UCO Bank

Compensation Policy (2015-16)

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 banks, financial institutions and other market forces of competition to come into play to improve efficiencies in providing better service to their customers and other users of the system. It will be the bank's endeavour to offer services to its customers with best possible utilization of its technology infrastructure. This compensation policy of the bank is therefore, designed to cover areas relating to frauds, unauthorized debiting of account, payment of interest to customers for delayed 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.

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. By ensuring that the customer is compensated without having to ask for it at the very initial stage to leverage their genuine financial problems, the bank expects instances when the customer has to approach Banking Ombudsman or any other Forum for redressal to come down significantly.

The policy covers compensation for financial losses only which customers might incur 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 right the bank will have in defending its position before any forum duly constituted to adjudicate banker-customer disputes.

The policy covers the following areas:-

1. Unauthorized/Erroneous Debit

If the Branch 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. In the event the unauthorized/erroneous debit has resulted in a direct financial loss for the customer by way of (i) reduction in the minimum balance applicable for payment of interest on savings bank deposit or (ii) payment of additional interest to the bank in a loan account, the bank will compensate the customer for such loss. 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 such direct financial losses. However, financial loss mentioned hereinabove will not cover any loss incurred by the customer due to loss of reputation or loss of profit.

In case verification of the entry reported to be erroneous by the customer does not involve a third party, the bank shall arrange 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. In order to comply with the directions of the RBI and with a view to redressing the grievances of the customers in this regard, the Bank will act as under

  1. In cases where bank is at fault, the bank should compensate customers without demur, and will not defer action till completion of either departmental action or police interrogation.
  2. In cases where neither the bank is at fault nor the customer at fault but the fault lies elsewhere in the system, then also the bank should compensate the customers depending upon the facts of the case and on case to case basis up to 25% of the loss suffered by the customer subject to a maximum of Rs.1 lac (one lac only).

2. Delay in ECS Debit Instructions

The bank will undertake to carry out direct debit/ECS debit instructions of customers in time. In the event of noncompliance /delayed compliance of instructions by the Bank the customer will be compensated equivalent to the interest calculated on the amount to be debited , for the delayed period, at applicable saving Bank rate, minimum Rs.20/- subject to a maximum of Rs.1000/-

The bank would debit the customer's account with any applicable service charge as per the schedule of charges notified by the bank from time to time displayed on Bank's website www.ucobank.com , which will be a notice to the public at large. 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. Any consequential financial loss to the customer will also be compensated.

3. Payment of Cheques after Stop Payment Instructions

In case a cheque has been paid after acknowledging the stop payment instructions, 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 under para 1 above. Such debits will be reversed within 2 working days of the customer intimating the transaction to the bank.

4. Foreign Exchange Services

The Bank would not compensate the customer for delays in collection of cheques designated in foreign currencies sent to foreign countries as the bank would not be able to ensure timely credit from overseas banks. It is the bank's experience that 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. Bank however, would consider upfront credit against such instrument 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 normal cooling period stipulated. The compensation in such cases will be worked out as follows :

  1. Interest for the delay in crediting proceeds as indicated in the collection policy of the bank.
  2. Compensation for any possible loss on account of adverse movement in foreign exchange rate.

5. Remittances in India

  1. If a customer wants to remit money within India, bank will disclose the details of all charges including commission that a customer has to pay for the services as per the Tariff Schedule as amended from time to time.

6. Payment of Interest for delayed Collection of Outstation Cheques

The compensation on account of delays in collection of instruments would be as indicated in the bank's collection policy. The Bank will

  1. Inform the customers about the clearing cycle for local instruments and the outstation instruments including details such as when the customer can withdraw money after lodging collection instruments and when the customer will be entitled to earn delayed interest as per our Cheque Collection Policy.
  2. Provide details, if bank offers immediate credit for outstation cheques, including the applicable terms and conditions, such as the limits up to which the instruments tendered by the customers can be credited, operating accounts satisfactorily, etc.
  3. Proceed as per our cheque collection policy and provide all assistance to obtain a duplicate cheque/ instrument in case the tendered instrument is lost in transit.
  4. The above information will be given at the time of opening of the account and whenever asked for. If any change in the policy, the revised policy will be displayed on our website and will be available at all our branches.

6.1. Time frame for collection of local/ outstation instruments

For Local Cheques/Instruments: Credit and Debit shall be given on the same day or at the most the next day of their presentation in clearing.(i.e., bank would give credit to the customer account on the day clearing settlement takes place. Withdrawal of amounts so credited would be permitted as per the cheque return schedule of the clearing house at the centre).

