Compensation Policy...Compensation Policy of our Bank is therefore, designed to cover areas relating...

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Compensation Policy

1. Introduction

Technological progress in payment and settlement systems and the qualitative changes in

operational systems and processes that have been undertaken by various players in the market have

enabled market forces of competition to come into play to improve efficiencies in providing better

service to the users of the system. It will be the bank’s endeavor to offer services to its customers

with the best possible utilization of its technology infrastructure. Withdrawal of the Reserve Bank of

India instructions to banks on time frame for collection of outstation cheques, payment of interest

on delayed collection of outstation cheques/instruments, with effect from 1st November 2004, had

offered Banks further opportunities to increase their efficiencies for better performance. This

Compensation Policy of our Bank is therefore, designed to cover areas relating to:

Unauthorized debiting of accounts,

Payment of interest to customers for delay in collection of cheques/instruments,

Payment of cheques after acknowledgement of stop payment instructions,

Remittances within India, foreign exchange services, lending, etc.

The policy is based on principles of transparency and fairness in the treatment of customers.

2. Objective

The objective of this policy is to establish a system enabling the bank to compensate the customer

for any financial loss he/she might incur due to:

deficiency in service on the part of the bank or

any act of omission or commission directly attributable to the bank.

By ensuring that the customer is compensated without having to ask for it, the bank desires to do

the right thing and also expects instances, when the customer approached the Banking Ombudsman

or any other Forum for redressal, to come down significantly.

3. Framework

It is reiterated that the policy covers only compensation for financial losses which customers may

incur due to deficiencies in the services offered by the bank, which can be measured directly. It must


be noted that the commitments under this policy are without prejudice to any right the bank will

have in defending its position before any forum duly constituted to adjudicate banker-customer

disputes.

4. Unauthorised / Erroneous Debit by the Bank

4. a. If the bank has raised an unauthorized/erroneous direct debit to an account, the entry will be

reversed immediately on being informed of the erroneous debit, after verifying the facts.

4. a. i. In the event, the unauthorized/erroneous debit has resulted in a financial loss for the customer

by way of reduction in the minimum balance applicable for payment of interest on savings bank

deposit or payment of additional interest to the bank in a loan account, the bank will compensate

the customer for such loss.

4. a. ii. Further, if the customer has suffered any direct financial loss incidental to return of a cheque

or failure of direct debit instructions, due to insufficiency of balance on account of the

unauthorized/erroneous debit, the bank will compensate the customer to, the extent of any charges

levied for balance falling below minimum balance requirement (MAB) or any charges levied for return

of cheques due to shortfall in balance, after taking into consideration all relevant factors.

4.b. In case verification of the entry (reported to be erroneous by the customer) does not involve a

third party, the bank will endeavour to complete the process of verification within a maximum period

of 7 working days, from the date of reporting of such erroneous debit.

In case, the verification of an erroneous debit involves a third party or where verifications are to be

done at overseas centres, the bank will strive to complete the verification process within a maximum

period of one month from the date of reporting of unauthorised/erroneous transaction by the

customer.

4.c. Unauthorised Erroneous transaction reported by customers in respect of credit card operations,

which require a referral to a merchant establishment, will be handled as per rules laid down by the

card association.


5. Unauthorised Electronic Transactions reported by Customers

As per the circular no. DBR.No.Leg.BC.78/09.07.005/2017-18 dated July 6, 2017 issued by the Reserve

Bank of India, all Banks are required to formulate a Board Approved Customer Protection Policy for

unauthorised electronic Banking transactions reported by customers.

The policy is, inter alia, required to cover in detail, the liability of customers in different scenarios

depending on whether the compromise was at the Bank’s end, customer’s end or elsewhere in the

system.

For all such transactions, the Bank is governed by their Board Approved Customer Protection Policy

as indicated in Addendum I of this policy.

6. ECS direct debits/other debits to accounts

6.a. The bank will undertake to carry out direct debit/ ECS debit instructions of customers in time. In

the event the bank fails to meet such commitments, customers will be compensated to the extent

of:

direct financial loss or payment of additional interest to the Bank in a loan account or

any charges levied for reason of balance falling below the minimum balance requirement or

any charges levied for return of cheques due to shortfall in balance on account of delay in carrying

out the instruction/failure to carry out the instructions.

