Ccpc Role Manual Fy 2023-24

FY 2023-24
RO GUICUCERTIFIC
MAN
CENTRALCLEAR
LE DE PROCES
M ATION CENT
UAL (CC)
ISED ING SING RE PC
For Internal Circulation Only
FOREWORD
Dear Role Holder,
Role Based Certifications (RBCs) were introduced in our Bank in 2018 to equip our
staff with the knowledge and skills to face the increasing challenges in the Banking
Industry. The concept has received wide acclaim and has proved useful in providing
focussed understanding of different roles and the proficiencies required to handle
them. The emphasis has been on equipping learners with the practical applications
along with the theoretical aspects of the subject. The number of RBCs has also been
increased with the demand of the times.
Based on inputs received from the participants and others associated with process,
the manuals, the training, and the evaluation methods have undergone changes in the
past few years. With the introduction of share-point, learners now have access, not
only to the written matter, but also videos, PPTs, Quizzes, Booklets and other matter
which facilitates self -learning and makes content easier to absorb.
Chapters will now have the learning objectives at the beginning with a few recap
questions and sample case let at the end. This will serve to imbibe information better,
and learners will be able to understand its application in real-life situations.
We at Strategic Training Unit, are committed to equip our staff with the expertise
required in discharging their functions better, thereby ensuring customer satisfaction.
This Role Guide cum Certification Manual will provide insights into the role you are
currently performing, provide you with conceptual clarity and help in mitigating
associated risks.
We wish you all the best for a successful and enriching journey in your current role.
Stay safe and healthy!
With Best Wishes,

CHIEF GENERAL MANAGER & HEAD (STU)
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INDEX
SL. NO. PARTICULARS PAGE NO
1 Evolution & Overview of Centralised CPC 09
1.1 Clearing House 09
1.2 Payments without use of Cheque and Cash 09
1.3 Objective & Scope of CCPC 11
1.4 Activities beyond Scope 12
1.5 Overview of CCPC 13
1.6 Linkages of the Branch to CCPC 13
2 Structure of CCPC 18
2.1 Organizational Structure 18
2.2 Role Holders in CCPC 20
2.3 ORM Areas 43
2.4 External Compliances & Self-Audit 51
3A Cheque Truncation System 58
3.1 CTS implementation 58
3.2 Benefits of Grid Based CTS 59
3.3 Image specifications in CTS / Uniqueness of Images 61
3.4 Cheque Standardisation and CTS 2010 Standard 61
3.5 Fraud Prevention Measures 63
3.6 Image Quality Assessment (IQA) Failures 66
3.7 Cheque Deposit Kiosk 67
3.8 Positive Pay System (PPS) for Cheque Payments 68
3.9 NCR WEB CTS Software 71
3.10 Inward Process 84
3.11 OLRR (Online Rejection Referral & Return) Process 88
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Sl. Particulars Page No
No.
3B NACH 90
3.12 Electronic Clearing Service (ECS) 90
3.13 National Automated Clearing House (NACH) 91
3.14 Aadhar Payment Bridge System (APBS) 93
3.15 NACH Credit/ Debit 156 94
3.16 Overview of NACH Credit 95
3.17 Overview of NACH Debit 99
3.18 Mandate Management System (MMS) 101
3.19 Dispute Management System (DMS) 110
3.20 CRM Tracker 115
3.21 Operational Risk Management 128
3.22 Irregularities Pointed Out in RFIA 132

4 Laws relating to Clearing & Collection 143
4.1 Negotiable Instruments Act 1881 143
4.2 Payment and Settlement Systems Act 2007 153
4.3 Indian Contract Act 159
4.4 The Banking Ombudsman Scheme 162
4.5 Integrated Ombudsman Scheme (IOS) 2021 170
4.6 Consumer Protection Act (COPRA) 2019 177
4.7 Banking Codes and Standards Board of India (BCSBI) 186
5 Payment Systems in India 192
5.1 Real Time Gross Settlement (RTGS) 192
5.2 National Electronic Funds Transfer (NEFT) 194
5.3 Indo-Nepal Remittance Facility Scheme 203
5.4 US Dollar Cheque Collection 207
5.5 Committee on Payments and Market Infrastructures 215
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CHAPTER-1: EVOLUTION & OVERVIEW OF CENTRALISED CPC
Learning Objective: In this chapter we will try to get basic idea about clearing house,
different modes of payment, Electronic Funds Transfer (EFT), Electronic Clearing
System (ECS), MICR Clearing and National Automated Clearing House. Also, we will
discuss about objectives of CCPC, different activities being carried out at Clearing
Processing Centre (CCPC) viz., Inward clearing Instruments, Outward clearing
Instruments, Electronic Clearing System and Outstation Collection (SC Collection), as
also the activities which are beyond the scope of CCPC.
1.1. A clearing house is an association of banks that facilitates payments through

cheques between different bank branches within a city/ place. It acts as a central
meeting place for bankers to exchange the cheques drawn on one another and claim
funds for the same. Such operations are called as clearing operations. Generally, one
bank is appointed as in-charge of the clearing operations. In the four metros and a few
other major cities, the Reserve Bank of India is looking after the operations of the
clearing house. Each clearing house has uniform regulations and rules for the conduct
of its operations as prescribed by RBI.
RBI has advised all the banks to publicize their cheque collection policy so that
customers have an idea as to when the proceeds would be available for utilization by
the customers. For delay beyond the normal period, banks are required to compensate
the customer (even without customer asking for the same).
1.2. Payments without use of Cheque and Cash:

Payments can be made between two or more parties by means of electronic
instructions without the use of cheques. Retail payments mechanisms available to
facilitate such payments are the Electronic Funds Transfer, Electronic Clearing
Service, Credit/Debit cards etc.
1. Electronic Fund Transfer: Electronic Fund Transfer (EFT) is a system whereby

anyone who wants to make payment to another person/company etc. can approach
his bank and make cash payment or give instructions/ authorization to transfer funds
directly from his own accounts to the bank account of the receiver/ beneficiary.
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Complete details such as the receiver’s name, bank account number, account type
(saving or current account), bank name, city, branch name etc. should be furnished to
the bank at the time of requesting for such transfer so that the amount reaches the
beneficiaries account correctly and faster. The RBI is the service provider for EFT.
Benefits of EFT:
➢ EFT is a faster mode of transfer of funds which facilitate transference of funds

within 24 hours.
➢ The system is customer centric as it is paperless, and no delay is witnessed.
➢ There is absolutely no requirement for the beneficiary to go to the bank since
the beneficiary’s account is credited automatically.
➢ In-built security systems ensure safer mode of transfer of funds.
2. Electronic Clearing Service (ECS): Electronic Clearing Service is a retail payment

system that can be used to make bulk payments/ receipts of a similar nature especially
where each individual payment is of a repetitive nature and of relatively smaller
amount. This facility is meant for companies and government departments to make /
receive large volumes of payments rather than for funds transfers by individuals. The
ECS is further divided into two types- ECS (Credit) to make bulk payments to
individuals/ vendors and ECS (Debit) to receive bulk utility payments from individuals.
(The ECS facility has since being phased out; as per NPCI Circular No.
NPCI/201819/NACH/Circular/023 dated 4th September 2018. All Banks have been
now disabled from ECS sessions as ECS has since been migrated to ACH.
3. MICR Clearing: This is one of the automated clearing systems used by banks.
Under this system, specific type of paper is used for printing the cheque. The cheque
confirms to required specification as laid down and are having two white bands at the
top and another at the bottom. Between these bands, the details of the cheque are
encoded with special magnetic ink and that is why it is known as MICR cheque i.e.
Magnetic Ink Character Recognition cheque. The machine with sophisticated software
engaged for the purpose captures the image of the cheque and enables automated
clearing function.
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4. Core Banking Solution: The customers can transact business through any banking
branch of the country which is under the system.
5. Cheque Truncation: Cheque truncation is a system of cheque clearing and

settlement between banks based on electronic data/ images or both, without physical
exchange of instrument. It may be defined as the replacement of the physical cheque
flow with electronic information within all four legs of the clearing cycle (Outward
clearing, inward clearing, Outward returns and Inward Returns).
6. Speed Clearing: Speed Clearing refers to collection of outstation cheques (a

cheque drawn on non-local bank branch) through the local clearing. It facilitates
collection of cheques drawn on outstation core-banking-enabled branches of banks, if
they have a net-worked branch locally.
1.3. Objective & Scope of CCPC:

The basic objective of CCPC is to shift all non-customer facing activities related to
paper based as well as electronic clearing and collection away from branches and do
the same in a centralized manner with the highest level of efficiency, accuracy and
safety.
Scope
1. Inward clearing Instruments:
➢ Receive inward clearing of all types from clearing house/ RBI.
➢ Post these in customer accounts
➢ Do technical verification
➢ Send the returns to clearing house
2. Outward clearing Instruments:

Outward clearing is a decentralized model. Branches scans pay-in-slips and cheques
(instruments) in CTS.
1. Receive images of pay in slips and outward clearing instruments of all clearing
types tendered by the customers through Drop Box or across the counters at
the linked branches.
2. Process data captured by branches in CTS System
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3. Present the instruments' images to the clearing house through CTS
4. Mark the returns.
5. Release funds in customer accounts.
6. Dispatch returned instruments to the branches, which were submitted physically
through P2F (Paper to Follow). The instruments which cannot be processed in
CTS are sent as follow-up, so they are known as P2F (paper to follow)
Instruments.
7. Provide processed instrument report to branches with fate therefore as well as
returns report.
3. Electronic Clearing System:

1. Handle all the activities in a centralized manner for ECS.
2. ECS is of 2 Types:
a) Credit ECS
b) Debit ECS
4. Outstation Collection (SC Cheques):

