NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
BEFORE :
HON’BLE MR. JUSTICE
M.B. SHAH, PRESIDENT
HON’BLE MRS. RAJYALAKSHMI RAO,
MEMBER
HON’BLE MR. JUSTICE
K.S. GUPTA, MEMBER
For the Complainants : In
person
For the Opp. Parties : Mr.Avneesh
Garg, Advocate for
OP
1 (RBI)
Mr.S.L.
Gupta, Advocate & Mr. R.K. Dikshit
Advocate for Opp. Parties 3,18,21,36,37,38,39,41,43,69
Mr.Harsh
Jha and Mr.Dhruv Mehta, Advocates for OP 4
Mr.R.
Majumdar, Advocate for OPs 5, 10, 14
Mr.P.B.
Agarwala, Advocate for OPs 6, 60
Mr.V.K.
Tandon, Advocate for OP 7
Mr.Pradeep
Dewan, Mr.Anupam Dhingra, Advocates for OP 8
Mr.
Bishwajit Bhattacharya, Sr.Advocate with Mr. Debashish Mukherjee, for OP 12
Mr. Rambir
Singh and Mr.Kunal Tandan, Advocates for OP No.13
Mr.Krishna
Mohan, Advocate for Mr. R.N. Rout, Advocate for OP 15
Mr. Saran
Suri, Advocate for OP 16
Mr.H.D.
Talwani, Advocate for OP 17
Mr.Anshu
Mahajan, Advocate for OP 19
Dr.Sunil
Narula, Advocate for OP 20
Ms.Richa
Choudhary, Advocate for OP 22, 32 and 57
Mr.Ajay
Monga, Advocate for OP 23, 29
Mr.Dharam
Dev, Advocate for OP 25, 55
Mr.
Abhishek Kumar, Advocate for OP 26
Mr. S.S.
Salooja, Advocate for OP 27
Mr.Rajender
Kumar, Advocate for OP 30 and 33
Mr.P.S.
Shetty, Advocate for OP 35
Ms.Deepti
and Mr.P.I. Jose, Advocates for OPs 40 and 47
Mr. D.P.
Chaturvedi, Advocate for OP 44
Mr. S.K.
Garg, Advocate for OP 45
Mr. Dveep
Ahuja, Advocate with
Mr. V.
Ramakrishna, Manager (Legal) for OP 46
Mr.Vijay
Kumar, Advocate for OP 48
Mr.Devendra
Sain, Advocate for OP 49
Mr.K.J.
Naik and Mr.Subhash Chand, Advocates for OP 51
Mr.J.Pradhan,
Advocate for OP 52
Mr. K.K.
Mani, Advocate for OP 54
Mr.Manoj
Arora, Advocate for OP 56
Mr. Vijay
Kumar Gupta, Advocate for OP 63
Mr.L.K.
Bhushan and Mr.Anshu Bhanot, Advocates for OP 66
Ms. Nirmal Mishra, Advocates for OP 76
Mr.Manish
Khandelwal, Advocate for OP 79
Ms.Surekha
Raman, Advocate for OP 88 and 90
27.08.2008
Heard the learned counsel
for the parties.
The question which requires consideration in this complaint is whether a consumer can seek any relief in cases :
i)
where there is
delay in encashment of local cheques and long delay in clearing of outstation
cheques ; and
ii)
non-payment of
interest/compensation for such delay.
“It is the contention of the
complainant that despite the various Committee Reports, appropriate action is
not taken by the Reserve Bank of India (RBI) with regard to recommendation for
introduction of policy to curtail Banks’ enjoyment of float funds. Relevant part of the same is as under :
“Need for introduction of policies to curtail
bank’s enjoyment of float
:
The need for passing the interest
benefits to payees on their cheque proceeds once the payee’s bank (and not
payees’ account) receives credit from the drawee bank is of significant
consequence. No passing of such interest
benefits to the customers allows the banks to enjoy float and leads to undue
enrichment of banks at the cost of their customers. Presently, as per data available (See
Appendix C), in one year nearly 13,000 lakh cheques are cleared attributing to
a total amount of more than Rs.1,13,37,000 crores. Giving benefit of doubt to banks and
considering that for at most 50% of the cheques banks are not enjoying any kind
of float, it would mean that on an average the banking sector enriches itself
(at the cost of its customers) to the tune of at least one days interest on at
least 56,68,500 crores. On this
one-day’s interest, even at a conservative rate of interest of 4% per annum,
amounts to more than Rs.621 crores. In
fact the empirical study presented in Section 5 indicates that, on an average,
the float enjoyed by banks is 4 and 6 days (while they take 11 and 16 days for
collecting cheques) for metro and state capital respectively. For other centers it would be anybody’s guess
what the float period could be!