6.b. The bank will debit the customer’s account with any applicable service charge as per the

schedule of charges notified by the bank and updated from time to time. In the event the bank levies

any charge in violation of the arrangement, the bank will reverse the charges when pointed out by

the customer, subject to scrutiny of agreed terms and conditions. In such cases, the Bank will

compensate the customer for:

any direct financial loss by way of loss of savings account interest on account of reduction in the daily

closing balance applicable for payment of interest on savings bank deposit or

payment of additional interest to the Bank in a loan account or

any charges levied for balance falling below minimum balance requirement or

any charges levied for return of cheques due to shortfall in balance.

6.c. Where it is established that the bank had issued and activated a credit card without consent of

the recipient, the bank will not only reverse the charges immediately but also pay a penalty without


demur to the recipient, amounting to twice the value of charges reversed as per regulatory guidelines

in this regard.

7. Payment of Cheques after Stop Payment Instructions

In case a cheque has been paid after a stop payment instruction is acknowledged by the bank, the

bank will reverse the transaction and give value-dated credit to protect the interest of the customer.

In such cases, the Bank will compensate the customer to the extent of direct financial loss, if any:

a. by way of loss of savings account interest on account of reduction in the daily closing balance

applicable for payment of interest on savings bank deposit, or

b. payment of additional interest to in a loan account, or

c. any charges levied for reason of balance falling below minimum balance requirement, or

d. any charges levied for return of cheques due to shortfall in balance.

Such debits will be reversed within 2 working days of the customer informing the bank about such

transaction.

8. Payment of Interest for delayed Collection of Local / Outstation Cheques

As part of the compensation policy of the bank, the bank will pay interest to its customer on the

amount of collection instruments in case there is delay in giving credit beyond the time period

specified in banks cheque collection policy. Such interest will be paid 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.

Interest for delayed collection will be paid at the following rates:

a) Saving Bank Rate for the period of delay beyond 3 working days in case of local cheques.

b) Savings Bank rate for the period of delay beyond 7 days in collection of outstation cheques payable

at CTS Centres and 10 days in non CTS Centres.

c) Where the delay is beyond 14 days, interest will be paid at the rate applicable for term deposit for

the corresponding respective period or Saving Bank rate, whichever is higher. d) In case of

extraordinary delay, i.e. delays exceeding 90 days, interest will be paid at the rate of 2% above the

corresponding Term Deposit rate.


e) In the event the proceeds of cheque under collection was to be credited to an overdraft/loan

account of the customer, interest will be paid at the rate applicable to the loan account. For

extraordinary delays, interest will be paid at the rate of 2% above the rate applicable to the loan

account.

9. Compensation for loss of instrument in transit

The bank’s Compensation Policy for financial loss suffered by the customers due to loss of instrument

after it has been handed over to the bank for collection by the customer, is indicated in the Cheque

Collection Policy. This is replicated below:

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 will immediately on coming to know of the loss,

bring the same to the notice of the accountholder. The accountholder can accordingly 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. The bank will further

provide all assistance to the customer to obtain a duplicate instrument from the drawer of the

cheque. In line with its compensation policy the bank will compensate the accountholder in respect

of instruments lost in transit in the following way:

i. In case information regarding loss of instrument is conveyed to the customer beyond 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 rates specified in clause 8 of this policy.

ii. In addition, the bank will pay interest on the amount of the cheque for a further period of 15 days

at the Savings Bank rate, to provide for a likely further delay in obtaining duplicate

cheque/instrument and collection thereof.

iii. The bank will also compensate the customer, upon production of receipt for any reasonable

charges he/she incurs in obtaining a duplicate cheque/instrument from a bank/ institution who

charges a fee for issue of such duplicate instrument.


10. Issue of Duplicate Draft and Compensation for delays

A Duplicate draft will be issued within a fortnight from the receipt of such request from the

purchaser. Such request must be accompanied by documents as prescribed by the bank. For delays

beyond the above stipulated period, interest at the rate applicable for Fixed Deposit of

Corresponding period, will be paid as compensation to the customer for such delay period.

11. Violation of the Code by banks agent

In the event of receipt of any complaint from the customer that the bank’s representative / courier

or DSA has:

engaged in any improper conduct, or

acted in violation of the Code of Bank’s Commitment to Customers,

the bank is committed to investigate the matter and endeavour to communicate the findings to the

customer within 7 working days from the date of receipt of complaint and wherever justified,

compensate the customer for any direct financial loss, if any, as contemplated under this policy.