➢ Receive outstation collection instruments tendered by the customers through
Drop Box or across the counters at outstation branches.
➢ Capture data thereof
➢ Send collections to the outstation branches/banks
➢ Mark returns Do SC realization transaction
➢ Dispatch returned instruments to the branches
1.4. Activities beyond Scope: The following activities are beyond the scope of CCPC
and will continue to be done by the respective home branches or Asset CPCs and
CCPC will not:
➢ Take a credit decision on the referrals in respect of any inward instrument.
➢ Scrutinize transactions in customer accounts mandated by any internal or
external authority under Anti Money Laundering policy or any other measure.
➢ Amend customer level or Account level details or VPIS data in the CBS system.
➢ Handle dividend warrants payment: these will be handled by Cash
Management Product (CMP) cell in the respective centres.
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1.5 Overview of CCPC: CCPC helps achieve the following:
➢ Move back-office activities away from branches to enable them to focus on
marketing and sales. (Employ Latest Technology)
➢ Derive economies of scale by centralizing high volume transaction processing.
(Exploit CBS Fully)
➢ Exercise tighter control over quality and Turn-around Time. (Facilitate &
Process Cheque Truncation (CTS)
1.6 Linkages of the Branch to CCPC: Following preparations are required:
➢ Scan and Upload complete and current set of signatures of all account holders
for every cheque operated account.
➢ CCPC may have to return cheques for which signatures are missing in CBS
without referring to the Home Branch.
➢ Current mandates should be correctly and clearly captured in all cases.
➢ CCPC will rely on data in CBS only. Branches to ensure image update at the
time of BOD, through CBS Menu BOD Transactions -> Update Images
➢ All account holders’ names and addresses should be properly entered in CBS.
Drawing Power should be updated. Insufficient balance or DP will result in
OLRR.
➢ Instrument’s types entered in VPIS should be consistent with the product type.
Else, the cheque will result in OLRR.
➢ Stop Payment instructions should be updated in CBS. CCPC will rely on CBS
data only.
➢ Changes in the static data should be entered in the CBS data immediately.
➢ Try to use LCPC issued cheques as it increases speed and accuracy.
➢ Acceptance of only CTS-2010 standard compliant cheques in CTS clearing
w.e.f. 1st January 2019.
➢ Remove obsolete signatures and only keep active signatures of an account.
The Branch needs to create awareness with the customers in following areas:
1. Unauthenticated alterations (Alteration allowed only in the date field for
validation purpose).
2. Difference in amount and words
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3. Erroneous signature
4. Signature Difference
Cheques with such irregularities will be returned by the CCPC without referring to
Home Branch.
For linkage of the Branch to CCPC, the MICR code of the branches is to be linked to
Clearing House and the request for the same is sent by CCPC to NPCI. The maker
and checker login to CTS application with their ADS credentials. The approved
scanner is installed at the branch. After linkages of the Branch to CCPC, the work is
done as under:
1. Inward Clearing
➢ The branch has to ensure to attend to OLRR within the stipulated time.
➢ After the cut-off time, the CCPC will reject all the pending entries.
2. Outward Clearing
➢ CTS processing is required at the branch for outward clearing.
➢ Contents of the Drop Box are to be taken out before CTS Cut Off timing.
➢ Brand especially designed crossing stamp on all instruments.
➢ Make sure that the pay-in-slips bear the branch name and code number stamp.
➢ Prepare packing slip for P2F instruments (if any)
➢ Send P2F instruments along with packing list to CCPC/ P2F centre/ drawee
bank branch (as applicable).
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KEY LEARNINGS
The basic objective of CCPC is to shift all non-customer facing activities related to
paper based as well as electronic clearing and collection away from branches and do
the same in a centralized manner with the highest level of efficiency, accuracy and
safety. Further, this will enable the branches to focus on marketing and sales.
As straight through processing and automated payment processing are enabled by

CTS, faster realization (on T+1 basis) is accompanied by a reduction in costs for the
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customers and the banks. It is also possible for banks to offer innovative products and
services based on CTS. The banks have additional advantage of reduced
reconciliation and clearing frauds.
CHECK YOUR PROGRESS
Q1: What is EFT?

a) Efficient fund transfer
b) Electronic fund transfer
c) Electronic financial tracking
d) Efficient financial tracking
Q2: A clearing house is an association of………...?

a) Branches of the Banks
b) Various Banks
c) Financial institutions
d) All the above
Q3: What are the important functions to be carried out at branches, for smooth
functioning of CCPC?
a) Current mandates should be correctly and clearly captured in all cases. CCPC will rely
on data in CBS only.
b) All account holders’ names and addresses should be properly entered in CBS.
c) Stop payment instructions should be updated in CBS. CCPC will rely on CBS data
only.
d) All of the above
Q4: P2F stands for

a) Proceeds to Follow
b) Payment to Follow
c) Paper to Follow
d) Principles to Follow
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Q5. In order to derive economies of scale by centralizing high volume transactions
processing, CCPC is required to
a) Employ Latest Technology
b) Exploit CBS Fully
c) Facilitate and Process Cheque Truncation
d) Decide on Margins
Key:
Que. 1 2 3 4 5
Ans b b d c b
CASE STUDY
Shri K.K. Singh has recently been posted as a service manager at ABC branch (BPR
centre). The branch is situated in the business hub of the city and receives 200-250
CTS cheques for clearing on daily basis. He has maintained good relationship with all
the staff of CCPC and is able to always receive response immediately on any clearing
related issue raised with the CCPC. However, Shri Singh does not know much about
the functioning of CCPC and is interested to know about it. He interacts with the staff
of CCPC on regular basis and his curiosity is satisfied to a great extent. Based on the
interaction with CCPC staff, he has some questions in mind.
1. Which is not a basic objective to establish CCPC?

(i) To shift all non-customer facing activities related to paper-based clearing.
(ii) Shift electronic clearing and collection away from branches.
(iii) Work in a centralized manner with the highest level of efficiency, accuracy
and safety.
(iv) Take a credit decision on the referrals in respect of any inward instrument.
2. Which activity is not performed at CCPC?

(i) Inward Clearing
(ii) Outward Clearing
(iii) Scanning of customers’ signatures
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(iv) Outstation Collection (SC Cheques)
3. Which of the following activities are beyond the scope of CCPC and are done by
the respective home branches?
(i) Scrutinize transactions in customer accounts mandated by any internal or
external authority under Anti Money Laundering policy or any other measure.
(ii) Amend customer level or Account level details or VPIS data in the CBS
system.
(iii) Handle dividend warrants payment.
(iv) All of the above
4. A clearing house is an association of…………

(i) Branches of the Banks
(ii) Various Banks
(iii) Financial institutions
(iv) All of the above
5. In order to derive economies of scale by centralizing high volume transactions

processing, CCPC is required to
(i) Employ Latest Technology
(ii) Exploit CBS Fully
(iii) Facilitate and Process Cheque Truncation
(iv) Decide on Margins
Key:
Que. 1 2 3 4 5
Ans. iv iii iv ii ii
RELEVANT CIRCULARS
NA
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CHAPTER-2: STRUCTURE OF CCPC
(Including Functionaries at CCPC and their Roles & responsibilities)
Learning Objectives: In this chapter we try to know about organisational structure of

CCPC and different functionaries working in a CCPC along with their roles and
responsibilities. Also, a reference of value statements on operational risk management
and other components of RFIA of CCPC has been made at the end of the chapter so
that the readers may understand their responsibility towards ensuring adherence to
laid down systems & procedures.
2.1. Organizational Structure: CCPC is an independent accounting unit in the CBS

and has its own MICR code allotted by RBI. In the end state, it functions as a Service
Branch and represents the Bank in the Clearing System. Various Role Holders and
their reporting relationships are as under:
DGM & CDO
(Controller)
CCPC Head
AGM/CM
Shift in-charge In-charge In-charge In-charge Shift in-charge
CM/Mgr Mail Section Gen. Admin Section Help Desk CM/ Mgr
Morning Shift Dy. Manager Manager Spl./Sr. Assistant Afternoon Shift
In-charge In-charge In-charge In-charge

Data Processing Systems Section Systems Section
Section Data Processing
Manager Manager
Morning Shift Section
Morning Shift Afternoon Shift
Afternoon Shift
Dy. Managers, Special/Senior Assistants and
1. The roles indicated above may be combined depending upon the local
requirements.
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2. The categorization of the incumbency of CCPC Head is dependent on the total
number of the staff in the CCPC and will be arrived at as under:
TOTAL STAFF INCUMBENCY OF CCPC HEAD

Up to 30 Officer SMG Scale IV
31 and above Officer SMG Scale V
3. The categorization of the incumbency of Shift In-charge will be one step below that
of CCPC Head.
4. Officer JMG Scale-I may not be posted at CCPC as their passing powers are the
same as of Special Associate.
5. The ratio of officers to clerical staff should be 2:3.
Inward Clearing
1. A person doing ‘Reject Repair/Re-entry’ in Vendor software will be responsible
for the correctness of the repaired/re-entered data.
2. A person doing ‘Data Cleaning’ (i.e. inputting of account number, payee name
and other mandatory details in case of Demand Drafts, Govt. Cheques, etc) will
be responsible for the correctness of the data entered manually.
3. A person doing Technical Verification will be responsible for validity of and
conformity with the customer’s mandate, correctness of the posting and
genuineness of the instrument.
4. A person doing rejection in Technical Verification will be responsible for
sufficiency of the reason for doing so and also for selecting the appropriate
reason for the return/dishonour.
General
1. The functionaries entrusted with specific responsibilities as per the Process
Manuals and the Role Definitions will be personally responsible for the
mentioned tasks.
2. The functionaries handling exception cases referred to them will be personally
responsible for the decisions taken in such cases.
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2.2 ROLE HOLDERS IN CCPC
(I) CCPC Head: He/she is the leader of the Clearing CPC team. His/her basic role is
to create and maintain an overall environment which supports the highest level of
efficiency. He/she is responsible for achieving the objectives and maintaining the
standards set for the CCPC. He/she is also responsible for executing CCPC specific
policies and procedures. He/she monitors and controls the functioning of various
sections in the CCPC.
Role of CCPC Head :

