The Customer Compensation Policy is designed to compensate customer in the events of unauthorized debits or delays during banking transactions. The policy is applicable to all the products and schemes. The policy is to be followed meticulously by the field functionaries while resolving complaints.

Reserve Bank of India through its “Master Circular on Customer Service in Banks” circulated vide RBI/2015-16/59 DBR No. Leg.BC.21/09.07.006/2015- 16 dated 01st July 2015 requires banks to have a Board approved policy in place for compensating its customers.

Also as stated in the Statement on Development and Regulatory policies issued as part of monetary policy statement dated April 4, 2019, the Reserve Bank of India has given directive framework on Turnaround Time (TAT) for resolution of customer complaints and compensation framework across all authorized payment systems. This direction was issued under Section 10(2) read with Section 18 of the Payment and Settlement System Act, 2007 (Act 51 of 2007) and came into effect from October 15, 2019.

This Compensation policy of the bank is therefore, designed to cover areas relating to unauthorized debiting of account, incidences of unauthorized transactions effected through electronic mode, payment of interest to customers for delayed collection of cheques/instruments, payment of cheques after acknowledgement of stop payment instructions, remittances within India, outside India, lending, etc. The policy is based on principles of transparency and fairness in the treatment of customers.

The Policy covers only compensation for financial losses which customer might incur due to deficiency in the services offered by the bank which can be measured directly and as such the commitments under the 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.

The Bank may review the policy annually or earlier as per requirements arising out of regulatory directions.

We have noticed the surge in the usage of the Digital Banking Channel across the Banking Industry during the last few years. We have also observed similar surge in the usage of the Digital Banking channels such as ATM, Mobile Banking, UPI, RTGS/NEFT etc.

We being part of payment system are required to follow the framework given by Reserve Bank of India. The background of the said issue is as follows.

It was observed that a large number of customer complaints emanate on account of unsuccessful or ‘failed’ transactions. Failure could be on account of various factors not directly attributable to the customer such as disruption of communication links, non-availability of cash in ATMs, time-out of sessions, non-credit to beneficiary’s account due to various causes, etc. Rectification/ Compensation paid to the customer for these ‘failed’ transactions is not uniform.

After consultation with various stakeholders, the framework for TAT for failed transactions and compensation therefore has been finalized which will result in customer confidence and bring in uniformity in processing of the failed transactions.

We endeavor to offer services to our customers with best possible utilization of the given directive from progressive technology in payment and settlement systems and operational systems and processes with optimum possible utilization of our technology infrastructure. During the course of rendering such services a situation may arise where we may require to compensate loss incurred by our customer. In order to have uniformity and transparency while dealing with such cases a policy for bank as a whole is necessary. The present document is an attempt towards such a policy.

The objective of this policy is to establish a system whereby the bank compensates 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, proactively so as to strengthening grievance redressal mechanism.

It is reiterated that the policy covers only compensation for financial losses which customers might incurred due to deficiency in the services offered by the bank which can be measured directly and as such the commitments under this policy are without prejudice to any rights of the bank will have in defending its position before any forum duly constituted to adjudicate banker-customer disputes.

If an account of a customer is debited in unauthorized way / erroneously, the entry will be reversed immediately on being informed by the customer about the same, after verifying the position. 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.

In case verification of the entry reported to be erroneous by the customer does not involve a third party, the bank will endeavor to complete the process of verification within a maximum period of 7 working days from the date of reporting of erroneous debit. In case, the verification involves a third party, the bank shall complete the verification process within a maximum period of one month from the date of reporting of erroneous transaction by the customer. Erroneous transaction reported by customers in respect of debit card operations which require reference to a merchant establishment will be handled as per rules laid down by card association or NPCI.

Direct debit/ ECS/RTGS/ debit instructions of customers must be effected in time. In case of failure to do so in time, customer will be compensated to the extent of any financial loss the customer would incur on account of delay in carrying out the instruction/failure to carry out the instructions.

Applicable service charge for ECS / other debit transactions, as per the schedule of charges notified by the bank, may be recovered. In case charges levied which are not as per schedule of charges as applicable, the bank will reverse the charges when pointed out by the customer subject to scrutiny of agreed terms and conditions.

In case a debit card is issued and activated without consent of the recipient, the bank would 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.

In case a cheques has been paid after stop payment instruction is acknowledged by the bank, the bank shall reverse the transaction and give value-dated credit to protect the interest of the customer. Any consequential financial loss to the customer will be compensated as provided above. Such debits will be reversed within 2 working days of the customer intimating the transaction to the bank.

