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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 market forces of competition to come into play to improve efficiencies in providing better service to the users of the system. It will be the bank’s endeavor to offer services to its customers with best possible utilization of its technology infrastructure. Withdrawal of the Reserve Bank of India instructions to banks on time frame for collection of outstation cheques, payment of interest on delayed collection of outstation cheques / instruments, with effect from 1st November 2004, had offered bank further opportunities to increase its efficiency for better performance. This Compensation Policy of the bank is therefore, designed to cover areas relating to 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, the bank expects instances when the customer has to approach Banking Ombudsman or any other Forum for redressal to come down significantly.

It is reiterated that the policy covers only compensation for financial losses 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.

  1. Un-authorized / Erroneous Debit

If the bank 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 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. Further, if the customer has suffered any 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 financial losses.

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.

Reversal of Erroneous Debits arising on Fraudulent or other transactions:-

(i)         In case of any fraud, if the branch is convinced that an irregularity / fraud has been committed by its staff towards any constituent, Bank will at once acknowledge its liability and pay the just claim.

(ii)        In case where the Bank is at fault, Bank will compensate the customer without demur.

(iii)       In cases where neither the Bank nor the customer is at fault, but the fault lies elsewhere in the system, Bank will compensate the customers upto a limit of Rs.10000/-. “

  1. ECS direct debits / other debits to accounts

The bank will undertake to carry out direct debit / ECS debit instructions of customers in time. In the event the bank fails to meet such commitments 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.

The bank would debit the customer’s account with any applicable service charge as per the schedule of charges notified by the bank.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.

  1. Payment of Cheques after Stop Payment Instructions

In case a cheque 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 under para 1 above. Such debits will be reversed within 2 working days of the customer intimating the transaction to the bank.

  1. Foreign Exchange Services

The Bank would not compensate the customer for delays in collection of cheques designated in foreign currencies 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 after expiry of normal cooling period stipulated from the date of credit to Nostro account. The compensation in such cases will be worked out as follows:

a) Interest for the delay in crediting proceeds as indicated in the collection policy of the bank.

b) Compensation for any possible loss on account of adverse movement in foreign exchange rate.

  1. Remittances in India

The compensation on account of delays in collection of instruments would be as indicated in the bank’s collection policy, which is reproduced below for information:

Payment of Interest for delayed Collection of Local/Outstation Cheques:

As part of the compensation policy of the bank, the bank shall pay interest to its customer on the amount of collection instruments in case there is delay in giving credit beyond the time period mentioned in Cheque Collection Policy. 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 including local cheques for the purpose of payment of interest on delayed collection.

Interest for delayed collection shall be paid at the following rates:

A.For Local Cheques / Instruments:

As per the time frame detailed in Cheque Collection Policy, compensation will be paid at savings bank interest rate for the corresponding period of delay.

B. For Outstation Cheques / Instruments:

  1. Savings Bank rate for the period of delay beyond 7/10/14 working days as the case may be, in collection of outstation Cheques drawn on other banks.

  2. If the delay is beyond 14 working days, interest will be paid at the rate applicable to term deposit for the respective period.

  3. In case of extraordinary delay, i.e. delay exceeding 90 days interest shall be paid at the rate of 2% above the corresponding Term Deposit rate.

  4. In the event of the proceeds of cheque under collection were to be credited to an overdraft/loan account of the customer, interest shall be paid at the rate applicable to the loan account. For extraordinary delay, interest shall be paid at the rate of 2% above the rate applicable to the loan account.

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 also be same as indicated in our collection policy. The same is extracted below for information:

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 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 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.

  3. In the event the instrument is to be obtained from a Bank/institution who would charge a fee for issue of duplicate instrument, such a reasonable charge incurred by the customer will be compensated by the Bank on production of proof of such payment.

  1. Violation of the Code by bank’s agent

In the event of receipt of any complaint from the customer that the bank’s representative / courier or 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.

  1. Transaction of “at par instruments” of Co-operative Banks by Commercial Banks

Once the Bank has entered into an arrangement with a Co-operative Bank to pay its instruments ‘at par’ the Bank will honour all such cheques payable ‘at par’ irrespective of the fact whether such instruments have been funded by the Co-operative Bank or not. In case prior funding is not made, the Bank will take up the issue separately with the issuing Bank. However, before entering into such an arrangement with Co-operative Bank the Bank shall make proper funding arrangement as well.

  1. Reconciliation of failed transactions at ATMs

  1. All admitted customer claims about wrongful debit on account of failed ATM transactions will be reimbursed to the customer within a maximum period of 7 working days from the date of the receipt of the customer complaint.

  2. For any failure to re-credit the customer’s account within 7 working days from the date of receipt of the complaint, the bank will pay compensation of Rs.100/-, per day, to the aggrieved customer.

  3. 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.

  4. The number of free transactions permitted per month at other bank ATMs to savings Bank account holders shall be inclusive of all type of transactions, financial and non-financial.

  5. 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.

  6. Banks will extend the scope of concurrent audit to cover cases of delay in reimbursing the customers for failed ATM transactions.

  7. Bank will also place a quarterly review of ATM transactions to the Board of directors, indicating inter alia, the quantum of penalties paid, reasons thereof and the actions taken to avoid recurrence of such instances. A copy of the note along with the observations of the Board will be forwarded to the Chief General Manager, Reserve Bank of India, Department of Payment & Settlement Systems, Mumbai.

  1. Delay in return of original security documents and title deeds on repayment of the Loan.

The original security documents submitted by the borrower would be returned to the borrower within 15 days of repayment of all dues by the borrower, including principal amount, interest, EMI, costs, service charges and all other due as per the terms and conditions in the loan agreement signed by the borrower subject to the following conditions that

  1. The borrower/co-obligant makes a valid and formal demand for return of the documents.

  2. The bank in receipt of documents from the court/DRT, in case the same have been lodged with the court by the bank.

  3. There is no adverse claim from the third parties on the said property.

  4. The bank receives discharge/ receipt of the documents from all the persons having interest in the said property as per the records of the bank.

The borrower would be paid an amount of Rs. 100/- per week in case of any delay in returning of the documents beyond 15 days of loan repayment, subject to a maximum payment of Rs.500/-.

  1. Delay in credit / return of NEFT / NECS / ECS transactions.

The bank will undertake to carry out credit / return of NEFT / NECS / ECS transactions in time. In the event of delay, the bank would pay penal interest at the current RBI LAF Repo Rate plus two per cent from the due date of credit till the date of actual credit for any delayed credit to the beneficiaries’ account. Penal interest shall be credited to the Beneficiary’s Account even if no claim is lodged.

  1. Force Majeure

The bank shall not be liable to compensate customers if some unforeseen event (including but not limited to civil commotion, sabotage, accident, fires, nature 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.

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