KOTAK MAHINDRA BANK LTD.
Policy for Cheque Collection
Version 1.06
Version 1.00 approved by the Board of Directors on June 07, 2005
Version 1.01 approved by the Board of Directors on March 09, 2007
Version 1.02 approved by the Board of Directors on January 21, 2008
Version 1.03 approved by the Board of Directors on May 11, 2009
Version 1.04 approved by the Board of Directors on May 11, 2010
Version 1.05 approved by the Board of Directors on Jul y 2 1, 2011
Version 1.06 approved by the Board of Directors on October 25, 2012
Version 1.07 approved by the Board of Directors on October 22, 2019
Version 1.08 approved by the Board of Directors on January 25, 2021
Version 1.09 approved by the Board of Directors on June 25, 2022
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1. Introduction
Keeping in view the technological progress in payment and settlement system s
and the qualitative changes in operational systems and processes that have
been undertaken by a number of banks, the Reser ve Bank of India had, with
eff ect from 1st November 2004, wit hdrawn its ear lier instructions to
commercial banks on (i) Immediate Credit of local/outstat ion cheques, (ii)
Time Frame f or Collection of Local / Outstation Instruments and (iii) Interest
Payment f or Delayed Collection. The withdrawal of these mandato ry guidelines
was expected to enable market f orces of competition to come into play to
improve ef f iciencies in collection of cheques and other instruments. This
collect ion policy of the Bank is a ref lection of our on -going eff orts to provide
better ser vice to our customers and set higher standards f or perf ormance. The
policy is based on principles of transparency and f airness in t he treatment of
customers. The bank is committed to increased use of technology to provide
quick collect ion ser vices to its custo mer s. This policy document covers the
f ollowing aspects:
Collection of cheques and other instruments payable locally, at centres
within India and abroad.
Our commitment regarding time norms f or collect ion of instruments.
Policy on payment of interest in cases where the bank f ails to meet time
norms f or realizat ion of proceeds of outstation instruments.
Our policy on dealing with collection inst ruments lost in transit.
2. Arrangement s for Collection:
2.1 Local Cheques - All cheques and other negotiable instr uments payable
locally would be presented through the clear ing syst em prevailing at the
centres.
All CTS Compliant cheques and other Negotiable Instrum ents which are
payable under a Grid system will be presented through the CTS clearing
system prevailing at the centre. Cheques deposited at branch count ers ,
Cheque Deposit Kiosks and in collect ion boxes within the branch pr emises
bef ore the specif ied cut -off time will be presented f or clearing on the same
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day subject to the instrument being otherwise in or der in all technical aspects .
Cheques with discrepancy will not be presented and returned to the customer
through the depositing/ home branch . The cut off timings var y f rom branch to
branch. The applicable cut of f timings will be displayed at respective br anches
and cheque drop box f or the benef it of the customers.
Cheques deposited af ter the cut -off time in branches and in Cheque Deposit
Kiosks & collection boxes outside the branch premises including off -site ATMs
will be presented in the next clear ing cycle . As a policy, bank would give credit
to the customer account on the same day post return clear ing and after the
clearing settlement for cheques deposited is po sted in the RBI Account . In
certain categories of cheques, (subject to amendments in guidelines) or
instruments demanded by the correspondent Bank , Central & Stat e
government cheques or Image Qualit y Assessment (IQA) f ailure will be
presented in physical f orm to the drawee Bank.
2.2 Outstation Cheques
2.2 (a) Cheques drawn on other banks at outstation centres other than those
covered 2.1(a) above, will normally be collected through bank ’s branches at
those centres. W here the bank does not have a branch of its own, the
instrument would be direct ly sent f or collection t o the drawee bank or collected
through a correspondent bank.
2.2 (b) Cheques drawn on bank 's own branches at outstation centres will be
collect ed using the inter -branch arrangements in vogue. Branches which are
connected through a centralized processing arrangement and are of f ering
anywhere banking services t o its customers will provide same day credit to its
customers in respect of outstation instruments drawn on any of its branches
in the CBS net work if received in the branch , up to specif ied time and lat est
by next working day if deposited / dropped in collection box out side the branch
premise s including the off site AT Ms.