The Bank would not compensate the customer for delays in collection of cheques designated in foreign currencies sent to foreign countries through a bank with which collection arrangement is made, as the bank would not be able to ensure timely credit from overseas banks. However, the bank will compensate the customer for undue delays in affording credit once proceeds are received by our bank after taking in to account period required for verification of the transaction and identification of the beneficiary. Such compensation will be given for delays beyond one week from the date of receipt of the proceeds by our Bank after taking into account verification & identification period referred above. The compensation in such cases will interest for the delay in crediting the proceeds.

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 as per RBI guidelines in the matter. Such interest shall be paid without any demand from customers in all types of accounts. There shall 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 shall be paid at the following rates:

• Savings Bank rate for the period of delay beyond 7/10/14 days as the case may be in collection of outstation cheques.
• 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.
• In case of extraordinary delay, i.e. delays exceeding 90 days’ interest will be paid at the rate of 2% above the rate applicable to Term Deposit for the corresponding period.
• In the event the proceeds of cheques 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.

In the event a cheques 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 accountholder so that the accountholder can inform the drawer to record stop payment and also take care that cheques, if any, issued by him / her are not dishonored due to non-credit of the amount of the lost cheques / instruments.

The bank would provide all assistance to the customer to obtain a duplicate instrument from the drawer of the cheques.

In line with the compensation policy of the bank, the bank will compensate the accountholder in respect of instruments lost in transit in the following way:

• In case intimation 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 above.
• In addition, bank will pay interest on the amount of the cheques for a further period of 15 days at Savings Bank rate to provide for likely further delay in obtaining duplicate cheques/instrument and collection thereof.
• The bank would also compensate the customer for any reasonable charges he/she incurs in getting duplicate cheques/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.

Duplicate draft will be issued within a fortnight from the receipt of such request from the purchaser thereof supported by submission of documents required by Bank. For delay 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. The period of fortnight prescribed would be applicable only in cases where the request for duplicate demand draft is made by the purchaser or the beneficiary and would not be applicable in the case of third party endorsements.

The bank would return to the borrowers all the securities/documents/title deeds to mortgaged property within 15 days of repayment of all dues agreed to or contracted, including the dues not specifically against the involved security (subject to absence of contract to the contrary). The bank will compensate the borrower for monitory loss suffered, if any due to delay in return of the same. In the event of loss of title deeds to mortgage property at the hands of the bank the compensation will cover out of pocket expenses for obtaining duplicate documents.

The bank shall 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.

It is mandatory for bank to reimburse the customer, the amount wrongfully debited on account of failed ATM transaction/ POS transaction (account of customer is debited but cash is not dispensed or Confirmation not received at merchant location) Pro-active reversal ® of failed transaction within a maximum of T + 5 days.

For any failure to re-credit the customer’s account within a maximum of T + 5 days bank shall pay compensation for the delay period at the rate of Rs.100 per day. This compensation shall be credited to the customer’s account automatically without any claim from the customer, on the same day when bank affords the credit for the failed ATM transactions.

It case of IMPS/UPI transactions failure where customer account is debited but beneficiary’s account is not credited, the beneficiary bank shall not auto reverse the entry on T + 1 day , failure which the remitting customer shall be compensated at the rate Rs. 100 per day.

In case of UPI payment to merchants, if account is debited but transaction confirmation not received at merchant location, the beneficiary bank shall auto reverse latest on T + 5 day, failing which customer whose account is debited shall be compensated by Rs. 100/- per day, if delay is beyond T + 5 days.

In case of NACH transactions, if there is delay in crediting amount to beneficiary’s account or reversal of amount, the beneficiary bank shall reverse uncredited transaction with T + 1 day, failing which beneficiary bank shall compensate remitter Rs. 100/- per day if delay is beyond T + 1 day.

Broadly, the electronic banking transactions can be divided into two categories:

• Remote/ online payment transactions (transactions that do not require physical payment instruments to be presented at the point of transactions e.g. internet banking, mobile banking, card not present (CNP) transactions), Pre-paid Payment Instruments (PPI), and
• Face-to-face/ proximity payment transactions (transactions which require the physical payment instrument such as card or mobile phone to be present at the point of transaction e.g. ATM, POS, etc.)

Our bank has provided above types of Electronic Banking to the customers except Pre-Paid Payment Instruments (PPI).

Policy matters regarding liability of a customer–

A. A customer will have Zero liability in following cases –

• Contributory fraud / negligence / deficiency on the part of the bank. (Irrespective of whether or not the transaction is reported by the customer).
• Third party breach where deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within Three Working Days of receiving communication from the bank regarding the unauthorized transaction.

