ATUL NANDA Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) COMPLAINANTS have contended that there is deficiency in service by various banks in giving credit to the payee when the cheque is encashed and there is large float, which is enjoyed by the Banks for their benefits. On receipt of the Notice, RBI filed its affidavit on 9.11.2006 stating that RBI has deregulated the banking business on the aforesaid aspects by issuing circular dated 1.11.2004 and has directed the banks to lay down their own policy. The said circular is as under: "Committee on Procedures and Performance Audit on Public Services (CPPAPS)- Formulating policy for (i) Immediate Credit of local / outstation cheques (ii) Time Frame for Collection of local / outstation cheques and (iii) Interest Payment for delayed collection As you are aware, Reserve Bank has been issuing instructions, from time to time, to banks on issues relating to (i) Immediate credit of local / outstation cheques (ii) Time frame for collection of local / outstation cheques and (iii) Interest payment for delayed collection. The instructions in this regard are briefly summarised below:

(2.) (i) Immediate Credit of local / outstation cheques: Banks were advised to afford immediate credit in respect of outstation cheques upto Rs.2,500.00 subject to certain conditions such as bank being satisfied about the proper conduct of the customersaccounts etc., which was raised to Rs.15,000.00 vide our Circular DBOD.No.Leg.BC.21/09.07.007 dated August 23, 2002. (ii) Time Frame for Collection of Local / Outstation Instruments: We had vide our Circular DBOD.No. BC.No.59/09.07.007 dated May 17, 1995 stipulated the time frame for collection of outstation cheques in the four metropolitan centers having MICR cheque clearing system, in respect of State capitals and centres with more than 100 bank offices as also in case of local cheques. (iii) Interest payment for delayed collection: We had advised banks vide our Circulars DBOD.No.Leg. BC.88/C.466(IV)/88 dated February 4, 1988 and DBOD.No.BC.147/09.07007/99-2000 dated March 9, 2000 to pay interest at the rate as applicable for appropriate tenor of fixed deposit for the period of delay beyond 10 / 14 days in collection of outstation instruments. Banks were also advised vide the circular dated March 9, 2000 to pay penal interest at the rate of 2 per cent above fixed deposit rate applicable for abnormal delay caused by branch in collection of outstation instruments.

(3.) KEEPING in view the above, it has been decided to withdraw the instructions issued regarding (i), (ii) and (iii) above, leaving it to the individual banks to formulate policies in this regard. Banks should consequently formulate a comprehensive and transparent policy covering all the above three aspects, taking into account their technological capabilities, systems and processes adopted for clearing arrangements and other internal arrangements for collection through correspondents. Further, they may also review their existing arrangements and capabilities and work out a scheme for reduction in collection period. Adequate care also may be taken to ensure that the interests of the small depositors are fully protected. The policy framed in this regard should be integrated with the deposit policy formulated by the bank in line with the IBA's model deposit policy. The policy should clearly lay down the liability of the banks by way of interest payments due to delays for non-compliance with the standards set by the banks themselves. Compensation by way of interest payment, where necessary, should be made without any claim from the customer.