2.3 Cheques pa yabl e in Foreign Countries
Cheques payable at f oreign centres wher e the bank has branch operat ions (or
banking oper ations t hrough a subsidiar y, etc.) will be collect ed through that
off ice. The services of correspondent banks will be ut ilized in countr y/centres
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where the corresponden t has presence. Cheques drawn on f oreign banks at
centres where the bank or its correspondents do not have direct presence will
be sent direct to the drawee bank with instructions to credit proceeds to the
respect ive Nostro Account of the bank maintained w ith one of the
correspondent banks.
The cooling period (no of calendar days from date of receipt of Credit in KMBL
Nostro) will be as below –
Cheque With cash Letter On Collection
Currency
USD 21 calendar days f rom date Same day on receipt of
of receipt of credit in Bank credit f rom Drawee Bank
Nostro Account
GBP / EUR / 21 calendar days f rom date Same day on receipt of
CAD of receipt of credit in Bank credit f rom Drawee Ban k
Nostro Account depending upon the time
zone.
SGD / AED NA (No Corr Bank 21 calendar days f or
relat ionship f or cheque Individuals and Non
collect ion) individuals
JPY / CHF NA (No Corr Bank Same day on receipt of
relat ionship f or cheque credit f rom Drawee Bank
collect ion) depending upon the time
zone.
3. Time Frame for Collection of Outstation Cheques / Instruments:
3.1 For outstat ion cheques and other instruments sent f or collection to centres
within the country the f ollowing time norms shall be applied:
Cheques pay abl e at CTS Centr es: Maximum period of 7 working days.
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3.2 Cheques draw n on Forei gn Countri es:
Such instruments ar e accepted f or collection on the ‘best of eff orts’
basis. The bank is committed to ensuring that instruments drawn in
f oreign currencies and payable outside India are collect ed in the
quickest and most eff icient manner. Towards this, the Bank may enter
into specif ic collection arrangements wit h its correspondent banks in
those countr ies f or speedy collection of such instrument(s). Bank would
give credit to t he party upon realizat ion credit of proceeds int o the
bank’s NOSTRO Account with t he correspondent bank af ter taking into
account cooling periods as applicable to the countries / currencies
concerned.
The Countr y / location specif ic times norms wherever stipulated wil l
be specif ied f or f oreign currency instruments and made k nown to the
customers at the point in t ime of while accepting instrum ents f or
collect ion.
4. Immediate Credit of Outstation Cheques / Instruments
As per Banks policy, the bank may provide immediate credit against
outstation cheques at the request of the customer depending upon the
eligibilit y of account s, amount to be credited and the rate of interest to
be charged etc.
In all such cases nor mal che que collection charges, cheque r eturn and
charging of interest on cheques retur ned unpaid would be charge d as
per Banks general schedule of charges.
5. Purchase of local / outstation cheques
Bank may, at its discretion, purchase local /outstat ion cheque tendered
f or collection at the specif ic request of the customer or as per pr ior
arrangement. Besides satisf actor y conduct of account, the st anding of
the drawer of the cheque will also be a f actor considered while
purchasing the cheque.
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6 Payment of Interest for delayed Collection of Local / O utstation
Cheques and Cheques Payable outside India
6.1 In case of any delays in sending the cheques f or clear ing beyond the
timelines def ined in Point 2.1 to 2.3 above, bank will compensate the
customer at the savings bank rate as applicable f or balance of Rs. 1
lakh and below f or a period equivalent of the delay without the customer
having to place a r equest f or the same. This credit will be given to t he
customer at the end of the month in which such delay occurred.
6.2 As part of the compensation policy of the bank, the bank will pay inter est
to its custom er on the amount of clearing instrument sent f or collect ion
in case there is delay in giving credit beyond the t ime per iod mentioned
above in Point 3 af ter the cheque is presented in clear ing subject to the
cheque other wise being in order .
Such int erest shall be paid wit hout any demand f rom customers in all
types of accounts. There shall be no distinction bet wee n instruments
drawn on the Bank’ s own br anches or on other banks f or the purpose of
payment of interest on delayed collect ion . However bank will not be
liable f or compensat ion if clear f unds ar e delayed due to unavoidable
circumstances like riots, bandh, delay in return presentat ion by t he
drawee bank, etc.