A) Team Leadership
1. Build and maintain a cohesive, vibrant and responsible team capable of
fulfilling the objectives of CCPC.
B) Quality Control
1. Ensure strict adherence of the laid down processes, systems and
procedures
2. Guard against frauds
3. Strive to improve efficiency and safety
C) Administration
1. Ensure uninterrupted availability of entire infrastructure including hardware,
software, internal/external connectivity, courier arrangement, etc
2. Ensure timely completion of all clearing/collection related basic activities (shop
floor activities)
3. Monitor performance levels to ensure that the overall productivity benchmarks
laid down are achieved consistently
4. Monitor performance of all Service Providers to ensure adherence to Service
Level Agreements (SLAs) and initiate corrective actions, where necessary
5. Ensure right capacity and capability of staff in different sections
6. Co-ordinate with linked branches and other CPCs for communication and
resolution of issues between branches and CCPC
7. Ensure timely, correct and complete reporting to the Controller and other
functionaries
8. Deal with all internal and external inspections and audits and disposal of the
reports
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9. Manage external and internal changes and communicate the changes to the
concerned external authorities
10. Other functions normally associated with a unit Head
(2) Activities of CCPC Head

1. Ensure free and frank interactions with staff and other stakeholders for identification
of weak spots and also for formulating and implementing strategies to increase
efficiency and reduce risks
2. Identify the training and development needs of the staff at CCPC in consultation
with Shift In-charges and Section In-charges and arrange for fulfilment thereof.
3. Review all monitoring, control and exception reports to ensure rectification of errors
and take steps to prevent recurrence of errors
4. Ensure that all activities for the day are completed and no work is left pending
5. Ensure that the Fund Settlement amounts pertaining to all inward and outward
presentations including returns presentations are in agreement with the actual
presentations
6. Review day-end position of all relevant intermediate accounts. In case of un-
reconciled/incorrect entries, discuss and initiate corrective measures, through Shift
in-charges.
7. Review compliance with systems and procedures laid down by the Bank and
external authorities.
8. Review work allocation system and periodical job rotation to guard against frauds.
9. Guard against process deviations and work around/short cuts
10. Discuss infrastructure needs with Shift In-charges and Section In-charges and
arrange for timely availability. Take up the matter with Controller where required
11. With the approval of the Controller, arrange for a secured and efficient courier
agency for pick-up/delivery from/to linked branches and for own requirements of
CCPC
12. With the approval of the Controller and in consultation with the Shift in-charges,
prepare a detailed timetable for courier for pick-ups and deliveries both at branches
and CCPC.
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13. Follow up for execution/renewal of maintenance contracts with external service
providers and ensure periodical visits of the service engineers for maintenance
related activities happen as per the agreed schedule and are properly recorded
14. Interact with Circle/Network authorities and external hardware/software vendors
whenever delay is observed in attending routine service calls
15. Check that the Access Control System is working properly and access to the
premises is restricted to authorized persons.
16. Check that Fire Control System and other security systems are working properly
17. Review performances of Service Providers on regular intervals by getting
feedback from respective Section In-charges and other functionaries. Wherever
Service Level Agreement (SLA) is not complied with, discuss the matter with the
respective Service Provider to sort out the issue at the earliest. If necessary,
escalate to the Controller to resolve these issues
18. Compile/review Business Continuity Plan (BCP) and get it approved from the
Controller
19. Update BCP as and when risk perceptions change
20. Prepare “to do” lists for various designated functionaries for handling a disaster
and communicate these to the respective functionaries.
21. Estimate staffing needs of all the sections in consultation with Shift in-charges and
based on average volumes and benchmark productivity levels. In case of additional
staffing needs, advise the Controller and follow up to ensure that staff is in place
well in time
22. Allocate responsibilities to Shift in-charges and the functionaries directly reporting
to CCPC Head. Guide Shift In-charges in work allocation to the staff under their
control.
23. Design contingency plans in consultation with Shift in-charges to handle spikes
24. Scrutinize performance tracking reports of different sections at regular intervals
and discuss with respective Shift/Section in-charges to monitor productivity at all
the sections of CCPC to ensure achievement of stipulated benchmarks and initiate
corrective actions, where necessary
25. Interact with linked branches and their Controllers to sort out any pending matters
or important issues arising from time to time
26. Interact with non-linked branches or other CPCs to resolve issues which do not
get resolved in the routine manner.
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27. Monitor submission of tracking templates, periodical returns, statements,
compliance reports, etc to the Controller and other entities
28. Communicate relevant information to external entities on addition of new branches
to CCPC (e.g. date of linkage of new branches, branch information)
29. Align CCPC processes to the changes communicated by RBI, Clearing House or
any regulatory body.
30. Communicate changes to the Controller, linked branches and external agencies
well in time for smooth implementation
31. Implement any changes advised by the Controller
32. Interact with his/her counterparts in the other CCPCs and other functionaries for
improvement and efficient functioning of CCPC.
(3) Required Skills and Desirable Traits

1. Two years’ experience of successfully handling a medium / large sized retail branch
with a staff strength of 15 and above
2. Proven leadership qualities
3. Analytical ability to estimate right staffing requirements
4. Familiarity with CBS
(4) Reporting Relationship

1. CCPC Head reports to DGM & CDO of the Network in which CCPC is located.
2. Shift In-Charges of Morning and Afternoon shifts, In-Charges of Help Desk, General
Administration Section and Mail Section report to CCPC Head.
(II) Morning Shift in-Charge: The Morning Shift In-Charge is primarily responsible for
efficient and timely execution of all clearing/collection related basic activities (shop
floor activities) in the morning shift.
(1) Role:
1. Decide user rights of each user in the shift and the sections reporting to the CCPC
Head for CBS and Vendor software and ensure that rights are correctly defined in
the system
2. Ensure completion of SoD related activities for all the systems by Systems Section
In-Charge, Morning Shift
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3. Ensure timely inflow of instruments and data files from all sources for different types
of clearing
4. Ensure timely execution of various process related activities falling within morning
shift
5. Ensure proper load balancing among staff through appropriate distribution of
workload
6. Monitor performance levels of the staff to ensure that these are as per the
productivity benchmark levels laid down.
7. Ensure strict adherence to the laid down processes, systems and procedures
8. Check all control, monitoring and exception reports and initiate necessary
corrections
9. Facilitate continuous improvement in terms of process and performance
10.Identify training needs of the staff and discuss them with the CCPC Head.
Follow up to ensure that the right training is imparted
11.Ensure timely reporting and submission of operational and business matters to the
CCPC Head
12. Escalate issues to CCPC Head that need his/her intervention
(2) Activities
i) System Related Activities
1. Decide & ensure defining properly in system for user rights of each user in the Shift
as well as the users in the sections directly reporting to the CCPC Head for CBS
and Vendor software in consultation with Data Processing Section In-charge,
Morning shift.
2. Ensure that the hardware, software and connectivity are functioning properly.
3. Ensure that BoD/SoD related activities are completed without any problems and
systems are completely ready for the day’s work
4. Ensure that any system related issues observed are logged and taken up with
appropriate authority and followed up till resolution
ii) MICR Inward clearing
1. Ensure timely receipt of instruments from MICR Cheque Processing Centre
2. Ensure timely receipt/download of MICR inward clearing data files
3. Ensure data and image capture of all instruments as per the stipulated process
within time
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4. Allot batches equitably to users/makers & lay down prioritization for data entry
5. Ensure timely completion of data cleaning
6. Ensure that instruments which cannot be processed by CCPC are separated,
accounted for and sent to respective branches in time
7. Ensure timely completion of RBNL/LBNR matching and submission of relevant
claim forms to Clearing House for RBNL and LBNR
8. Ensure timely generation/transmission of posting files
9. Allot equitably uploaded instruments for technical verification
10. Ensure timely completion of Technical Verification including decision making for
referred items
11. Ensure timely clearance of OLRR items by linked branches
12. Authorize blanket rejection of pending OLRR items at cut-off time
13. Ensure reconciliation between presentation amount as per DP sheets and
postings in Inward Clearing Suspense Account after adjusting for RBNL, LBNR,
instruments handled manually and Not Drawn on Us (NDU) instruments.
14. Ensure correct claim settlement for RBNL, LBNR and NDU
iii) MICR Inward Returns (where return marking is done on T+2 days)
1. Ensure that inward returns are received in time
2. Ensure that the returns are marked in CBS in time
3. Ensure that manual postings, wherever required, are made and authorized in
time
4. Ensure that the clearing session for which returns have been marked is
cleared in time
5. Ensure that the late returns announced by RBI are followed up and marked
off whenever received
6. Ensure correct claim settlement for returns
iv) MICR Outward Returns (where the return activities fall within the Morning
Shift timings)
1. Ensure that Technical Verification is completed before returns timeline
2. Ensure that no OLRR is pending for a decision before returns timeline
3. Ensure timely generation of Dishonour Extract for dishonoured instruments
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4. Ensure timely upload of returns files to RBI/Clearing House server and to Vendor
software system
5. Ensure timely checking of return memos and Presenting Bank-wise lists
6. Ensure timely dispatch of all dishonoured instruments to RBI
7. Ensure correct accounting of returns
8. Ensure correct claim settlement for returns
v) ECS Inward debits

1. Ensure that the data file is received in time
2. Ensure that the posting file is uploaded in time
3. Ensure that the returns data are submitted to Clearing House in time.
4. Ensure that the reconciliation is completed on a daily basis.

