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Quick Success Series Remittance & Collection

Quick Success Series

Remittance & Collection

Compiled By Shailesh Kumar Manager Training, SBLC Deoghar Mobile- 9199373521 Email- sailesh.kumar@sbi.co.in [Type text] Page 1

Updated upto 15th Jan 2011

Quick Success Series Remittance & Collection Jan 15, 2011

RBI DRAFT
No advice is sent upto Rs 1000/ Validity 6 Months Becomes stale if not paid within 6 months from the date of issue Should be revalidated if stale Becomes lapsed if not paid within 3 accounting years from the date of its issue RBIs accounting Year is 1-7 to 30-6 If issued on 20-06-2009, will be valid upto 30-06-2011 A lapsed draft can be revalidated only with the clearance of Central Office of RBI Duplicate draft can be issued against indemnity Duplicate Draft can be cancelled only if both the original & duplicate are produced If the original is not produced, the payment of the duplicate to be obtained at the drawee office RBI Interest warrant lapses 8 months after issue

BANK DRAFT
Relationship of Banker with purchaser of Draft: Debtor & Creditor Relationship of Banker with Payee of Draft: Trustee & Beneficiary Punching System- It indicates the range in which the amount of Draft will fall Hologram is affixed on drafts of Rs 1 lakh & above against the Payees Name To Prevent Tampering Drafts of Rs 50000/- and above should be issued only by debit to customers A/C or against cheque, etc. Payment of Drafts of Rs 50000/- and above should be made through Bank A/C and not in cash (To curb misuse of banking channels for violation of fiscal laws) If PAN is provided cash transactions of Rs 50000/- and above are permissible Drafts of Rs 150000/- and above should be signed by two officials wef 1st Dec 2010 No Advice is sent for Drafts below Rs 10 Lakh

HC series draft is issued for amounts of Rs 10 Lakh & above but below Rs 1 crore HC Special Series Draft is issued for amounts of Rs 1 crore & above. It can be issued only at specifically authorized select branches Draft is valid for 6 months from the date of issue Thereafter, it should be revalidated by the issuing branch Advice of revalidation to be sent to the drawee branch Revalidation makes the draft valid for a period of 6 months from the date of revalidation but upto one year from the date of issue of the draft A draft will be revalidated only if it is presented within one year of its issue If presented after one year, it will not be revalidated instead it will be cancelled and a fresh draft issued On receipt of Draft Security forms from CSD, these have to be entered in the Stamped & Unstamped Forms Register and kept in the joint custody of the Accountant & Manager (Cash). Physical Verification of draft forms to be done half yearly on (30.06 & 31.12) Draft can be issued on 3 service branches only (Kolkata, Chennai & New Delhi) Drafts upto Rs 25,000/- may be paid to the payee on verification of his postal identity card /passport A draft should not be returned merely for reasons such as code number not furnished, branch name not given etc., if otherwise in order. It must be remembered that the value for the draft has been received by the Bank and Bank might be embarrassed by bad publicity; also legal action for wrongful dishonor under NI Act might be initiated by the payee. The customer may also file a complaint against the Bank under Consumer Protection Act The purchaser of the draft can apply for its cancellation any time before the draft is delivered to the payee

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Once the draft is delivered to the payee, the purchaser loses his right to cancel the draft When the bank sends the draft by post (at the request of the purchaser), the delivery of the draft to the payee is deemed to have been completed once the draft is posted. When there is no doubt that the draft has not been handed over the payee, the draft can be cancelled at the request of the purchaser. The purchaser should give a discharge at the back of the draft reading Received payment by cancellation. If the amount of the draft is over Rs 5000/the discharge should be obtained over a revenue stamp When a draft is reported lost by the purchaser the drawee branch is advised to exercise caution in case the draft is presented for payment and requested to confirm that the draft has not been paid by them. On receipt of the non-payment advice, a duplicate draft is issued after obtaining the stamped indemnity. The stamped indemnity has to be signed by the applicant and two sureties. Each of the sureties should be good for the amount and acceptable to the Bank No non-payment advice need be called from the drawee branch in case of issue of duplicate drafts for amounts upto Rs 10000/- provided there are no reasons to doubt the bonafide of the applicant Duplicate Draft below Rs 50000/- may be issued without sureties if purchaser is considered good for the amount involved & he is maintaining satisfactory account complying KYC norms with the issuing branch for a minimum period of six months as on the date of issue of the original draft (Rationale: To improve customer service by removing major irritant for the applicant in completion of formalities viz. arranging two sureties on the stamped indemnity)