6.2. Interest f or delayed collect ion beyond the per iod specif ied above shall be
paid at the f ollowing rates:
a) Savings Bank rate as applicable f or balance of Rs. 1 lakh and below f or
the period of delay beyond 7 days in collection of outstation chequ es
payable at CTS Centres .
b) W here the delay is beyond 14 days int erest will be paid at the rate
applicable f or term deposit f or the respective per iod.
c) In case of extraordinar y delay, i.e. delays exceeding 90 days interest
will be paid at the rate of 2% above the corresponding Term Deposit
rate. It may be noted that int erest paym ent as given above would be
applicable only f or instruments sent f or collect ion wit hin India
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d) In the event the pr oceeds of cheque under collection was to be credited
to an overdraf t / loan account of the customer, the rate should be the
OD Interest Rat e if the customer has ut ilized part / f ull O D am ount, else
the interest rate would be as applicable f or Savings Account f or balance
of Rs. 1 lakh and below f or a period equivalent of the delay on the
amount of the cheque .
e) At certain locat ions wher e the bank has no branches, the instrument
would be dir ectly sent f or collect ion to t he drawee bank or collect ed
through a correspondent bank. On account of any unjustif ied delay s on
the part of the dr awee bank in sending proceeds to the collecting bank
i.e KMBL, KMBL would pay compensation to the customer f or the period
of delay beyond 14 working days.
6.3. Interest for del ayed collection of f oreign currency cheques :
Customers will be compensated f or delay in f oreign currency cheques by
way of interest f or cases where there is a delay beyond one week of
stated collection period without any demands f rom the customer.
The interest shall be paid on the actual amount that is credited to the
customer account on realisat ion of the cheque as f ollowing:
a) Savings Bank rate as applicable f or balances of Rs. 1 lakh and below
f or the period of delay upto 30 days f rom the agreed date of realisat ion.
b) W here such delay is beyond 30 days interest will be paid at the rate
applicable to f or term deposit f or the respective per iod (upto 90 days)
c) In case of extraordinary delay, i.e. delay beyond 90 days, int erest will
be paid at the rate of 2% above the corresponding Term Deposit rate.
7. Cheques / Instruments lost in transi t / cheques dishonoured / in
clearing process or at paying Bank’s branch:
7.1. In the event a cheque or an instrument accept ed f or collection is lost in
transit in the clear ing process or at the paying bank ’s branch:
a. The bank shall imm ediately on coming to know of the loss, bring the
same to the notice of the account holder so that the account holder can
inf orm the drawer t o record stop paym ent and also take care that
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cheques, if any, issued by him / her are not dishono ured due to non -
credit of the amount of the lost cheques / instruments.
b. The bank would pr ovide all assistance to the customer to obtain a
duplicate instrument f rom the drawer of the cheque. In case, the cheque
is lost by the bank, charges if any f or recor ding the stop payment will
be borne by the bank.
7.2 In line with the compensation policy of the Bank, the Bank will
compensate the account holder in respect of instruments lost in transit in
the f ollowing way:
a) In case int imation regarding loss of instrument is conveyed to the
customer beyond the time lim it stipulated f or collection (as mentioned
in Point 3) interest will be paid f or the period exceeding the stipulated
collect ion per iod at t he rates specif ied abo ve.
b) In addit ion, Bank will pay interest on the amount of the cheque f or a
f urther period of 15 days at savings bank rate as applicable f or balance
of Rs. 1 lakh and below to provide f or likely f urther delay in obtaining
duplicate cheque / instrument and c ollect ion thereof .
c) The bank would also compensate the customer f or any r easonable
charges (up to Rs.500/ -) he/she incurs in getting duplicate cheque /
instrument upon production of receipt, in the event the instrument is to
be obtained f rom a bank / institution who would charge a f ee f or issue
of duplicate instrument.