1. Two years” experience of successfully handling a medium sized retail
branch/division with a staff strength of 10 and above
2. Good leadership qualities
4. Working knowledge of CBS

1. Morning Shift In-Charge reports to the CCPC Head
2. Officers In-Charge - Systems section, Morning Shift and Data Processing section,
Morning Shift will report to Shift In-Charge, Morning Shift.
(III) AFTERNOON SHIFT IN-CHARGE: The Afternoon Shift In-Charge is primarily

responsible for efficient and timely execution of all clearing/collection related basic
activities (shop floor activities) in the afternoon shift.
(1) Role
1. Decide user rights of each user in the shift for CBS and Vendor software and ensure
that rights are correctly defined in the system
2. Ensure completion of EoD related activities for all the systems
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3. Ensure timely completion of reports generation, checking, dispatch and file upload
relating MICR outward returns (where the return activities fall within the shift
timings)
4. Ensure timely completion of marking MICR inward returns and clearing the funds in
time (where return marking is done on T+1 day)
5. Ensure timely inflow of instruments from branches for different types of clearing
6. Ensure proper recording and disposal of outward and inward collections and
purchases
7. Ensure timely execution of various process related activities falling within afternoon
shift
8. Ensure proper load balancing among the staff through appropriate distribution of
workload
9. Monitor performance levels of the staff to ensure that these are as per the
productivity benchmark levels laid down.
10. Ensure strict adherence to the laid down processes, systems and procedures
11. Check all control, monitoring and exception reports and initiate necessary
corrections
12. Facilitate continuous improvement in terms of process and performance
13. Identify training needs of the staff and discuss them with the CCPC Head. Follow
up to ensure that the right training is imparted
14. Ensure timely reporting and submission of operational and business matters to the
CCPC Head
15. Escalate issues to CCPC Head that need his/her intervention
(2) ACTIVITIES
i) System Related Activities
1. Decide user rights of each user in the Shift for CBS and Vendor software in
consultation with Data Processing Section In-charge, Afternoon shift and ensure
that the rights are correctly defined in the system
2. Ensure that all the activities that need to be completed before EoD have been
completed
3. Ensure that back-ups are taken, and the media is stored as per the approved
arrangement
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4. Ensure that any system related issues observed are logged and taken up with
appropriate authority and followed up till resolution
ii) MICR Outward Clearing

1. Ensure that instruments are received in time as per the delivery schedule advised
to the courier agency and the deliveries are recorded in a register. A missing
delivery is taken up with the courier and the branch for quick resolution
2. Ensure that the instruments received from the branches are counted and the count
is tallied with the packing slip. Any variance is taken up with the concerned branch
and resolved
3. Ensure that the instruments are sent to Data Processing sections without any delay
4. Allot equitably batches for data entry and authorization
5. Ensure that data entry and authorization progress at a desired pace
6. Ensure that encoding extracts are generated periodically and instruments are
encoded in suitable lots
7. Check that all instruments received during the day are encoded and nothing is kept
pending overnight
8. Ensure that Batch and Block tickets are generated in time, the Block count tallies
with the number of instruments received as per the register maintained for recording
the receipt of instruments from branches and the Block amount tallies with amount
displayed in Session Enquiry screen
9. Ensure that the presentation is sent to MICR Centre in time
10. Scrutinize Adjusted Batch Tickets received from MICR Centre and carry out
necessary rectification activities
11. Ensure correct claim settlement for outward presentation
iii) MICR Outward Returns (where the return activities fall within the Afternoon
Shift timings)
Activities are the same as that for Morning Shift In-charge
iv) MICR Inward Returns (where return marking is done on T+1 day)
Activities are the same as that for Morning Shift In-charge
v) Outward Collections (SC – Cheques)
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1. Ensure that collection (SC) related instruments are received in time as per the
delivery schedule advised to the courier agency and the deliveries are recorded in
a register. A missing delivery is taken up with the courier and the branch for quick
resolution
2. Ensure that the instruments are counted, and the count is tallied with the packing
slip. Any variance is taken up with the concerned branch and resolved
3. Ensure that the instruments are sent to Data Processing sections
4. Allot equitably batches for data entry and authorization
5. Ensure that data entry and authorization progress at a desired pace
6. Check that all instruments received during the day are processed and nothing is
kept pending overnight
7. Ensure that collection schedules are generated after completion of data processing
8. Ensure that collection schedules along with the instruments are checked, duly
authenticated and handed over to Mail section for dispatch
9. Ensure that the dishonoured instruments received from the realizing (receiving)
branches/CCPCs are sent to the branches from which these instruments were
received.
10. Follow up with the realizing (receiving) CCPCs/branches for instruments reported
lost in transit and for long outstanding entries.
vi) Outward Purchases (DD – Cheques)

1. Ensure that purchase (DD) related instruments are received in time along with the
Packing Slips as per the delivery schedule advised to the courier agency and the
deliveries are recorded in a register. A missing delivery is taken up with the courier
and the branch for quick resolution
slip. Any variance is taken up with the concerned branch and resolved
3. Ensure that receipt/non-receipt of instruments are marked in CBS
4. Check that all instruments received during the day are processed and nothing is
kept pending overnight
5. Ensure that remittance schedules are generated, checked, duly authenticated and
handed over to Mail section for dispatch
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6. Ensure that the dishonoured instruments received from the realizing (receiving)
branches/CCPCs are sent to the branches from which these instruments were
received.
7. Follow up with the realizing (receiving) CCPCs/branches for instruments reported
lost in transit and for long outstanding entries.
vii) Inward Collections/Purchases (SC/DD – Cheques)

1. Ensure that inward collection/purchase instruments are received in time along with
the Packing Slips as per the delivery schedule advised to the courier agency and
the deliveries are recorded in a register. A missing delivery is taken up with the
courier and the branch for quick resolution
slip. Any variance is taken up with the concerned sending CCPC/branch and
resolved
3. Ensure that receipt/non-receipt of instruments are marked in CBS
4. Check that all instruments received during the day are processed and included in
the day’s outward clearing presentation so that nothing is kept pending overnight
5. Ensure that return marking is done in CBS and the batches are cleared as per
clearing discipline timelines.
6. Ensure that the dishonoured instruments are sent to the respective
CCPCs/branches from which these instruments were received.
7. Respond to the sending CCPCs/branches for instruments reported lost in transit for
long outstanding entries.

1. Two years’ experience of successfully handling a medium sized retail
branch/division with a staff strength of 10 and above
2. Good leadership qualities

1. Afternoon Shift In-Charge reports to the CCPC Head
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2. Officers In-Charge - Systems section and Data Processing section, Afternoon Shift
will report to Shift In-Charge, Afternoon Shift.
(IV) SYSTEMS SECTION IN-CHARGE, MORNING SHIFT : The Systems section in-
charge, Morning shift is primarily responsible for maintenance related activities of
Hardware and Software to facilitate uninterrupted and efficient functioning of all the
systems across the shifts. He/she handles all the activities related to Scanner
machines within the shift timings. He/she also functions as primary System
Administrator for Vendor software system.
(1) Role
1. Maintain systems for uninterrupted availability with full efficiency
2. Do SoD for CBS and Vendor software and make them ready for the day’s activities
3. Receive inward clearing data from all sources in time and upload it to CBS and
Vendor software after necessary processing
4. Receive MICR inward clearing instruments and scan these in Scanner
5. Generate and upload image files to CBS system
6. Do reconciliation of Inward Clearing Suspense Account
7. Receive ECS debit data and reports files and upload data to CBS
(2) Activities
1. Check and ensure that hardware, software and connectivity are working properly
2. Check that the routine maintenance activities are properly and timely carried out for
entire hardware including UPS and batteries. Report any unresolved issue to CCPC
Head.
3. Complete all maintenance activities loading the patches, etc for Vendor software.
4. Do SoD for CBS system and check all SoD related activities are completely and
correctly performed by CBS system. Record any error message displayed, log it to
the Service Desk and follow it up till resolution.
5. Check that all routine reports and dumps/files are received. If not, log it to the
Service Desk and follow it up till resolution
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6. Do SoD for Vendor software and check all SoD related activities are completely and
correctly performed by Vendor software. Record any error message displayed, log
it to the vendor and follow it up till resolution
7. Download files for MICR Inward presentations provided by NPCI and/or from the
mailbox/media and clean the files as per CCPC requirements. Upload cleaned files
to CBS and Vendor software.
8. Receive Inward clearing instruments
9. Process the instruments in Scanner machines to capture data and images.
10. Lead Reject Re-entry process in Vendor software
11. Check that images are properly shifted to CBS for data cleaning
12. Lead RBNL/LBNR matching
13. Generate RBNL and LBNR reports and ensure that corresponding entries are
properly posted in CBS system
14. Check that Trickle Feed reports for all uploaded files have been received
15. Ensure that entries in Inward Clearing Suspense Account have been correctly
passed for the total presentation as per RBI file, RBNL, LBNR and NDU. Reconcile
the account.
16. Upload MICR outward returns file to RBI server
17. Receive ECS debit data and report files from Clearing House and upload the data
files to CBS for further processing
18. Report any issue to the Shift in-charge
(3) Required Skills