B. A Customer will have Limited Liability in following cases -

• In case where the loss is due to negligence of customer, such as sharing of the payment credentials, (viz. User ID, Passwords, PIN, MPIN, OTP, Card Details, Mobile Device sharing or any other credential that may be defined by the Bank), the customer will bear the entire loss until he reports the unauthorized transaction to the bank. Any loss occurring after reporting of the unauthorized transaction will be borne by the bank.
• In case where the responsibility for the unauthorized electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and the customer notifies the bank of such a transaction within Four to Seven Days of receiving a communication of the transaction, the per transaction liability of the customer is limited to the amount of transaction or the amount specified by RBI as under, whichever is lower.

Table1 Maximum Liability Customer

Type of Accounts	Maximum liability Rs.
BSBD Accounts (SBBA)	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	25,000

In case of reporting delay beyond Seven Working Days, here the entire liability lies on the customer.

Overall liability of the customer in third party breaches, where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, shall be as below

Table2 Summary of Customer’s Liability

Time taken to report the fraudulent transaction from the date of receiving the communication	Customers’ liability (Rs.)
Within 3 working days	Zero Liability
Within 4th to 7th working day	The transaction value or the amount mentioned in table 1, whichever is lower.

Reversal Timeline for Zero Liability / Limited Liability of customer –

Bank will credit customers account the amount involved within 10 days on being notified by him regarding the unauthorized electronic transaction, without waiting for insurance claim, if any. Such credit will be value dated and shadow reversal i.e. no debits to the extent of such amount will be allowed till the complaint is resolved as under.

The complaint is resolved and liability of the customer, if any, is established and the customer is compensated as per provisions enumerated above, within 90 days from the date of the receipt of the complaint.

• In case the complaint is not resolved within the period of 90 days, the compensation as per this policy noted at (b) (ii) above, will be paid immediately.
• In case of debit card / bank account, the customer will not suffer any loss of interest, and in case of credit card, the customer will not bear any additional burden of interest.

A. Arising from natural calamities like earthquake, flood, thunderstorm, lightning etc. or due to sole negligence of the customer

The bank shall not be liable for any damage and/or loss of contents of locker arising from natural calamities or Acts of God like earthquake, floods, lightning and thunderstorm or any act that is attributable to the sole fault or negligence of the customer. Bank shall, however, exercise appropriate care to their locker systems to protect their premises from such catastrophes.

B. Liability of banks arising from events like fire, theft, burglary, dacoity, robbery, building collapse or in case of fraud committed by the employees of the bank

It is the responsibility of bank to take all steps for the safety and security of the premises in which the safe deposit vaults are housed. Bank will take responsibility to ensure that incidents like fire, theft/ burglary/ robbery, dacoity, building collapse do not occur in the bank’s premises due to its own shortcomings, negligence and by any act of omission/commission. As per revised guide lines of RBI, bank cannot claim that they bear no liability towards their customers for loss of contents of the locker, in instances where loss of contents of locker are due to incidents mentioned above or attributable to fraud committed by its employee(s), the banks’ liability shall be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker. These guidelines are applicable with effect from 1 January, 2022 onwards.

Residual issues in this matter-

1. The burden of proving customer liability in case of unauthorized electronic banking transactions shall lie on the bank.

2. Periodical reporting of unauthorized electronic banking transactions to the Audit Committee will be done.

3. Such transactions will be reviewed by the bank’s Internal Auditors.

The Bank reserves the right to amend/modify this Policy, as and when deemed fit and proper, at its sole discretion. However, the Bank shall endeavor to review the Policy at annual intervals.

Bank will not be responsible

• for the loss to the customers due to customer's carelessness in keeping the Cheques book, passbook, cards, PIN or other security information and not following "Do's and Don'ts" issued by the Bank, until the Bank has been notified by the customer
• If customer acts fraudulently and/or acts without reasonable care which has resulted in loss to him/her.
• for the losses arising out of misuse of lost PIN, compromise of passwords or confidential information, until the time the Bank has been notified of such loss/compromise and has taken steps to prevent its misuse.

Notwithstanding anything contained here above, the Bank shall not pay any compensation in the following cases: -

• Any deficiency in regard to loans and advances activities of the Bank.
• Dishonor of at par payment agreement with other banks, due to non- funding and security compliance.
• Delays on account of non-functioning of business due to factors beyond the control of the bank the period covered by such events shall be omitted for calculation of delay etc.
• Where the issues are subjudice and pending before Courts, Ombudsman, arbitrator, Government and matter put on hold due to stay.

This policy shall be published on Banks website as a part of good governance. Policy shall be valid up to 31st March 2024 and shall be updated & revised as and when RBI issues any advisory in this regard.

The RBI’s circular in this subject shall be having superiority over this policy documents.