7.3. Miscellaneous:
a) Cheques which are deposited wit h wr ong account number mentioned on
the Pay- in slip, Bank will retur n such cheques to the depositing branch
within 48 working hours. In the case of cheques dropped in AT M /
cheques collect ion boxes / vendor pickups, the Bank will send the
cheques to the home branch of the customer. In case the home branch
is not ident if iable ( eg. Due to wrong account number capture), the said
cheques would be sent to the Ser vice Branch and retained at the
clearing location . However in cases with incomplet e address,
incomplete phone no., no phone number mentioned on the Pay - in slip,
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the bank will be responsible to keep these instruments f or a maxim um
period of 3 months.
b) Cheques received back unpaid will be returned by post / courier etc. to
the customer wit hin 48 working hours on the addr ess recorded in Bank’s
database. However, these will be kept in the Bank f or returning to the
customer over the counter if he/she makes a request f or the same. If
not collected by the customer within 15 days bank will send t hem back
at the recorded addr ess by post or courier. The cheque return charges
f or the same will be collected as def ined in the General Sc hedule of
Charges.
8. Service Charge
For all collection ser vices the bank will r ecover appropr iate service charges
as decided by the bank f rom time to time and communicat ed to customer,
displayed on Bank’s website.
9. Charging of Interest on cheques ret urned unpaid w here Instant Credit
w as given:
If a cheque sent f or collect ion f or which immediate credit was provided by the
bank is returned unpaid, the value of the cheque will be immediately debited
to the account. As per various arrangements with the cust omer, bank shall
recover inter est f or the per iod wherein bank was out of f unds and / or per
instrument rate which is applicable to customer as return charges. If the
proceeds of the cheque were credit ed to the Savings Bank Account and was
not withdrawn, the amount so cr edited will not qualif y f or payment of interest
when the cheque is returned unpaid. If proceeds wer e credited to an
overdraf t/loan account, interest shall be r ecovered at the rate of 2% above the
interest r ate applicable t o the clean overdraf t/loan f rom the date of credit t o
the date of rever sal of the entry if the cheque/ instrument was returned unpaid
to the extent the bank was out of f unds.
10. The Bank will pay the customer savings bank rate as applicable f or
balances of Rs. 1 lakh and below f or any erroneous debits/ credits / list ing
errors in the account aff ected f or more than a day so that t he customer is
compensated f or the interest loss. In the event the rectif ication amount was to
be credited t o an overdraf t / loan account of the customer, the rate should be
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the OD Interest Rat e. This credit will be given to the customer at the end of
the month in which such delay occurred
11. Cheque return charges shall be levied only in cases where the cust omer
is at f ault and is responsible f or such ret urns.
The illustrative, but not exhaust ive, list of returns, where the customers ar e
not at f ault are indicated below:
Code Reason for Return
No.
33 Instrument mutilated; requires bank's guarantee
35 Clearing House stamp/date required
36 W rongly delivered/ not drawn on us
37 Present in proper zone
38 Instrument contains extraneous matter
39 Image not clear ; present again wit h paper
40 Present with document
41 Item listed t wice
42 Paper not received
60 Crossed to t wo banks
61 Crossing stamp not cancelled
62 Clearing stamp not cancelled
63 Instrument specially crossed to another bank
67 Payee's endorsem ent irregular/ requires collecting bank's
conf irmation
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68 Endorsement by mark/ thumb impression requires attestation by
Magistrate with seal
70 Advice not received
71 Amount/ Name dif f ers on advice
72 Drawee bank's f und with sponsor bank insuff icient(applicable to
sub-members)
73 Payee's separate discharge to bank required
74 Not payable till 1st proximo
75 Pay order/cheque requires counter signature
76 Required inf ormation not legible/correct
80 Bank's certif icate am biguous/ incomplete/ required
81 Draf t lost by issuing off ice; conf irmation required f rom issuing
off ice
82 Bank / Branch block ed
83 Digital Certif icate validat ion f ailure
84 Other reasons -connectivit y f ailure
87 ‘Payee's a/c Credited' -Stamp required
92 Bank excluded
12. Cheques that need to be re -presented without any recour se to the payee,
shall be made in the immediate next presentation clear ing not later than 24
hours (excluding holidays)
13. Force Majeure
The bank shall not be liable to compensate customers f or delayed credit if
some unf oreseen event (including but not lim ited to civil commotion, sabotage,
or other labour disturbances, accident, f ires, natural disaster s or other “Acts
of God”, war, damage t o the bank’s f acilities or of its correspondent bank(s),
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absence of the usual means of communication or all types of transportation
etc beyond the control of the bank prevents it f rom perf orming its obligations
within the specif ied ser vice deliver y parameters.
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