1. Good knowledge of MICR clearing system
2. Proficiency in CBS
3. Good knowledge of Windows and MS-Excel

1. Systems Section In-Charge, Morning Shift reports to the Morning Shift In-Charge.
However, all system maintenance related issues will be directly reported to CCPC
Head.
2. All staff in Systems Section, Morning Shift reports to System Section In-Charge,
Morning Shift
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(V) SYSTEMS SECTION IN-CHARGE, AFTERNOON SHIFT: The Systems section
in-charge, Afternoon shift is primarily responsible for all activities related to HSPE
machines during the shift timings. He/she also ensures adequate availability of
consumables/spares and assists the Systems section in-charge, Morning shift in
maintenance related activities of Hardware and Software to facilitate uninterrupted
functioning of the systems. He/she also functions as standby System Administrator for
Vendor software.
(1) Role
1. Assist the Systems section in-charge, Morning shift in maintenance of the systems
for uninterrupted availability
2. Manage inventory of consumables and batch/block tickets
3. Perform System Administration related functions in exigencies
4. Do EoD and take backups for CBS and Vendor software
5. Generate batch tickets and block tickets for MICR outward clearing and reconcile
presentation with CBS
6. Attend to Adjusted Batch Tickets received from MICR CPC
7. Do reconciliation of Outward Clearing Suspense Account and Clearing Differences
Account.
(2) Activities
1. Check and ensure that hardware, software and connectivity are working properly,
and the routine maintenance activities are properly and timely carried out for entire
hardware including UPS and batteries. Discuss any issues with Systems section In-
charge, Morning shift and report any unresolved issue to CCPC Head.
2. Maintain adequate stock of consumables/spares
3. Upload MICR outward returns file to RBI server (where applicable)
4. Generate periodically encoding files in CBS system for 1 pass operation
instruments and upload the files to Vendor software for encoding.
5. Receive 1 pass operation instruments from Data Processing Section and encode
the same periodically
6. Manually encode MICR unreadable instruments
7. Generate outward clearing reports in CBS and Vendor software
8. Prepare batch and block tickets
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9. Reconcile the outward presentation with CBS
10. Hand over encoded instruments, together with batch and block ticket and tipping
list to Mail Section for dispatch
11. Receive Adjusted Batch Tickets from Mail section and take corrective actions
12. Reconcile Outward Clearing Suspense Account on daily basis.
(3) Required Skills

2. Proficiency in CBS
3. Good knowledge of Windows and MS-Excel

1. Systems Section In-Charge, Afternoon Shift reports to the Afternoon Shift In-
Charge
2. All staff in Systems Section, Afternoon Shift reports to System Section In-Charge,
Afternoon Shift
(VI) DATA PROCESSING SECTION IN-CHARGE, MORNING SHIFT: The Data

Processing section in-charge, Morning shift is primarily responsible for timely and
accurate completion of data entry including data cleaning and data checking in CBS
and Vendor software for activities happening in the shift. He/she functions as User
Control Officer in respect of CBS and Vendor software for the users in the shift and
those working in the section directly reporting to the CCPC Head. He/she also
functions as standby User Control Officer for users working in Afternoon shift.
(1) Role
1. Ensure timely completion of data entry/cleaning and data checking as per the work
allocation for the day
2. Ensure timely completion of return marking and clearing the funds in customers’
accounts (where return marking is happening on T+2 days)
3. Ensure timely completion of Technical Verification and OLRR clearance
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4. Take decision on referral items in Technical Verification and all other exception
cases referred by other users in the section.
5. Follow up with linked branches for timely clearance of OLRR items
6. Coordinate with Systems section In-charge for generation/upload of various data
files and reports.
7. Coordinate with Systems section In-charge for sending the outward returns
presentation in time if the timelines for the same fall during the shift timings.
8. Process ECS debit data and send return file to the Clearing House.
9. Do reconciliation of OLRR Suspense Account and OLRR Dishonour Account
10. Do reconciliation of ECS debit related BGLs
11. Monitor performance of individual staff member in productivity and accuracy. Take
appropriate corrective action to bring in improvement wherever necessary
12. Function as User Control Officer in respect of CBS and Vendor software for the
users in the shift and those working in the section directly reporting to the CCPC
Head. Also function as standby User Control Officer for users working in Afternoon
shift
(2) Activities
1. Ensure that data entry and authorization is completed within timelines for MICR
inward returns and the respective batch is cleared (where return marking is
happening on T+2 days)
2. Receive MICR IW clearing instruments from Systems section and distribute the
same to the respective users for Technical Verification
3. Ensure timely completion of Technical Verification and scrutiny of instruments
4. Take decisions on the Technical Verification items referred by lower capability users
5. Continuously monitor OLRR clearance by linked branches and call slow moving
branches to expedite the clearance
6. Ensure that all OLRR items are cleared by the cut-off time. In case of any pending,
do data entry for Blanket Rejection and advise Morning Shift In-Charge to authorize
the same
7. Ensure that OLRR Suspense Account and OLRR Dishonour Account are zeroised
on a daily basis
8. Generate reason memos, presenting bank-wise lists, summary lists and file for RBI
for MICR outward returns (where the activity falls within the shift timings)
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9. Coordinate with Systems section In-charge for generation of various reports.
10.Ensure data cleaning file generation, file posting and returns in respect of ECS
debit are completed within the timeline.
11.Ensure reconciliation of ECS related BGLs
12.Monitor user-wise productivity for various activities and take corrective action in
respect of users who often fall below the stipulated benchmarks
13. Monitor user-wise accuracy levels and take corrective actions where the frequency
of mistake is at unacceptable levels
14.Draw up a list of users in the shift and those working in the section directly reporting
to the CCPC Head with required user rights in CBS and Vendor software with the
approval of the Morning Shift In-Charge and allot the rights in both the systems
15.Function as standby User Control Officer for users in Afternoon shift and allot user
rights as approved by the Afternoon Shift In-charge
16.Report any issue to the Shift in-charge
(3) Required Skills


1. Data Processing Section In-Charge, Morning Shift reports to the Morning Shift In-
Charge
2. All staff in Data Processing Section, Morning Shift report to Data Processing Section
In-Charge, Morning Shift
(VII) Data Processing Section in-Charge, Afternoon Shift : The Data Processing
section in-charge, Afternoon shift is primarily responsible for timely and accurate
completion of data entry/cleaning and also data checking in CBS and Vendor software
for activities happening in the shift. He/she functions as User Control Officer in respect
of CBS and Vendor software for the users in the shift and as standby User Control
Officer for users working in other sections/shifts.
(1) Role
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1. Ensure timely completion of data entry/cleaning and data checking as per the work
allocation for the day
2. Take decision on exception cases referred by other users in the section
3. Ensure completion of inward and outward collections/purchases related activities
4. Coordinate with Systems section In-charge for generation/upload of various data
files and reports.
5. Coordinate with Systems section In-charge for sending the outward returns
presentation in time if the timelines for the same fall during the shift timings.
6. Function as User Control Officer in respect of CBS and Vendor software for the
users in the shift and as standby User Control Officer for users working in other
sections/shifts
7. Monitor performance of individual staff member in productivity and accuracy. Take
appropriate corrective action to bring in improvement wherever necessary.
(2) Activities
1. Ensure that data entry and authorization is completed within the timelines for MICR
inward returns and the respective batch is cleared (where return marking is
happening on T+1 day)
2. Coordinate with Systems section In-charge for sending MICR outward returns
presentation in time if the timelines for the same fall during the shift timings
3. Receive MICR outward instruments and pay in slips from Mail section and ensure
that data entry and authorization is completed within timelines
4. Coordinate with Systems section In-charge for timely encoding and reconciliation
of the MICR outward presentation
5. Monitor user-wise productivity for various activities and take corrective action in
respect of users who often fall below the stipulated benchmarks
6. Monitor user-wise accuracy levels and take corrective actions where the frequency
of mistake is at unacceptable levels
7. Take decisions on the exception items in outward clearing
8. Draw up a list of users in the section with required user rights in CBS and Vendor
software with the approval of the Afternoon Shift In-Charge and allot the rights in
both the systems
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9. Function as standby User Control Officer for all other sections/shifts and allot user
rights as approved by the Morning Shift In-charge or CCPC Head as the case may
be.
(3) Required Skills


1. Data Processing Section In-Charge, Afternoon Shift reports to the Afternoon Shift
In-Charge
2. All staff in Data Processing Section, Afternoon Shift reports to Data Processing
Section In-Charge, Afternoon Shift
(VIII) MAIL SECTION IN-CHARGE : The Mail section In-charge is responsible for
proper recording and disposal of dak including clearing and collection instruments
coming into and going out of CCPC. He/she monitors punctuality of couriers. He/she
is also responsible for taking up the matters relating to incorrect or delayed mails with
the concerned senders/addressees.
(1) Role
1. Receive outward clearing/collection/purchase instruments from the linked
branches, keep record thereof, check for completeness and correctness and send
instruments to concerned sections
2. Keep track of delayed/missing deliveries from the linked branches
3. Receive inward collections, keep record thereof, check for completeness and
correctness and send instruments to concerned sections
4. Maintain keys to the locks on courier bags and ensure that all instruments are
received from branches in locked bags only and not otherwise
5. Disaggregate pay in slips and instruments for 1 pass operation encoding
6. Dispatch inward return instruments to branches
7. Receive other incoming dak, record it and send to respective sections
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8. Receive other outgoing dak from various sections, record it and dispatch to the
concerned entities
(2) Activities
1. Receive outward clearing/collection/purchase instruments from branches in locked
bags and record time of receipt for each branch
2. Count number of instruments in each bag and record the pickup number, time of
delivery and number of instruments in a register.
3. Tally the number with that mentioned by the sending branch on the accompanying
Packing Slip. If there is a difference, record the same in a register and contact the
branch concerned immediately to reconcile the difference. Send a written
communication to the branch pointing out the difference.
4. Brand crossing stamps on instruments where it is missing
5. Send periodically MICR outward clearing instruments to Data Processing section
through a Transit Voucher book
6. Receive inward collection/purchase instruments from sending CCPCs/branches
and record time of receipt for each branch
7. Count number of instruments attached to each collection/remittance schedule and
record the details in a register.
8. Tally the number with that mentioned by the sending branch/CCPC on the
accompanying schedule. If there is a difference, record the same in a register and
send a written communication to the branch/CCPC pointing out the difference.
9. Brand crossing stamps on instruments where it is missing
10. Check that all the deliveries from the linked branches have come in time. In case
of missing deliveries, take up the matter with respective branches and the courier
agency to resolve the issue. Report immediately all such cases to Shift In-Charge,
Afternoon shift
11. Manage and control the keys to the locks on courier bags and arrange for
replacement of the locks where necessary
12. Dispatch MICR inward returns and SC/DD returns to branches/CCPCs after proper
recording
13. Receive instruments not to be processed in CCPC from Data Processing/Systems
section, record the same and send to branches through courier
14. Receive outgoing dak from various sections, record it and send to the addressees
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15. Receive incoming dak from various entities, record it and send to the concerned
sections through a dak register
(3) Required Skills