For Outstation Cheques/Instruments:

Drawn on State Capitals 07 days
Drawn on Major Cities 10 days
Drawn on Other Locations 14 days

The time frame for collection shall be treated as outer limit and credit shall be afforded if the process gets completed earlier.

As part of the compensation policy of the bank, the branch will pay interest to its customer on the amount of instruments collected in case there is delay in giving credit beyond the time period mentioned above. 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.

6.2. Interest for delayed collection:

  1. For Local Cheques: Compensation at Savings Bank interest rate shall be payable for the period of delay.
  2. For Outstation Cheques : Savings Bank rate for the period of delay beyond 07/10/14 days as the case may be in collection of outstation cheques, i.e., from 08th/11th/15th day, the interest will be payable.
  3. Where the delay is beyond 14 days after the time frame for collection of outstation instruments (07/10/14 days as the case may be in collection of outstation cheques) interest will be paid at the rate applicable for term deposit for the respective period.
  4. In case of extraordinary delay, i.e. delays exceeding 90 days after the time frame (07/10/14 days as the case may be in collection of outstation cheques) for collection of outstation instruments interest will be paid at the rate of 2% above the corresponding Term Deposit rate.
  5. In the event the proceeds of cheque under collection is to be credited to an overdraft/loan account of the customer, the bank would consider value-dating the proceeds keeping normal period required for collection in mind.  It may be noted that interest payment as given above would be applicable only for instruments sent for collection "within India".

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 would be as indicated in our Bank's Cheque Collection Policy.

7. 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 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 dishonoured 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 cheque.

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:

  1. In case intimation regarding loss of instrument is conveyed to the customer beyond the time limit stipulated for collection (07/10/14 days as the case may be) interest will be paid for the period exceeding the stipulated collection period at the rates specified above.
  2. In addition, bank will pay interest on the amount of the cheque for a further period of 15 days at Savings Bank rate to provide for likely further delay in obtaining duplicate cheque/instrument and collection thereof.

The bank would also compensate the customer for any reasonable charges he/she incurs in getting duplicate cheque/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.

8. 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 Direct sales agent (DSA) has engaged in any improper conduct or acted in violation of the Code of Bank's Commitment to Customers which the bank has adopted voluntarily, bank shall take appropriate steps to investigate and to handle the complaint and to compensate the customer for financial losses, if any.

9. Transaction of "at par instruments" of Co-operative Banks

The RBI has expressed concern over the lack of transparency in the arrangement for payment of "at par" instruments of co-operative banks by commercial banks resulting in dishonor 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 cheques issued. Issuing bank should be responsible to compensate the cheque holder for non-payment/delayed payment of cheques in the absence of adequate funding arrangement. Therefore, once arrangement made is in public domain (Bank's website) the paying bank should honour the cheque and settle the matter separately with the issuing bank.

10. Issue of Duplicate Draft and Compensation for Delay:

Duplicate draft will be issued within a fortnight from the receipt of such request from the purchaser thereof. 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.

11. Lenders Liability, Commitment to borrowers:

The Bank has adopted the principles of lenders’ liability. In terms of the guidelines for lenders liability, and the Code of Bank's Commitment to customers adopted by the bank, 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. 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 mortgaged property at the hands of the Bank, the compensation will cover out of pocket expenses for obtaining duplicate documents plus a lump sum amount subject to a maximum of Rs. 5000/- only.

12. Reconciliation of failed transactions at ATMs

  1. The time limit for resolution of customer complaints by the issuing banks is 7 working days from the date of receipt of customer complaint. Accordingly, failure to recredit the customer’s account within 7 working days of receipt of the complaint shall entail payment of compensation to the customer @ Rs. 100/­per day by the issuing bank.
  2. Any customer is entitled to receive such compensation for delay, only if a claim is lodged with the issuing bank within 30 days of the date of the transaction.
  3. The number of free transactions permitted per month at other bank ATMs to Savings Bank account holders shall be inclusive of all types of transactions, financial or non-financial.
  4. All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring bank through the ATM system provider only. No bilateral settlement arrangement outside the dispute resolution mechanism (available with the system provider) is permissible. This measure is intended to bring down the instances of disputes in payment of compensation between the issuing and acquiring banks. Reference: RBI Circular no.DPSS.PD No.2632/02.10.002/2010-11 dated May 27,2011

13. Force Majeure

The bank shall not be liable to compensate customers for delayed credit if some unforeseen event (including but not limited to civil commotion, sabotage 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.

14. Delay in credit of Electronic Clearing Service (ECS):

In terms of the RBI ECS (Credit Clearing) procedural guidelines which clearly stipulate that if a destination bank branch is not in a position to credit a particular transaction for reason like "Account Closed/transferred"; "No such Accounts"; "Account description does not tally"; etc. it should report the same and forward it to the Service Branch/Main Branch on the same day.