The totality of huge float being
enjoyed by banks is actually an unaccounted credit taken from the depositors
without their explicit consent. The
vital question here is why are the banks being allowed to enjoy even one-day’s
float?”
He further submitted that the vital
question, why the Banks are being allowed to enjoy even one day’s float, is
required to be answered by RBI. For this
purpose, the complainant submits that RBI itself has issued circular dated
1.11.2004 to all the Scheduled Commercial Banks, wherein it is stated as under
:
“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.”
The complainant submits that this
particular part is still not implemented by various Banks.
As against this, learned counsel
appearing on behalf of the Banks submit that at least 80 Banks have formulated
their own policy and are following the same.
They have produced a note issued by Indian Banks’ Association (IBA)
wherein it is contended that the data given by the complainant is incorrect.
Prima facie, it appears that even though
the Banks have formulated their own policy with regard to float fund, credit is
not given to the payee immediately and the interest thereon is also not paid
and, hence, the Banks enjoy the said fund without paying any interest.
Considering the aforesaid aspect,
Central Government and RBI are directed to state on affidavit as to what steps
can be taken for minimizing the loss to the consumers because of the floating
fund. Further, RBI should state on
affidavit whether the Guidelines issued by it are properly implemented by the
Banks by framing reasonable policies in conformity with the Guidelines.
Some of the officers of different Banks, who are present in
the Court submits that with regard to the local clearance of cheque, as soon as
the cheque is presented/deposited for clearance with the Bank, credit is given
but the funds are not allowed to be withdrawn till the amount is received by
the Bank and, therefore, there is no loss of interest to the customer.
Prima facie, it is apparent that this policy followed by
some Banks is required to be uniformly adopted by rest of the Banks.
Thereafter, various orders were passed from time to time.
On 21.5.2007, after
considering the affidavits and hearing the parties, the following order, inter
alia, was passed :
“For the local cheques, it has been pointed out that most of
the Banks who have filed affidavits and have stated that credit and debit of
the cheques is being given or would be given on the same day.
In view of the aforesaid affidavits and the stand of the RBI,
RBI to consider and decide whether
appropriate guidelines can be issued for this purpose.
Regarding outstation cheques, RBI may
find out solution so that there may not be any floating of money for a longer
time.”
By order dated 21.4.2008, we framed the question for decision in the matter with regard to the alleged float arising out of the delay due to non-clearance of outstation cheques for a long period. The question which was framed is as under :
“Whether a
consumer, who suffers in case when the cheque deposited by him for collection
of amount is honoured by the drawer bank (say on 1.4.2008) and the information
is received by the drawee bank (say on 15.4.2008), should get interest or
whether no interest is payable to him by either of the banks (either drawer or
the drawee bank) because it is a transit loss?
Thereafter, the matter
was heard on various dates and necessary directions were issued from time to
time.
On 30.7.2008, after
hearing the learned counsel for RBI and various banks, the following order,
inter alia, was passed :
“From the
submissions made by the learned counsel for the banks, it appears that some
delay occurs because of the clearing bank in clearing the cheques. Firstly, it is to be stated that the clearing
bank is also expected to clear the cheques either on the date when it is
received or on the next date but it has no business to keep the cheque
uncleared for more than 48 hours. If
they cannot do such business then it is for the RBI to control such banks on
the ground that they are not in a position to discharge their banking functions
effectively. Normally it is expected that the cheque would be cleared at least
on the same date when it is received or on the next day by the clearing bank.
Next step would be its communication
to the collecting bank. In this country,
we have very good network of postal department.
Any letter from one corner to the other corner of the country could be
sent within a maximum period of 4 to 5 days.
Therefore, even an outstation cheque which is to be cleared from a
remote village also may not take more than 4 to 6 days time for its
clearance. In addition to this period,
it may take further 5 to 6 days for its
communication to the collecting bank. This would require that the collecting
bank and the clearing bank would act promptly on receipt of the cheque and take
steps for clearance as early as possible.