No specific skills are required

1. Mail Section In-Charge reports to the CCPC Head
2. All staff in Mail Section reports to Mail Section In-charge
(IX) HELP DESK IN-CHARGE: The Help Desk In-charge is responsible for receiving,
attending and responding to all incoming communications from outside entities.
He/she is also responsible for maintaining a complaint register for CCPC.
(1) Role
1. Be informed about the current status of all routine activities
2. Be informed about the exception cases handled by all the sections in CCPC
3. Respond expeditiously to all incoming communications seeking information without
breaching the secrecy conventions
4. Strive to build an image of CCPC as a competent and professional unit
(2) Activities
1. Interact with all sections for having latest status update on all activities
2. Interact with all sections for having complete information on exception handling
3. Receive all incoming telephone calls seeking information and provide the same to
the callers during the calls
4. Receive all emails addressed to Help Desk and mail back replies to the senders
within a day
5. Receive fax messages and letters seeking information and provide the same to the
senders within a day
6. Record any communication in the nature of complaint in Complaint Register and
produce the same to CCPC Head for his/her information
7. Get the complaint resolved by the concerned Shift-In-charge and send reply to the
complainant within a day
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8. Mark off disposal of the complaint under authentication of CCPC Head
(3) Required Skills

1. Thorough knowledge of all CCPC processes
2. Excellent communication skills
3. Good knowledge of CBS

Help Desk In-charge reports to CCPC Head
(X) GENERAL ADMINISTRATION SECTION IN-CHARGE: The General

Administration Section In-charge is responsible for all routine administrative functions
except those relating to the systems.
(1) Role
1. Handle all staff related matters such as service record, attendance, leave, transfer,
promotion, advances, welfare activities, severance, disciplinary proceedings, etc.
2. Facilitate inter-shift and inter-section mobility of staff to handle peak volumes and
acute staff shortages
3. Arrange for safekeeping and maintenance of records.
4. Maintain sufficient stock of stationery items
5. Sanction, subject to discretionary powers, routine expenses
6. Operate on the drawal account and maintain record thereof
7. Maintain premises and security systems and obtain/renew service contracts with
the concerned service providers
8. Compile all periodical and ad-hoc returns, statements, data, etc
9. Maintain Branch Documents Register and hold Branch Documents except those
that are required to be held in the personal custody of the CCPC Head.
10. Obtain and maintain all statutory licenses, approvals, etc
(2) Activities
As per the Bank’s extant instructions for handling the above role descriptions
(3) Required Skills

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1. General Administration Section In-Charge reports to the CCPC Head
2. All staff in General Administration Section reports to Admin Section In-Charge
(XI) DATA PROCESSING OFFICER: The Data Processing officer is responsible for
accurate and expeditious data processing
(1) Role
1. Completion of the data processing work allotted by the Shift/Section In-
charge
2. Maintain the highest level of accuracy
3. Achieve or exceed productivity benchmarks
4. Guard against frauds
(2) Activities
1. Note daily work allotment mentioned in the roaster
2. Complete data processing activities as per the Process Manual
3. Escalate exception cases to the Shift/Section In-charge and get the decision
4. Report completion of allotted work to the Section In-charge
5. While doing data checking, point out observed errors to the maker and ensure that
errors are corrected
6. Report perceived cases of fraud to Section/Shift In-charge
(3) Required Skills


1. Data Processing Officer reports to the Section In-charge
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2.3 ORM Areas: Operational Risk Management at CCPC is the responsibility of all
the functionaries/ role holders at the centre. It is divided into different segments and
each role holder in CCPC has to ensure adherence to laid down systems &
procedures.
1. BACK-OFFICE OPERATIONS (ADHERENCE TO SYSTEMS & PROCEDURES)

A. PETTY CASH / POSTAGE
i) Proper control is exercised over petty cash and other expenses.
ii) All registers (Registered Letter Register, Ordinary Post Register, Courier Register
etc.) are properly maintained. Full particulars of outward mail are entered in the
despatch registers. Entries in dispatch registers verified and authenticated.
iii) Approved Couriers alone are engaged.
iv) Couriers are not handling the job of closing covers and entering them in the register.
v) Postal / Courier Receipt (duly acknowledged by authorised courier agent) numbers
are recorded in the Register.
vi) Letters returned undelivered are recorded and held in the custody of authorised
official.
vii) Receipts of POD are ensured and same marked in the dispatch register. Penalty
clause for delay in delivery, wherever applicable, is invoked at the time of making
payment of courier bill.
B. PROTECTIVE ARRANGEMENTS
i) Approved locking up arrangement as on a current date is on record
ii) The instruments processed/ unprocessed are held overnight in FBR safe/strong
room/almirah and held in proper custody
iii) Entry of outsiders is strictly prohibited in processing zone.
iv) Record of periodical testing of smoke detectors and pest control treatment is
maintained.
v) Right type and adequate no. of fire extinguishers are installed, renewed and in
working condition.
vi) The keys of clearing bags are properly recorded and acknowledged.
vii) Courier carries the locked clearing bags through approved mode of conveyance.
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viii) Standby machines / servers are tested periodically to ensure uninterrupted
clearing services.
ix) The Security Officer has visited the Branch and confirmed the security
arrangements. Observations by the Security officer on the branch security
environment are meticulously dealt with under advice to Controllers.
x) Security Information Register has been maintained and the Security Officer has
commented therein.
xi) CCTV surveillance system is used round the clock

xii) Arrangement with local police is on record for night patrol and emergency
situations.
xiii) Anti termite treatment is done at periodic intervals.
xiv) Temporary movement of keys are recorded under authentication.
C. BRANCH DOCUMENTS
i) BD Register is maintained as per instructions in force and authenticated by the
concerned custodians.
ii) The following are held as BDs under authentication:
a) Licence from RBI /under Shops & Establishment Act (if applicable) for opening
of the centre,
b) Passwords
c) All licenses of software used in the Branch
d) Current AMCs
e) Hire / lease agreements for vehicles, Genset and property etc
f) MoUs / SLAs with service providers / lawyers / Valuers etc
g) Latest Process/ Role Manuals
iii) Documents relating to frauds / lawsuits
iv) ‘Aide-Memoire’ is recorded
v) Handing Over /Taking Over authentications have been recorded invariably
vi) Approved and current Emergency arrangements are on record
vii) Digital signatures of authorised officials are on record
viii) Document destruction / other compliance certificates are recorded and duly
authenticated.
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D. RECORDS AND STATIONERY
i) The record register and record requisition register are maintained, and records
archived properly. Cheques/pay-in slips/other vouchers are stored/archived
systematically to enable easy retrieval
ii) Effective control over records is observed so as to prevent any unauthorized
removal
iii) All checked / computer output reports including nil reports are properly bound and
stored for future reference / verification
iv) All obsolete records are destroyed as per extant instructions with the controller’s
approval.
v) Stationery register and ledger are maintained up to date. Consumption of stationery
has been properly accounted for and entries passed in the System. Annual indent has
been placed.
vi) Stationery and registers are obtained from CSD only and for local purchase of
stationery item, if any, permission obtained, and record maintained.
vii) The record of Clearing House is maintained for 8 years.
2. CONTROL SYSTEMS
A. INFORMATION SYSTEMS (IS) AUDIT
(i) Software Development and IT Outsourcing
(ii) IT Procurement and SLA Management
(iii) Application Security
(iv) Process Controls
(v) Network Security
(vi) Third Party Access
(vii) Configuration Management
(viii) Operating System Security
(ix) Anti-Virus and Firewall
(x) Monitoring and Incident Management
(xi) Backup and Disaster Recovery (DRP)
(xii) Physical Security
(xiii) Personnel Security
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B. FRAUDS AND PREVENTIVE VIGILANCE
Indicative List
(i) Frauds reported prior to period under review have been adequately followed
up/closed
(ii) There is no fraud reported during this audit period.
(iii) Preventive Vigilance Committee meetings are held at prescribed intervals and
minutes reported to controllers. Modus operandi of frauds reported as discussed and
deficiencies found, if any, are rectified.
(iv) Identification of fraud-prone areas is done & preventive vigilance measures put in
place in critical areas like:
a) Recording of lost/ fake instruments.
b) Delivery / collection of clearing instruments.
C. VVR/BGL CHECKING
i) All VVRs / BGL and VPS are checked regularly & records kept. Online allotment
/acknowledgement of VVRs is done.
ii) Checking is confirmed in CBS by the respective allottees and relevant report
checked by Branch Head.
D. OFFICE ACCOUNTS FOLLOW UP