In the event of non-compliance by the Destination Bank branch, it would be held liable to pay penal interest at the rate of prevailing Bank Rate plus two percent from the due date of credit till the date of actual credit to the beneficiary's account.

There have been instances of undue delay by the branch in crediting ECS payment to the beneficiary accounts at destination bank much beyond the settlement date.

Further it is observed that in cases where accounts are closed for various reasons, the ECS transactions are not returned by the destination bank, within the ECS cycle (i.e. 24 hours). In all such cases, branches are required to strictly adhere to the RBI ECS Credit Procedural Guidelines. Penal interest, if any, may be credited to the Destination Account Holder's account even if no claim is lodged by the Destination Account Holder.

15. Delay in Credit/ return of NEFT/NECS/ECS Transactions.

Bank will pay penal interest at the current RBI LAF Repo Rate plus two percent from the due date of credit till the actual credit for any delayed credit to the beneficiaries account. Penal interest shall be paid to the beneficiary's account even if no claim is lodged. Reference: As per RBI Circular Nos. DPSS(CO)EPPD No.477/04.03.01/2010-11 dated September 1,2010 & DPSS(CO)EPPD No.12.4/04.03.01/2010-11 dated January 5, 2012.

16. Issue of ATM/Debit Cards without written consent of customers:

Where the Bank had issued ATM / Debit card without written consent of the customer, which has been disputed by the customer without using the card, the said ATM/Debit card will be taken back by the Bank and got cancelled. The Bank would not only reverse the charges, if levied, immediately but also pay compensation to the customer @ Rs.50/- if cancellation is done within 7 days of the representation or else Rs.100/- for cancellation done after 7 days.

17. Other areas of deficiency in services

  1. Where loan has been allowed against Bank's own Fixed Deposit Receipt and the Branch, after maturity of the FD does not adjust the loan account and thereby interest is charged on the loan outstanding. Excess interest so charged in the loan account will be refunded to the customer.
  2. Where the Branch after adjustment of the loan account does not remit/ credit the remaining amount of the pledged FD to the customer's account but keeps the balance in Deposit Suspense Account, the Bank will compensate the customer by the interest on such deposit kept in suspense at saving Bank rate, if the customer has not been duly informed.
  3. Where loan has been allowed against NSCs, KVPs, LIC policy and the Branch after maturity of the instruments does not collect the proceeds of the instruments in question from the Post Offices/ LIC Offices concerned & thereby charging of interest in the loan account is continued, excess interest so charged in the loan account will be reversed to the customer immediately.
  4. In case of affecting reversal of excess interest charged in the borrowal accounts due to non-adjustment of liquid securities like Fixed Deposits/ NSC/KVP/LIC policy etc in time the Branch concerned will have to obtain prior permission/approval from the controlling Offices(Zonal Office).
  5. In case reimbursement of expenses to the customers arising out of loss of instruments/securities the branch concerned will obtain prior approval from the respective controlling Office.
  6. However, adoption of the compensation policy will not absolve accountability of the officers/staff members responsible for the lapses/deficiencies leading to financial loss to the Bank.

18. Discretionary Powers for Compensation:

The discretionary powers vested with various authorities are as under:

(Rs. In Lac)
MCB CMD ED Circle Head Zonal Head
Full 10.00 5.00 2.00 1.00

19. Payment and Settlement Act, 2007 - Dispute Resolution Mechanism

The participants under CTS Grid under the payment and Settlement System Act come within the ambit of customer base in a bank. Matters emanating from any dispute in any payment and Settlement System in the CTS Grid are to be referred before the Panel for Resolution of Dispute (PRD). Operational guidelines on working of PRD have already been circulated to Branches/Offices and the same have to be complied.

20. Appeal against the order of Panel for Resolution of Dispute (PRD) in CTS Grid environment:

If any of the aggrieved parties is not satisfied with the decision of the PRD, the dispute may be referred to the appellate authority at the Reserve Bank of India. The Appellate Authority is Officer-in-charge of Department of Payment and Settlement Systems at the Central Office of Reserve Bank of India.

For preferring an Appeal against the decision of PRD (In CTS Grid environment) prior approval of the competent authority is required, which should not be below the rank of Executive Director.

Proposals for appealing against the order of PRD should be referred to Head Office, Operation & Services Department, with full details duly recommended by Circle Head, for taking approval of the Competent Authority.