Therefore, to contend that such
outstation cheque would require more than 14 days for its payment to the payee
cannot be justified.
Hence, in our view, the order dated 14th July, 2008 does not
require any clarification or modification.
However, it is directed that if there is any unjustified delay on the
part of the clearing bank, the consumer should be informed about it, so that
the consumer can take appropriate action or he could refer it to Ombudsman for
taking appropriate action. In any case
if it is informed to the consumer that the delay was on account of clearing
bank, then for the unjustified delay by the clearing bank, the collecting bank
would not be liable to pay interest
beyond 14 days.
But, in above cases also, it should
not exceed the period/days prescribed in terms of bank’s policy and would pay
interest as per its policy.
It is also made clear that if any bank
receives the clearing advice from the clearing bank prior to outer limit
specified in their respective policies, the credit shall be given on the same
date or on the following date.
The banks shall file compliance report
to the order dated 14th July, 2008 within a period of two weeks from
today.”
Today, it is pointed out
that, to provide for the regulation and supervision of payment systems in India
and to designate the Reserve Bank of India as the authority for that purpose
and for matters connected therewith or incidental thereto, the Parliament has
passed ‘The Payment and Settlement Systems Act, 2007’ (hereinafter
referred to as the Act for brief) which has come into force with effect from
12.8.2008. On the basis of the aforesaid
Act, RBI also framed regulations, which have also come into force with effect
from 12.8.2008.
Under the said Act, Reserve Bank of India (hereinafter referred to as
the RBI for short) is required to provide regulations and supervision as stated
in Section 10 of the Act. Section 10,
inter alia, provides as under :
“10. Power to determine standards – (1) The Reserve
Bank may, from time to time, prescribe-
(a)
…………………..
(b)
The timings to be
maintained by payment systems;
(c)
The manner of
transfer of funds within the payment system, either through paper, electronic
means or in any other manner, between banks or between banks and other system
participants;
(d)
Such other
standards to be complied with the payment systems generally;
(e)
……………………………….”
Further, Section 18 of the Act empowers the RBI to give directions
generally. RBI is also empowered to
impose fine under Section 30 in appropriate cases. Under Section 38 of the Act, RBI is also
required to make regulations, inter alia, for the format of payment
instructions and other matters relating to determination of standards to be
complied with by the payment systems under sub-section (1) of section 10.
Considering the wide
powers, which are given to the RBI under the Act, we hope that RBI would try to
control the float, if any, arising due to delay in payment of the amount in
case of outstation cheques.
It is also hoped that the
“Challenges Ahead” noted in the speech delivered by Mr. V. Leeladhar,
Deputy Governor, RBI on 1.8.2008 at Mumbai, would be taken care of by the RBI
as well as by all the banks. The said “Challenges
Ahead” are as under :
“We have no doubt
covered considerable ground in modernizing our payment and settlement
system. The banking system too has made
considerable investment in the related infrastructure to upgrade the payment system. However, there are several challenges that
need to be effectively addressed if the full benefits of the achievements so
far are to be reaped.
One of the main challenges in the
payment system area is to promote large-scale use of the electronic modes of
payment across the country and requires addressing the constraints that impede
the adoption of this mechanism. To my
mind, the primary reason for slow pace of adoption of the electronic modes of
funds transfer, particularly in the retail segment, is the lack of education –
particularly on the part of the bank staff at the branch level that have
interface with the public. A survey
conducted by one of the Regional Offices of the RBI in the recent past revealed
that in the limited sample covered, there were several bank branches in the
State which were not even aware of the National Electronic Fund Transfer
System. The banks, therefore, need to
make concerted efforts to increase the degree of awareness at the level of the
branch staff so that the electronic fund transfer services percolate down to
the level of the public in a significant manner.
The other side of the coin is the lack of customer education
and awareness about the features and benefits of the EFT, which precludes wider
adoption of this product and leads to carrying on with the traditional modes of
payment. I would, therefore, like to
urge upon the banks to launch a systematic educational campaign for their
clients to educate them of the suite of electronic products offered by
them. This would not only reduce the
avoidable paper work in the operation of the banks but would also improve the
quality of customer service and eventually, business volume.