i) Follow-up is prompt and effective in respect of outstanding entries in Sundry Deposit/
Suspense /IBTS /System Suspense Accounts.
ii) Entries pertaining to clearing differences are promptly followed up for reversal and
there is no unreconciled entry pending at the centre.
iii)
a) Weekly reconciliation of accounts with RBI/ Link Branches. Certificate of
balances is held on record.
b) Entries passed in Sundry Deposit account/ Suspense account, if any, on
account of clearing differences are adjusted positively within 7 days. Back-up
register is properly maintained.
E. CONTROL FUNCTIONS
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i) Control Returns for all expenses incurred within the Branch are invariably reported
for Control and duly reviewed statements are on record.
ii) Post facto sanction for expenses incurred beyond Branch discretionary powers have
been obtained in all cases.
iii) Cases of leave on loss of pay / unauthorised absence of staff reported to controllers.
iv) Resignation, death of employees is reported to Controllers / LHO HRMS.
v) Restrictive practices of staff and Indiscipline of staff, misbehaviour and Court Cases
pertaining to staff, reported to controllers for Follow-up action.
vi) Productivity and TAT norms are achieved.
vii)All Salary & allowances & other expenditure incurred are authorised as per eligibility
& reasonable (Prior sanction obtained wherever applicable)
viii) No salary / regular payments are made outside HRMS.
ix) Salary Register generated by HRMS is printed, scrutinised and held on record.
x) Controllable expenses have not increased by more than 10% over previous year's
level except in abnormal circumstances like shifting / renovation etc.
xi) Monthly return on Charges is sent promptly and scrutinised copy are received back
is on record.
xii) Extant instructions with regard to engaging service providers, confidentiality and
security, monitoring their performance standards, business continuity, preparedness,
due diligence reviews, etc are complied with
F. SUBMISSION OF PERIODICAL RETURNS

i) BMMC Register is well maintained.
ii) CCPC Monthly Certificate covers all the latest mandatory areas and is promptly
submitted to controllers.
iii) Certificate regarding genuineness of expenditure incurred and debited to Charges
account as per delegation of financial powers is included.
iv) False certification of substantive nature in BMMC is not observed in confirmations
relating to Maintenance of password secrecy and inactivation of absentee users
v) False certification of substantive nature in BMMC is not observed in confirmations
relating to Deduction / remitting of TDS
vi) All other periodical returns, including daily Tracking Statements, are submitted in
time.
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G. ACCOUNTS & ACCOUNTING PROCEDURE
i) Promptness in adjustment of differences in clearing
ii) The Weekly Abstract report (wa.txt) is checked at weekly intervals to ascertain that
there is no balance in any of the Deposits and Loans related accounts as also in any
account which is not supposed to be used by CCPC under normal circumstances.
iii) IBTS entries are responded to promptly and there are no long outstanding entries.
iv) a. Reversing entries are passed only by In-charge of the Centre and reported to the
controllers.
b. Record of reversing entry is maintained.
H. DAK RECEIVING / OPENING / DISTRIBUTION / DISPOSAL

i) Letters received are opened in the presence of authorised official, entered in Inward
Mail Register and distributed against acknowledgements.
ii) Prompt disposal is ensured. Disposals are marked of with date under authentication.
iii) Telegrams/ FAX sent/ received are properly recorded with particulars of disposal.
iv) Outward Mail is entered in a register along with full particulars and authenticated.
v) Postage register / Courier register / Registered post register / Ordinary post register
maintained.
vi) Contents of envelope are recorded properly.
vii) Postal / Courier Receipt acknowledged by authorised courier agent) numbers are
recorded in the Register
viii) Letters returned undelivered are recorded and held in the custody of authorised
official
ix) Proof of Delivery (POD) are collected & Courier bill payment is made only after
disallowing bill claimed for the delay in delivery as per terms of agreement
3. CUSTOMER SERVICE
i) Whether all complaints are:
(a) promptly acknowledged and recorded
(b) whether the complaint has been disposed of to the satisfaction of the customer and
the fact recorded
(c) all complaints are recorded.
(d) follow up of cases/suits filed against the Bank, (COPRA, OMBUDSMAN)
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(e) Extracts from SBI Compensation Policy (Banking Services) - system established
whereby the Bank compensates the Customer in the event of deficiency in service on
the part of the Bank or any act of omission or commission directly attributable to the
Bank - are available to the Customers
ii) Participation in / conduct of General body meetings/ standing committee meetings
of clearing house is effective, and suggestions received are properly analyzed and
implemented. Proper liaison/ rapport is maintained with RBI/ other banks/ branches.
iii) Level of support extended to local branches in settling their issues for improvement
of customer service at their end.
5. GENERAL MANAGEMENT
A. GENERAL ADMINISTRATION
i) In charge of the centre is exercising effective control.
ii) Staff are adequately trained including ongoing on-the-job capsules and e-learning
to meet emerging needs of the business environment.
a) Staff members are punctual and adhere to leave discipline.
b) Detailed screening exercise has been done in respect of all staff as per extant
guidelines on 'Know Your Employee' (KYE)
iii) Awareness of important aspects of Housekeeping, Customer Service and Audit
Reports amongst staff and officials, is observed.
a) All the Circulars and Communications of the Bank are circulated amongst staff
members.
iv) Staff meetings are held regularly and meaningfully.
B. CONTROLLER’S SUPERVISION
i) Controllers visit the Unit at periodic intervals and record their observations using the
Online Multilevel MIS facility.
ii) Controllers are sensitizing the Centre about the High & Medium Risk areas brought
out in various audit reports. Support for rectification of deviations and follow up to
ensure against recurrence is observed. Controllers are verifying compliances /
rectifications of irregularities brought out in various audit reports to prevent recurrence
on a sample check basis during their visit.
iii) Risk History & Operational Risk – Loss Collection Data
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a) Risk Register (as per Operational Risk Management Department (ORMD)
circular letter is maintained to record historical perspective of kind of risks /
types of losses, potential risk events, near miss history, loss history, etc.
b) Entries related to OR losses have been put through designated GL accounts.
c) All OR loss incidents are reported.
d) Reporting of legal losses, if any. e. Retention of vouchers and documents as
per Bank’s Policy.
iv) Near Miss Events
a) All incidents of Near Miss Events have been reported
b) Formulate & implement new mitigation measures, if any.
c) Effective implementation of existing mitigation measures
v) Business Continuity Plan (BCP)

a) Updated BC Plan / DR Plan, duly approved by controller, is in place.
b) BC Plan / DR Plan is being reviewed annually.
c) BCP / DRP testing is being conducted annually.
d) Level of awareness of staff on BCP / DRP.
e) Invocation of BCP / DRP at the time if disruption.
C. DEALING WITH AUDIT REPORTS
(i) Closure status and adherence to time frame - Corporate Audit
(ii) Closure status and adherence to time frame - Spot Audit
(iii) Closure status and adherence to time frame - RBI Audit
(iv) Quality and extent of rectification during the course of Inspection/ residual
irregularities after the closure of previous reports.
(v) Instances of recurrence of irregularities not observed
D. PREMISES & FURNITURE

i) Fixed Assets Register/Ledgers are maintained properly, and depreciation entries
passed as per LHO guidelines. All furniture & fixtures are numbered, accounted for.
ii) A proper record of fixed assets and furniture supplied to official’s residences is
maintained; all items supplied adheres to eligibility norms. Annual possession
certificate is obtained in all cases.
iii) Formalities relating to disposal of old and discarded furniture / fixed assets are
meticulously followed.
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iv) Annual verification of Fixed Assets items is carried out.
v) Formalities regarding renewal of lease (and registration of lease deed, where
applicable) complied with.
vi) Infrastructure: adequacy of space, proper layout and provision of amenities (Xerox
machine, fax machine, computer peripherals, telephone, Internet connection and IP
phone, Franking machine etc.)
vii) Fixed Assets Balance in CBS balanced with IFAMS at monthly intervals
2.4. External Compliance / Self-Audit

1. RBI / GOVT. GUIDELINES
i) TDS is recovered in all applicable cases including rent paid on lease premises, hiring
of Taxies, etc.
a) TDS has been deposited into the Govt account as per regulation and within the
stipulated time
b) TDS returns has been filed with the respective Govt departments
c) Service Tax are collected in all applicable cases and remitted to respective Govt
departments
d) Cen VAT credit, if any, has been received from the respective Govt
departments
e) In case of owned premises, property tax is paid up to date.
ii) Mitra committee (on legal aspects of Bank Frauds-Legal compliance certificate)
are complied with.
iii) Instructions from RBI/Govt. are recorded in the prescribed register and
implementation is ensured and recorded.
iv) Official Language Policy implemented as per guidelines.
v) Name of the authorised official under RTI Act is displayed
(vi) A booklet on Code of Fair Banking Practice is held
(vii) Names and addresses of the Controllers / Banking Ombudsman is displayed
(viii) Other mandatory notices as per the latest RBI Circular are displayed
(ix) Outsourcing arrangements, if any, are made with the approval of appropriate
authority and the agreements are entered in Bank's approved format
2. SELF-AUDIT
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(i) Self Audit has been carried out at half yearly intervals
(ii) Self Audit scores have been validated by the Controller.
----------
KEY LEARNINGS
CPC is an independent accounting unit in the CBS and has its own MICR code. it
functions as a Service Branch and represents the Bank in the Clearing System. In
CCPC there are various role holders and they are having different reporting
relationships. The categorization of the incumbency of CCPC Head is dependent on
the total number of the staff in the CCPC.
The categorization of the incumbency of Shift In-charge will be one step below that of
CCPC Head. Officer JMG Scale I may not be posted at CCPC as their passing powers
are the same as of Special Assistants. The ratio of officers to clerical staff should be
2:3.
The CCPC head the leader of the Clearing CPC team. His/her basic role is to create
and maintain an overall environment which supports the highest level of efficiency.
He/she is responsible for achieving the objectives and maintaining the standards set
for the CCPC. He/she is also responsible for executing CCPC specific policies and
procedures. He/she monitors and controls the functioning of various sections in the
CCPC.
For the support of CCPC head there are officers who hold the responsibilities of the
various sections like, In-charge of morning and afternoon shifts, System section In-
charge of morning and afternoon shifts, Data processing section In-charge of morning
and afternoon shifts, Mail section In-charge, Help desk In-charge, General
administration section In-charge and Data processing officer and they need some
skills to perform their roles.
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Operational Risk Management at CCPC is the responsibility of all the functionaries/
role holders at the centre. It is divided into different segments and each role holder in
CCPC is required to ensure adherence to laid down systems & procedures. Different
aspect of Operational Risk Management (Back Office Operations, control systems,
customer service, general management), External Compliance (Compliance Risks)
and Self Audit should be ensured by all the employees working at CCPC.
CHECK YOUR PROGRESS
Q1: CCPC can be headed by