In no case, the unstamped letter of indemnity should be obtained as payment of stamp duty is a fiscal matter The purchaser should confirm in writing that he has not delivered the draft to the payee The original application for draft has to be kept along with the indemnity documents as B.D. In case the indemnity has to be invoked by the bank at any time, the application form will serve as evidence of the transaction No sureties to be insisted upon in case of staff members Duplicate draft to be issued within a maximum period of 15 days from the date of receipt of such request. Interest at the rate applicable for term deposit of corresponding maturity has to be paid for the period of delay (only to the purchaser or beneficiary of the draft) in case of delay- RBI A duplicate draft can be issued to the payee against his indemnity if the Bank is able to satisfy itself that the draft had been delivered to him and that he was the holder of the draft at the time of his loss. In fact we cannot insist on the indemnity of the purchaser in such cases. Concurrence of the purchaser is also necessary. Even if the purchaser refuses to give his consent, the legal position is that once a draft is handed over to the payee, he becomes the owner. Controlling Authorities approval is required in these cases. In case the bank remits the proceeds of bills realized to lodgers of the bills and it is lost, an unstamped letter of undertaking is obtained from the lodgers and the duplicate draft is issued. The lodgers undertake to the return the original draft if received later (Rationale: In such cases, bank acts as an agent of the lodgers of the bill. The banks responsibilities continues till the proceeds are received by the lodgers) Before cancelling a duplicate draft, bank should ascertain whether payees claim in respect of draft has been satisfied. (Eg. a letter of acknowledgement by the payee of the receipt of money through alternative means,

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cancellation of the contract which establishes that the payee has no claim on the amount, etc). In all other cases, payees express consent in writing should be obtained before payment to the purchaser. In case of payment of the original draft by the drawee branch when duplicate has been cancelled, the bank has to have recourse only to the purchaser on the strength of indemnity executed by him In case the original draft (reportedly lost) is presented for payment before the duplicate is paid, the title of the presenter has to be ascertained carefully and the draft is paid if it is in order In case the lost draft is presented after the duplicate has been paid, the draft has to be returned with remarks Draft reported lost, Payees Endorsement requires verification. In case both the original & duplicate are presented simultaneously, the duplicate is to be paid and the original is to be returned with the answer Duplicate since paid. If the duplicate is presented after the original is paid, the duplicate is returned with the answer Original Paid. Legally bonafide title to both the original & duplicate could be acquired by different parties in good faith & for value. Whatever initial action the branch might have taken, ultimate recourse is available to the purchaser of the draft only on the strength of indemnity executed by him. In case of loss of both the original & the duplicate, the triplicate draft may also be issued. However, more than ordinary care should be exercised to ascertain the loss of both the drafts. Non-payment advice should be obtained for both the drafts from the drawee branch irrespective of the amount. A second indemnity letter must also be obtained. Controlling authority should also be advised. Section 31 of the RBI Act prohibits issue of bearer draft as it would virtually tantamount to issue of currency note. It is a punishable offence under section 58(b) of the Act

Once the purchaser delivers the draft to the payee, the Bank becomes the trustee for the payee as regards the draft amount. Hence, the purchaser is not entitled to countermand payment of the draft.

BANKERS CHEQUE
It is used for making local payments on the Banks Account. It is also used for making payment of remittance received in favour of parties who do not maintain any account with the Bank. It is not a Draft. It should be marked Non Transferable It is payable locally at any of the branch at the centre where it has been issued. Hence, it is also marked Payable at par locally. Duplicate Bankers Cheque can be issued against stamped indemnity (COS 537) Before cancellation of original/duplicate Bankers cheque, enquiries should be made to ascertain if the payees claim has been satisfied by separate payment. Otherwise express consent of the payee should be obtained. In case of difficulty in getting payees consent where payee is a large institution like LIC or Govt Dept., etc the purchaser should produce convincing proof that the payees claim has been discharged otherwise. Purchasers receipt should be obtained at the back of the Bankers Cheque (on a revenue stamp if the amount is above Rs 5000/-) against a discharge Received Payment by Cancellation. Similar Procedure to be followed for cancellation of duplicate Bankers Cheque also. Items outstanding for more than 3 years to be transferred to Bank Charges Account once in a year. Service Charge- Draft & Bankers Cheque A) Issue By transfer of funds from any other account at home branch Upto Rs. 5,000/- Rs. 25/Above Rs. 5,000/- upto Rs. 10,000/- Rs. 40/-

