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USD denominated Cheques Collection Policy

Proceduresfor realization of USD Cheques

Normal procedure for collection of cheque is forwarding the cheques to foreign correspondent by foreign exchange Authorised Branches, with clear instructions for crediting bank’s nostro account after final realization of the cheque. Under this procedure, foreign bank charges are deducted and credit is also received after delay. These charges are different for different foreign banks, further, they also vary on account of cheques drawn on different centers. In this scheme there is no risk of dishonour of the item..Scheme is not favorable for smaller amount of cheques as charges deducted are very high, whereas similar charges may appear to be negligible on cheques of higher amounts.

In order to provide better service to valuable clients, there is facility of sending cheques to foreign bank using Cash Letters Scheme. facility offered by ABN Amro, NY & HSBC, NY for the realization of USD cheques . The normal period of realization is on 4th day after receipt of instruments at foreign bank abroad. Since the payment under said scheme is under usual reserve the actual credit is released after expiry of cooling period of 14 working days. ( 14 working days is the normal time recognized by most foreign centres in which advice of dishonour of cheque is communicated, however as per the US law forged instruments may be dishounoured as late as 3 years time) The scheme is useful mainly for small amount instruments because of just nominal charges which are charged on bank’s nostro account. It may also be useful for valuable clients of the branch from whom the recovery is possible in case credit is called back by foreign bank.

Final Credit Servise Scheme: To cater the needs of our valuable clients and to take care of future return risk factors which are inherent in collection of Foreign Currency Cheques as per the existing procedure, bank has entered into arrangement with a foreign bank in New York. for utilising facility of Comprehensive Final Credit Service (FCS) for USD denominated cheques only, Some features of scheme are as under:

  • It is applicable to Instruments of USD only
  • Guaranteed credit for USD cheque collections on Pre-advised Due Date ( 6 business days after receipt at their Carlstadt, New Jersey Center in case of cheques drawn on banks in the State of New York & Philadelphia as well as all branches of Wachovia Bank located anywhere in USA. For all other cases within 15 business days)
  • Facility covers all types of Fraudulent presentations on face of cheque such as Forged Instruments, alteration in Date/amount etc., as well as counterfeit Cheque in addition to other return reasons such as insufficient funds, account closed, refer to maker etc. (sans fraudulent endorsements on the back of instruments), as the uniform commercial code states if a cheque is found to be fraudulently endorsed, then issuer has three years to return the item.
  • Scheme is available for items valued up to USD 7,50,000/-
  • Service charges as under:
Commercial cheques USD 8 per item up to USD 2000
  USD 10 per item 2000 to 5000
  USD 12 per item above 5000
  • Fees will be assessed for each cheque processed through FCS, whether the cheque is paid or not.

Instant Credit for Small value cheques of any currency

The guidelines for cheque amounts up to value of USD 250 or its equivalent for other foreign currencies are as under:

  • Customer should have standing of 3 years with the branch. It should not be sparingly used account.
  • Minimum average balance in the account should be Rs 30000, for at least last 6 months.
  • At one point of time there should not be items for aggregate value of more than USD 500 or its equivalent, outstanding for realization.
  • Alternately, customer should have been enjoying regular credit limits with the branch and account being running regular in which case point b) & c) above may be ignored. However upper limit of o/s at a point of time may be capped by branch depending upon credit worthiness of client/collateral available, however, amount outstanding not to exceed USD 1000 or its equivalent at one point of time.

For cutting short time for realization.

Clients may informtheir counterpart abroad about details of various nostro accounts of the bank maintained abroad so that if a cheque drawn on center/bank is procured by them from counterparty abroad, it would curtail delays in collection period as well as it will automatically result in reduction in charges. For ready reference USD nostro accounts are maintained by our bank with following foreign banks in USA:

Name of Bank

  • Abn Amro,New York
  • Citi Bank New York
  • Hsbc New York
  • American Express Bank,Ny
  • Wachovia Bank,New York

Payment of Interest On Delayed Credits ot Customers

Guidelines are as under

  • In case of realizations of cheques in any foreign currency, interest be paid at simple rate as applicable on SB deposits, for the period beyond seven working days from the date of IBR (credit advice) from HO Foreign Exchange Delhi . Maximum interest payable under this head would be for 15 days
  • In case of delay of more than 15 days, 0.5% would be added for paying interest on the period which is beyond initial delayed period of 15 days.

For the purpose of above rule the delay has been reckoned with from the date when credit is received with complete information on basis of which bank disburses the credit. To make it clear sometimes payment is received without clear/complete details for disbursement, as such bank has to resort back to remitter bank which at times takes time due to some technicalities involved at foreign center and such delays cannot be attributed to delays on part of our bank. Holding payment under usual reserve for 14 working days is not being construed as delay because of the reasons mentioned in point (1b).

Redressing of Complaints

Complaint box and Register is already in vogue at Forex branches of the bank. Customers may lodge their complaints accordingly which will be considered/redressed by the branch manager on priority basis.

Banks charges

For ready reference the relevant charges in force for clean collection of Foreign currency cheques payable abroad are as under:

Purchase of customers personal cheques,DD,IMO,TT’s,Bankers cheques where cover has not been received in Nostro a/c 0.15% +15 days intt at domestic commercial rate
Collection of clean foreign currency  instruments Payable abroad .30% Min Rs 100 Max Rs 5000
Where inward remittance is to be executed in foreign Currency by way of DD/MT/TT 0.15%  Min  Rs 500
Service charges  Rs 100 per each transaction

(service tax is applicable as per taxation rules in force)

Branches are advised to ensure that best service is rendered to customers in collection of cheques and for affording credit to customers with the proceeds. Zonal Managers are advised to ensure compliance by branches as per the policy.

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