12. Transaction of “at par instruments” of Co-operative Banks by Commercial Banks *

The RBI has expressed concern over the lack of transparency in the arrangement for payment by

commercial banks, of “at par” instruments of co-operative banks, resulting in dishonour of such

instruments when the remitter has already paid for the instruments. In this connection it is clarified

that the bank will not honour cheques drawn on current accounts maintained by other banks with it,

unless arrangements are made for funding the cheques issued. The Issuing bank will be responsible

to compensate the cheque holder for non-payment/delayed payment of cheques in the absence of

adequate funding arrangement. [* para 12 is applicable only for policy documents of commercial

banks]

13. ATM Failure

Compensation payable will be in line with the Reserve Bank of India (RBI) guidelines on “Harmonization of Turn Around Time (TAT) and customer compensation for failed transactions using authorised Payment Systems”. Kindly refer Addendum II of this policy for details.


14. Foreign Exchange Services

The Bank will not compensate the customer for delays in collection of cheques designated in foreign

currencies sent to foreign countries as the bank will not be able to ensure timely credit from overseas

banks. It is the bank’s experience that the time for collection of instruments drawn on banks in

foreign countries differ from country to country and even within a country, from place to place. The

time norms for return of instruments cleared provisionally also vary from country to country. The

Bank however, may consider upfront credit against such instruments by purchasing the

cheque/instrument, provided the conduct of the account has been satisfactory in the past. However,

the bank will compensate the customer for undue delays in affording credit once proceeds are

credited to the Nostro Account of the bank with its correspondent. Such compensation will be given

for delays beyond one week from the date of credit to Nostro Account/ due date after taking into

account the normal cooling period stipulated. The compensation in such cases will be worked out as

follows:

Interest for the delay in crediting proceeds as indicated in the clause 8 of this policy.

Compensation for any possible loss on account of adverse movement in foreign exchange rate.

15. Lenders liability: Commitments to borrowers

The bank has adopted the principles of lenders of liability. In terms of the guidelines for lenders

liability, and the Code of Bank’s Commitment to customers adopted by the bank, the bank will return

to the borrowers all the securities/documents/title deeds to mortgaged property within 15 working

days of repayment of all dues agreed to or contracted. The bank will compensate the borrower for

monitory loss suffered, if any, subject to a maximum of Rs500/-, due to delay in return of the same.

In the event of loss of title deeds to mortgage property at the hands of the banks, the compensation

will cover out of pocket expenses for obtaining duplicate documents plus a lump sum amount of

Rs500/-.

16. Wealth Management Products

The bank is a corporate Agent and distributor of Insurance and Mutual Fund products. For any

deficiencies in such services, the bank will assist all customers to raise their grievances with the tie-

up partners.


For any deficiencies in services at the bank level raised by customers, the issue will be examined by

the bank and if the lapse on the part of the bank is confirmed (mis-selling) the customer will be

compensated, based on the facts and circumstances of the case.

17. Customer Compensation for failed transactions using authorized payment systems

Reserve Bank of India (RBI) vide its circular on “Harmonization of Turn Around Time (TAT) and

customer compensation for failed transactions using authorised Payment Systems” has prescribed

the framework & guidelines to be followed by the banks. These guidelines issued from time to time

will be applicable to the below mentioned channels/transactions:

Automated Teller Machines (ATMs) including Micro-ATMs

Card Transactions

Immediate Payment System (IMPS)

Unified Payments Interface (UPI)

Aadhaar Enabled Payment System (including Aadhaar Pay)

Aadhaar Payment Bridge System (APBS)

National Automated Clearing House (NACH)

Prepaid Payment Instruments (PPIs) – Cards / Wallets

For details, kindly refer Addendum II of this policy.

18. Force Majeure

The bank will not be liable to compensate customers for delayed credit if some unforeseen event

(including but not limited to civil commotion, sabotage, lockout, strike or other labour disturbances,

accident, fires, 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.


ADDENDUM I – LIMITING LIABILITY OF CUSTOMER – UNAUTHORIZED ELECTRONIC BANKING TRANSACTIONS

The customer is obliged to promptly report the unauthorized electronic transaction to RBL Bank

RBL Bank shall conduct an independent investigation to establish the liability for the unauthorized transaction. CUSTOMER LIABILITY Based on the outcome of the investigation conducted by RBL Bank, the customer will be entitled to receive compensation as follows: (a) Customer has zero liability A customer’s entitlement to “zero liability” will arise where the unauthorised transaction occurs in the following events:

(i) Contributory or Deliberate fraud/ negligence/ deficiency on the part of RBL bank as established by the investigation carried out by RBL bank (irrespective of whether or not the transaction is reported by the customer).