In so far as the RBI is concerned
with a view to promoting the electronic payment culture and to make it more
user-friendly, the RBI has intervened and mandated reasonability in pricing of
transactions effect6ed through ATMs and compulsory use of electronic mode for
transactions above a specified threshold.
The service charge levied on banks by the RBI for ECS, EFT / NEFT and
RTGC transactions has been waived until March 2009, so that this benefit of
reduced costs is passed on to customers, and the right incentive framework is
created for the use of electronic retails payment products. Similarly, the limits set for ECS and EFT /
NEFT transactions were also dispensed with in November 2004 with a view to
expanding the user base. This, of
course, is apart from various measures taken by the RBI for strengthening the
payment systems infrastructure in a variety of ways.
Although the share of electronic
payment products is improving in the overall retail segment, the share of
public sector banks in this area is very low even as the number of branches
offering the electronic payment facility is increasing. It is, therefore, necessary to make these
products available across all bank branches.
There is also a need to focus on expanding the geographical reach of the
electronic payment services so as to include the segments of the population not
yet toughed by it. It is difficult to
achieve financial inclusion without encompassing rural-India in the payment
system out-reach and the banks that do so first, will reap the rewards of the
‘first-mover advantage’ in terms of higher market share, with the concomitant
increase in business and revenues. And
as we all know, the electronic payment medium is not only speedier and more
efficient, but is also more environments friendly as it reduces the reliance on
paper required for effecting payments.
It is our vision that electronic products reach a level of 50% by volume
and 95% by value of the aggregate payment system transactions in the country,
the end of March 2009.
Then, there are also some nagging
efficiency issues in the payment system.
Whilst the current clearing cycle of T+1 basis for the cheques payable
locally, compares favourably with the best in the world, it is necessary to
look into the entire cheque collection cycle – from the time a customer
deposits a cheque at a branch till the point of realization of credit in his
account. There is perhaps scope for
continuous improvement in overall collection cycle. Going by the number of complaints received,
it appears that customer-service in this area is not very customer-centric.”
We further reiterate that
the following order, which was passed by this Commission on 14.7.2008, shall be
implemented by all the banks :
“On
the basis of the various policies framed by the Banks and the RBI directions,
it is directed that:
(a). For the local cheques credit and debit
shall be given on the same day or at the most on the next day.
(b). The maximum period for collection of outstation cheques shall be 7/10/14 days. And, if there is any delay in collection of the said chques beyond the period of 7/10/14 days, interest at the fixed deposit rate, or at a specified rate as per the respective policy of the banks, is to be paid to the payee of the cheques;
(c). 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 place in every branch.
All
the banks are, therefore, directed to comply with the same within a period of
two weeks, if they have not complied with the aforesaid RBI directions uptil
now.
(d). A copy of the complete policy shall be
made available by the Branch Manager, if the consumers require the same for
reading.
(e). The salient features highlighting the
rights of the consumers shall also be displayed on the notice board of each
branch of the Banks.
(f). Needless to say that the RBI would
monitor the directions given by it as well as this Commission.”
By our order dated
19.8.2008, we had directed the State Bank of India (SBI), Standard Chartered
Bank and HSBC Bank to publish the operative part of our order dated 14.7.2008
at their joint cost in at least two leading newspapers which are published from
Delhi and Mumbai. Learned counsel for the
SBI submitted that the said order has been complied with. He has also produced a photocopy of the said
publication issued in the Delhi Edition of the Times of India and Indian
Express dated 27.8.2008. The same is taken
on record. The cost incurred by the SBI
in publishing the same shall be equally shared by SBI, Standard Chartered Bank
and HSBC Bank, as agreed. It would be
open to the SBI to recover the said amount from the aforesaid two banks.
This complaint, at this stage, stands disposed of accordingly. It would be open to the complainant and/or
voluntary consumer organizations to approach this Commission in future for
appropriate relief, in case, there is deficiency in implementation of the Act
and its Regulations (as defined in Section 2(1)(g) of the Consumer Protection
Act).
We appreciate the hard work done by the complainants in drawing our
attention to various reports and making the consumers aware of their rights.
……………………………………….J.
( M.B. SHAH)
PRESIDENT
…………………………………………
(RAJYALAKSHMI RAO)
MEMBER
……………………………………….J.
(K.S. GUPTA)
MEMBER
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