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Above 10,000/- upto 1,00,000/- Rs. 3 per Rs.1,000/- or part thereof (min Rs. 50) Above Rs. 1,00,000/- Rs. 2.50 per Rs.1000/or part thereof (min Rs. 300 max Rs.12500) B) Issue By deposit of cash In addition to above charges, cash handling charges or Rs. 10 per draft whichever is higher Revalidation/ cancellation & issuance of duplicate DD / Banker's Cheque Rs 100/- per instrument

IOI
Inter Office Instrument (IOI) is a single running security form for issuing Demand Draft, Bankers Cheque & Associate Bank Draft BGL A/Cs 98602BBBBBC titled as IOI Account and 98505BBBBBC as IOI to be issued Account have been opened Creation & Branch wise allocation of VPIS in CBS by CSD Kolkata Branch to acknowledge receipt through CBS after receiving physically from respective RSD/CSD Can be paid by any branch in country irrespective of the location of drawee branch. Inter City Core Power charge applicable if paid at non drawee centre This facility not to be extended to other banks when presented in clearing or in collection at non drawee centre Once IOI is printed, the data is automatically transmitted to CDC and balance lying in IOI to be issued A/C is reversed. Limited Data Entry- Only 4 fields at the time of IOI Payment. Issue details verified before authorizing payment. Invalid BIAK cannot be bye passed. Can be issued for all denominations including HC series upto Rs 99,99,99,999/Duplicate IOI can be issued by the issuing branch only. Duplicate IOI shall not be hand written Triplicate IOI cannot be issued

Serial number of IOI will be a unique 12 digit number without any Circle prefix The first six digit shall be printed on the MICR Band in place of Account Number or Short Account Number (SAN) and the last six digit shall be printed in place of the present instrument number Instrument type for IOI is 17. IOI security forms with serial number of 10 lakhs, 20 lakhs, 30 lakhs, etc. are non useable and hence will not be allocated by CSD to any Branch. However, such security forms physically received by the branches should invariably be destroyed and noting to be made in Security Forms Register

CHEQUE COLLECTION POLICY

Branch will of their own afford immediate credit of outstation cheques upto & inclusive of Rs 30000/- tendered for collection by the customers for satisfactorily conducted accounts For the purpose of this policy, a satisfactorily conducted account shall be the one i. opened at least six months earlier and complying with KYC Norms ii. Account is neither dormant nor inoperative iii. Where bank has not noticed any irregular dealings/suspicious transactions in the last 6 months iv. Where the bank has not experienced any difficulty in recovery of any amount advanced in the past including cheques returned after giving credit v. Where no adverse features attached to the account/account holders has been brought to the notice of the bank Normal collection charges + 0.50% as DDP charges+ service tax are to be recovered Time frame for collection of outstation cheques a) Collection between Metro Centres/Major A Class Cities (Mumbai, Chennai, Kolkata, New Delhi, Ahmedabad, Bangalore & Hyderabad): OUR BRANCHES-6 Days; OTHER BANKS BRANCHES-7 Days