(ii) Third party breach, as established by the investigation carried out by RBL bank, where the deficiency lies neither with RBL bank nor with the customer but lies elsewhere in the system (i.e. no contributory or deliberate fraud/ negligence/ deficiency on the part of RBL bank or customer), and the customer notifies the bank within three working days of receiving the communication from the bank regarding the transaction. (b) Customer has limited liability A customer will be liable for the loss occurring due to unauthorised transactions in the following cases:

(i) In case where the loss is due to negligence by a customer, such as where the customer has shared or compromised the payment credentials, the customer will bear the entire loss until he/she reports the unauthorised transaction to the bank. Any loss occurring after reporting such unauthorized transaction will be borne by the bank.

(ii) In case where the responsibility for the unauthorised electronic banking transaction lies neither with RBL bank nor with the customer, but lies elsewhere in the system, as per the investigation carried out by RBL bank (i.e. no contributory or deliberate fraud/ negligence/ deficiency on the part of the bank or customer) and when there is a delay of four to seven working days, after receiving the communication from the bank, on the part of the customer in notifying RBL bank of such a transaction, the liability of the customer per transaction will be limited to the transaction value or the amount mentioned in Table 1 below, whichever is lower.


Table 1

Type of Account Maximum Customer

Liability (₹)

• BSBD Accounts 5,000

• All other SB accounts • Pre-paid Payment Instruments and Gift Cards • Current/ Cash Credit/ Overdraft Accounts of MSMEs • Current Accounts/ Cash Credit/ Overdraft Accounts of Individuals with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs.25 lakh • Credit cards with limit up to Rs.5 lakh

10,000

• All other Current/ Cash Credit/ Overdraft Accounts • Credit cards with limit above Rs.5 lakh

25,000

(c) Customer is fully liable

In cases where the responsibility for the unauthorised electronic banking transaction lies neither with RBL bank nor with the customer, but lies elsewhere in the system, as per the investigation carried out by RBL bank (i.e. not contributory or deliberate fraud/ negligence/ deficiency on the part of the bank or customer) and when there is a delay beyond seven working days after receiving the communication from the bank, on the part of the customer in notifying RBL bank of such a transaction, the customer shall be solely liable in full for all the losses arising out of such unauthorized transaction.

Transactions where a Password/PIN/MPIN/OTP (One Time Password)/CVV has been used or where the transaction has been performed with information available only with the customer or can be done only with the knowledge of the customer like Net Banking User ID & Password, will be treated as “Transaction performed by the customer or due to customer negligence” and the complete liability for such transactions will be borne by the Customer.

Further, in cases where the unauthorized electronic banking transaction was successful through the second factor authentication sent to the customer’s registered email / mobile number, the complete liability for such transactions will be borne by the Customer.

For all the disputed cases, RBL Bank would need the customer to provide the relevant documents like dispute form, copy of the FIR, etc. within the stipulated time frame of 15 calendar days of customer reporting the unauthorized transaction. In an event the customer is unable to provide the documents or when there is a delay on part of the customer in submitting the documents within the stipulated timeframe, RBL Bank will be unable to conclude the investigation and the full liability of such unauthorized transaction(s) will be borne by the customer.

The overall liability of the customer as detailed in sections (a), (b) & (c) above, where the deficiency lies neither with the Bank nor the Customer, but lies elsewhere in the system, as per the investigation carried out by RBL bank, is summarised in Table 2 below:


Table 2

Time taken to report the fraudulent transaction from the date of receiving the communication Customer’s liability (₹)

Within 3 working days Zero liability

Within 4 to 7 working days The transaction value or the amount mentioned in Table 1, whichever is lower

Beyond 7 working days Full

REVERSAL TIMELINES FOR ZERO LIABILITY / LIMITED LIABILITY OF CUSTOMER

On being notified by the customer of the unauthorized transaction, RBL Bank will credit (temporary/shadow reversal) the disputed amount, into the respective account within 10 working days from the date of such notification by the customer.

Where verification involves a third party or requires reference to a merchant establishment, the same will be handled as per the rules laid down by the Card associations.

Saving and Current account holder will not be able to use the funds credited by way of temporary/shadow credit till the dispute is resolved in favour of the customer. The temporary/shadow credit is not applicable for Prepaid Cards.

Bank will also further ensure to complete the investigation and provide final resolution on the liability of the unauthorized transaction, within a maximum of 90 days from the date of receipt of the complaint.