21. Appeals against Banking Ombudsman

As per Banking Ombudsman Scheme 2006, to make an appeal to the Appellate Authority against the order of the Banking Ombudsman the said appeal may be filed by a bank only with the previous sanction of the Chairman or, in his absence, the Managing Director or the Executive Director or the Chief Executive Officer or any other officer of equal rank."

Hence proposals for appealing against the order of the Banking Ombudsman should be referred to Head Office, Operation & Services Department for taking approval of the Competent Authority.

22. Appeal in Other Cases

In all cases of appeal, viz, appeal against the order of District Consumer Disputes Redressal Forum, State Consumer Disputes Redressal Commission, Court Order or any other Authorities, decisions would be taken by the Authorities with whom  the relevant discretionary powers are vested as per above table.

23. Cases falling under the power of MCB/CMD/ED:

Head Office, Operations & Services Department will vet the proposals for compensation falling under the sanctioning power of MCB/CMD/ED and recommend the payment of the amount as well as suggest measures to avoid recurrence of such incidents. Operations & Services Department will also examine as to whether to go in appeal against the Awards by Banking Ombudsman. Based on the recommendations of the Department, the proposal will be placed to the Competent Authority for decision.

Proposal for compensation falling under the sanctioning power of MCB/CMD/ED should be sent to Head Office, Operation & Services Department as per the format enclosed (Annexure-1.)

All proposals sanctioned at ZO and CO levels as per their sanctioning power to be reported quarterly by the Zones/Circle Offices to Head Office, Operations & Services Department within seven days from the close of every quarter.(As per Annexure-II)

24. Internal Ombudsman:

In order to enhance the customer confidence and improve transparency in complaint redressal, bank has appointed Internal Ombudsman called Chief Customer Service Officer (CCSO) with the following objectives:

  1. To enable customer to approach an independent body in the Bank for redress of his/her complaint, if not satisfied with the resolution of the Bank.
  2. To strengthen grievance redressal mechanism and minimize number of complaints escalated to other forums such as Banking Ombudsman and/ or Ministry of Finance, RBI, Consumer Forums, Court of law etc

Jurisdiction of Internal Ombudsman

The internal Ombudsman will deal with all complaints within India involving compensation demanded by aggrieved parties not exceeding Rs 3 Lakhs.

Appeal & Appellate Authority

Any person aggrieved by an award under or rejection of a complaint, may within 30 days of the date of receipt of communication of Award or rejection of complaint , prefer an appeal before the Appellate Authority. The appellate authority for the purpose in our Bank shall be Executive Director. The appellate authority shall dispose of the matter after giving the parties a reasonable opportunity of being heard.

25. Amendment of the modification of Policy:

Bank reserves the right to amend/ modify this policy as and when deemed fit and proper, at its sole discretion.

Annexure - I

Sr. No Compensation Proposal Details


2 Name of the customer and address
3 Type of Account/ Account Number/ Opened on
4 Date of Transfer to Inoperative Account (If applicable)
5 Whether KYC norms adhered to
6 Date of occurrence of Fraud
7 Date of Detection of Fraud
8 Date Reported to Vigilance Department
9 FIR particulars, Lodged on
10 Name of the Police Station
11 FIR Lodged against
12 FMR-1 Submitted to H.O., Fraud Risk Management
13 History of the case:
(Giving full particulars of the events- stating modus operandi of the fraud committed (by Staff/Customer/Outsiders etc.)
14 Name of the Investigating Officer of the Bank
a. From Zonal Office
b. From Field Inspectorate
15 Has the Investigating Officers confirmed occurrence of Fraud/Erroneous Debit in his report
16 Details of Inspection Reports
17 Names of the Staff members found accountable and the specific lapses on their part.
18 Whether any Disciplinary Action has been initiated / completed. If yes, latest position/punishment awarded. Likely time by which Disciplinary proceedings will be completed.
19 Nature of Claim made by the Customer and justification for payment of the same.
20 Steps Taken / proposed for recovery of the amount
21 Amount of Recovery effected till date (If any)
22 Whether Amount to be Debited to Suspense Account and reasons thereof.
23 How the Suspense Account entry is proposed to be adjusted
24 Details of the Order of Consumer Court /Banking Ombudsman/Other Authorities (If any)
1. Authority of Award/Order
2. Date of Award/Order
3. Details of Award/Order
4. Date of Receipt of Award / Order
5. Date of acceptance of Award by complainant
25 Comments of the Branch Head (with reference to whether Bank is at fault and that actual fraud has taken place)
26 Zonal Head’s Recommendation (with reference to whether Bank is at fault and that actual fraud has taken place)
27 Circle Head's Recommendation (with reference to whether Bank is at fault and that actual fraud has taken place)

Signature with seal of Circle Head




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