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b) Collection between places at (a) above and state capitals (other than North Eastern states & Sikkim) and Area I Cities (Pune, Nagpur, Kanpur, Surat, Vishakhapatnam, Vadodra, Kochi, Indore, Ludhiana, Coimbatore, Agra, Madurai & Varanasi): OUR BRANCHES-8 days; OTHER BANKS BRANCHES 10 days c) Collections between all other centres: OUR BRANCHES- 10 days; OTHER BANKs BRANCHES- 14 days Delay beyond 45 days in collection of cheques/ instruments would be treated as abnormal delay Interest Payable for delayed collection: i) Delay beyond stipulated Period & Upto 45 days: 2% above SB Rate i.e. 5.5% p.a if credit to deposit account & applicable ROI linked to Base Rate if credit to Loan or OD Account ii) Delay beyond 45 days (Abnormal Delay): 1% above prescribed rate Such Interest shall be payable with a minimum of Rs 20/In exceptional circumstances (business exigencies) BMs may use their discretion to permit drawals against uncleared effects of local cheques of other banks up to Rs. 30,000/- only, for deposit accounts on recovery of collection charges of Rs. 100/- per instrument. The facility can be provided only on well conducted, KYC complaint accounts. This will be done within the discretionary powers vested with the Branch Manager in the respective Grade/Scale, as per discretionary power structure, on the day of purchase itself and is required to be reported to the next higher authority, immediately. In the event a cheque or an instrument accepted for collection is lost in transit or in the clearing process or at the paying banks branch, the bank shall immediately on coming to know of the loss of instrument not only bring the same to the notice of the account holder so that drawer can be informed 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 but also compensate the customer as per Banks Compensation Policy. The bank would also advise the drawee bank all particulars of lost cheques / instruments for exercising caution and provide all assistance to the customer in obtaining a duplicate instrument from the drawer of the cheque. Service Charge- Collection of cheques Upto Rs. 10,000 Rs. 50 per instrument Rs. 10,000 to Rs. 1,00,000 Rs. 100 per instrument Rs. 1,00,001 and above Rs. 150 per instrument Above charges are all inclusive. (No courier charges, out of pocket expenses) These charges are applicable only to transactions originated and payable within India.

BILLS
A bill of exchange is a written instrument containing an unconditional order, signed by the maker, directing to pay a certain amount of money only to a particular person, or to the bearer of the instrument. It is a negotiable instrument drawn by the seller (drawer) on the buyer (drawee) for value of the goods delivered to him. A demand bill is payable on demand i.e. immediately at sight or on presentation to the drawee. A Usance bill is payable after a specified time. If the seller wishes to give some time for payment, the bill would be payable at a future date. Documentary Bills Where the bills are supported by Railway Receipt (RR) or Lorry Receipt (LR) or Bill of Lading (BL) Clean Bills - Where bills are not accompanied by documents of title to goods Credit Bills - Drawn under LCs Non-Credit Bills Not drawn under LCs

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DP Bills: When the documents accompanying the bills are deliverable only against payment DA Bills: When the documents accompanying the bills are deliverable against acceptance Supply Bills: Arise on account of supplies of goods to Government Usance Bill discounted at the Branch and payable at other centre is debited to Inland Bills A/c. Usance Bill discounted and payable at the same branch is debited to Bills Discounted A/c. Usance Bills are generally entitled to a grace period of 3 days, unless the bill is drawn without grace If a Case in Need is given, it must be presented to the Case in Need on dishonor by drawee/acceptor. The Bill should be presented for acceptance within 24 hours of receipt. Any delay will be regarded as negligence. The acceptor must sign across the bill- Accepted, Payable at State Bank of India ______, (Branch). Opinion on drawers/discounters must be compiled and kept renewed each year. The drawee is entitled to 48 hours of time to either accept/refuse to accept the bill. Demand Bills do not attract stamp duty. Ad valorem stamp duty is paid on usance bills. Central Govt has remitted (i.e. waived) stamp duty payable on usance bills upto 3 months usance (after date or sight) if they are drawn on or made by or in favour of a commercial bank or a Co-operative bank or SIDBI and they arise out of bona-fide commercial or trade transactions. Noting is recording the fact of nonacceptance/non-payment of a bill of exchange by a notary public. Noting has to be done only if instructed by the lodgers of the Bill. If dishonor of a bill (either by nonacceptance or non-payment) is to be certified

by a notary public in addition to Noting, the process is called Protest. The lodgers instructions have to be followed as regards Protest also. However, it is essential to protest all foreign bills, if dishonoured. This will be treated as proof of dishonor in foreign courts. When bill of exchange is drawn in sets of two, each draft bears an exclusion clause making the other draft invalid in case the first is paid. Service Charge-Collection of bills Up to Rs.5,000/- Rs50/Above Rs 5,000/- and Up to Rs10,000/Rs75/Above Rs.10,000/- Rs 6/-per thousand (Min. Rs 100/- Max 12,500/-+ out of Pocket expenses)

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