Where the Bank is unable to resolve the complaint or determine the customer liability, if any, within 90 days, the compensation as prescribed in above paragraphs will be paid to the customer. CUSTOMER AWARENESS The Bank will continue to carry out periodic customer awareness and education campaigns on safe usage of Electronic Banking Channels & Do’s and Don’ts of the respective electronic banking channels through any of the following means:

o Website o Branches o SMS o Email

REPORTING The Bank will periodically review the unauthorised electronic banking transactions reported by the customers and will report the relevant details to its Standing Committee on Customer Services.


ADDENDUM II – FRAMEWORK FOR AUTO-REVERSAL AND CUSTOMER COMPENSATION FOR FAILED TRANSACTIONS USING AUTHORIZED PAYMENT SYSTEMS 1. A ‘failed transaction’ is a transaction which has not been fully completed due to any reason not

attributable to the customer such as failure in communication links, non-availability of cash in an ATM, time-out of sessions, etc. Failed transactions also includes the credits which could not be effected to the beneficiary account on account of lack of full information or lack of proper information and delay in initiating a reversal transaction.

2. ‘T’ is the day of transaction and refers to the calendar date. 3. ‘R’ is the day on which the reversal is concluded and the funds are received by the issuer /

originator depending upon the type of transaction. Reversal will be effected at the issuer / originator end on the same day when the funds are received from the beneficiary end.

4. Domestic transactions i.e., those where both the originator and beneficiary are within India are

covered under this framework.

5. Wherever financial compensation is involved, the same will be effected to the customer’s account suo moto, without waiting for a complaint or claim from the customer.

6. Customers who do not get the benefit of redress of the failure as defined in the TAT, can register

a complaint with the Banking Ombudsman of Reserve Bank of India.


FRAMEWORK FOR AUTO-REVERSAL AND CUSTOMER COMPENSATION FOR FAILED TRANSACTIONS USING AUTHORIZED PAYMENT SYSTEMS

SI. No.

Description of the incident

Framework for auto-reversal and compensation

* Timeline for auto-reversal

Compensation payable

I II III IV

1 Automated Teller Machines (ATMs) including Micro-ATMs

a Customer’s account debited but cash not dispensed.

Within T + 5 days.

₹ 100/- per day of delay beyond T + 5 days, to the credit of the account holder.

2 Card Transaction

a

Card to card transfer Remitter’s Card account debited but the beneficiary’s card account not credited.

Within T + 1 day. ₹ 100/- per day of delay beyond T + 1 day.

b

Point of Sale (PoS) (Card Present) including Cash at PoS Account debited but confirmation not received at merchant location i.e., charge-slip not generated. Within T + 5 days.

₹ 100/- per day of delay beyond T + 5 days.

c

Card Not Present (CNP) (e-commerce) Account debited but confirmation not received at merchant’s system.

3 Immediate Payment System (IMPS)

a Account debited but the beneficiary account is not credited.

Within T + 1 day. ₹100/- per day if delay is beyond T + 1 day.


SI. No.





4 Unified Payments Interface (UPI)

a Account debited but the beneficiary account is not credited (transfer of funds).


b

Account debited but transaction confirmation not received at merchant location (payment to merchant).

Within T + 5 days. ₹100/- per day if delay is beyond T + 5 days.

5 Aadhaar Enabled Payment System (including Aadhaar Pay)

a Your account debited but transaction confirmation not received at merchant location.

“Credit Adjustment” shall be initiated within T + 5 days, if transaction is done through our Aadhaar Enabled Payment System.

₹100/- per day if delay is beyond T + 5 days.

b Your account debited but beneficiary account not credited.

6 Aadhaar Payment Bridge System (APBS)

a Delay in crediting beneficiary’s account.

As a beneficiary bank, we shall reverse within T + 1 day.

₹100/- per day if delay is beyond T + 1 day.

7 National Automated Clearing House (NACH)

a Delay in crediting beneficiary’s account or reversal of amount.

As a beneficiary bank, we shall reverse within T + 1 day.



SI. No.





b Account debited despite revocation of debit mandate with the bank by the customer.

Within T + 1 day.


8 Prepaid Payment Instruments (PPIs) – Cards / Wallets

a

Off-Us transaction The transaction will ride on UPI, card network, IMPS, etc., as the case may be. The TAT and compensation rule of respective system shall apply as specified above.

b

On-Us transaction Beneficiary’s PPI not credited. PPI debited but transaction confirmation not received at merchant location.


*As prescribed by RBI vide its circular, the TAT shall be arrived based on calendar day.

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