 15 days at savings bank rate to provide for likely further delay in
obtaining duplicate cheque/instrument and collection thereof
 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

For foreign currency cheques lost prior to receipt by the correspondent bank, the Bank will
bear the stop payment charges on customer producing the relevant document.
Compensation for foreign currency cheques would be applicable only if the Bank or its
correspondent bank loses the cheque. The compensation in such case would be as follows:

 In case intimation regarding loss of instrument is conveyed to the customer beyond

the time stipulated for collection, interest will be paid for the period exceeding the
stipulated collection period at the applicable savings bank rate
 The Bank will 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 that would charge a
fee for issue of duplicate instrument
 The Bank would also compensate for any possible loss due to adverse movement of
foreign exchange rate in case of foreign currency cheques. The compensation would
thus be calculated based on the time stipulated for collection

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 15. 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, accident, fires,
terrorist attacks, 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.

Illustrative but not exhaustive list of objections where customers are not at fault

(Applicable for Instrument and Image-based Cheque Clearing 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 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
83 Digital Certificate validation failure
84 Other reasons-connectivity failure
87 Payee’s a/c credited-stamp received
92 Bank excluded

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