a) DGM/AGM
b) AGM/CM
c) CM/Manager
d) GM/DGM
Q2: The categorization of the incumbency of Shift In-charge will be

a) one step below that of CCPC Head.
b) Two steps below that of CCPC Head
c) It can be of any incumbency
d) None of these
Q3: What is the role of Data Processing Officer?

a) Completion of the data processing work allotted by the Shift/Section In-charge
b) Maintain the highest level of accuracy
c) Achieve or exceed productivity benchmarks
d) All of the above
Q4: Who is primarily responsible for maintenance related activities of Hardware

and Software to facilitate uninterrupted and efficient functioning of all the
systems across the shifts?
a) System Section In charge for Morning shift
b) System Section In charge for After noon shift
c) DATA PROCESSING SECTION IN-CHARGE, MORNING SHIFT
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d) CCPC Head
Q5: Who is primarily responsible for efficient and timely execution of all
clearing/collection related basic activities (shop floor activities) in the
morning shift?
a) Morning Shift In-Charge
b) After noon shift in-charge
c) CCPC Head
d) All of the above
Q6: Morning Shift In-charge of CCPC reports to

a) DGM (B&O)
b) CCPC Head
c) Afternoon Shift In-charge
d) General Administration Section In-charge
Q7. CCPC Head reports to

a) DGM (CS&OPS)
b) GM (Network)
c) RM (RBO)
d) CGM (Circle)
Q8. Which of these is not a basic objective behind establishing CCPC?

(a) To shift all non-customers facing activities related to paper-based clearing.
(b) To shift electronic clearing and collection away from branches.
(c) To take a credit decision in respect of inward instruments.
(d) To work in a centralised manner with highest level of efficiency, accuracy and
safety.
Q9. Which of the following statement(s) is/are correct in respect of OLRR?

(a) Insufficient balance will result in OLRR.
(b) Insufficient DP will result in OLRR.
(c) Both the statements are correct.
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(d) None of the statements is correct.
Q10. In outward clearing CCPC receives

(a) Images of pay in slips only
(b) Images of outward clearing instruments only
(c) Images of pay in slips and outward clearing instruments
(d) None is correct
Q11. Who is responsible to ensure timely generation/transmission of posting

files in CCPC?
(a) Morning shift In-charge
(b) Evening shift In-charge
(c) CCPC Head
(d) In-charge Data Processing Section
Q12. Please check whether the statements are true or false:

(a) It is to be ensured that the courier carries the locked clearing bags through
approved mode of conveyance.
(b) Entry of outsiders is allowed in the processing zone.
(c) Being a processing centre, there is no laid down norms of TAT for CCPCs.
(d) It is the responsibility of CCPC Head to ensure that approved BCP/ DRP is
there on record to be reviewed half yearly.
Key-
Que. 1 2 3 4 5
Ans. b) a) d) a) a)
Que. 6 7 8 9 10
Ans. b) a) c) c) c)
Que. 11 12
Ans. a) True- a), d)
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CASE STUDY
There are 28 staff posted in a CCPC. Mr. Khanduja is posted as CCPC Head. Mr.
Gagan is posted as Morning Shift In-Charge in CCPC and is primarily responsible for
efficient and timely execution of all clearing/collection related basic activities in the
morning shift. Mr. Kunal is posted as Afternoon Shift In-Charge. Mr Mittal is posted as
Mail section In-Charge and is responsible for proper recording and disposal of dak
including clearing and collection instruments coming into and going out of CCPC.
1. What should be the incumbency of CCPC head?
i) MMGS-III
ii) SMGS-V
iii) MMGS-II
iv) SMGS-IV
2. Which of the following works has to be specifically performed by Mr.

Khanduja?
i) To ensure timely inflow of instruments and data files from all sources.
ii) To ensure that all the activities of a day are completed before EoD.
iii) To monitor performance levels to ensure that the overall productivity benchmarks
laid down are achieved consistently.
iv) To maintain keys to the locks on courier bags and ensure that all instruments are
received from branches in locked bags only.
3. Which of the following work has to be performed by Mr. Gagan as per his
role?
i) To ensure strict adherence of the laid down processes, systems and procedures.
ii) To monitor performance levels to ensure that the overall productivity benchmarks
laid down are achieved consistently
iii) To ensure that all the activities of a day are completed before EoD.
iv) To ensure timely inflow of instruments and data files from all sources for different
types of clearing.
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4. Who will ensure strict adherence of the laid down processes, systems and
procedures
i) Mr. Mittal
ii) Mr. Khanduja
iii) Mr. Gagan
iv) Mr. Kunal
5. Who will ensure that all the activities that need to be completed before EoD
have been completed.
i) Mr. Kunal
ii) Mr. Mittal
iii) Mr. Gagan
iv) Mr. Khanduja
Answers-
Que. 1 2 3 4 5
Ans. iv) iii) iv) ii) i)
RELEVANT CIRCULARS
NA
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CHAPTER-3A: CHEQUE TRUNCATION SYSTEM
Learning Objectives: In this chapter we will learn about different aspect of Cheque
Truncation System (CTS) in the country viz., its process, benefits and steps taken by
RBI for prevention of frauds related to clearing of cheques. The CTS 2010 Standards,
Grid based CTS Clearing, CTS enabled Cheque Deposit Kiosks NCR Web CTS
Software along with screenshots with step-by-step process and other miscellaneous
topics have also been discussed for better understanding of the users. In the second
part of the chapter, we have discussed National Automated Clearing House (NACH),
its different modes namely NACH Credit and NACH Debit, Mandate Management
System, E-Mandate, Dispute Management System and Dispute Resolution
Mechanism. As Operational Risk Management is a vital tool to improve the efficiency
of the clearing as also to minimise the risk of customer complaints and frauds, value
statements with regard to Outward Clearing, Inward Return Clearing and CTS Inward
Clearing and Outward Returns along with Irregularities pointed out in RFIA have also
been discussed for the benefits of those working in CCPCs.
3.1. CTS implementation

Truncation is the process of stopping the flow of the physical cheque by the presenting
bank to the paying bank. An electronic image of the cheque is transmitted to the paying
branch through the clearing house, along with relevant information like data on the
MICR band, date of presentation, presenting bank, etc. Cheque truncation thus
obviates the need to move the physical instruments across bank branches, other than
in exceptional circumstances, for clearing purposes. It reduces cost and the time
required for collection, including reduction in the scope of loss of instruments in transit
resulting in better customer service.
Despite RTGS and NEFT facilities, cheques continued to be the prominent mode of
payments in the country. Reserve Bank of India therefore decided to focus on
improving the efficiency of the cheque clearing cycle. Offering Cheque Truncation
System (CTS) was a step in this direction. Apart from other benefits, it removed
reconciliation-related and logistics-related problems, thus benefitting the system as a
whole. CTS has been implemented in New Delhi (Feb 2008), Chennai (Sept 2011)
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and Mumbai (April 2013). After migration of the entire cheque volume from MICR
system to CTS, the traditional MICR-based cheque processing has been discontinued
across the country.
It is a grid-based approach and entire cheque volume in the country which was earlier
cleared through MICR Cheque Processing locations is consolidated into the three
grids, with their headquarters in New Delhi, Chennai and Mumbai. The grid related
activities are handled by Grid Headquarter CCPC, i.e., Delhi, Chennai and Mumbai.
Each grid provides processing and clearing services to all the banks under its
respective jurisdiction. Banks, branches and customers based at small/remote
locations falling under the jurisdiction of a grid would be benefitted, irrespective of
whether there exists a formal arrangement for cheque clearing or otherwise. The
illustrative jurisdiction of the three grids are indicated below:
• Northern Grid: National Capital Region of New Delhi, Haryana, Punjab, Uttar
Pradesh, Uttarakhand, Bihar, Jharkhand, Rajasthan and the Union Territory of
Chandigarh.
• Western Grid: Maharashtra, Goa, Gujarat, Madhya Pradesh and Chhattisgarh.
• Southern Grid: Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu,
Odisha, West Bengal, Assam and the Union Territory of Puducherry.
3.2 Benefits of Grid Based CTS

- over Speed Clearing to the customer
Under grid-based Cheque Truncation System clearing, all cheques drawn on bank
branches falling within the grid jurisdiction are treated and cleared as local cheques.
Cheque collection charges including Speed Clearing Charges should not be levied if
the collecting bank and the paying bank are in same CTS grid even though they are
located in different cities.
Only Instruments complying with CTS-2010 standards should be presented for

clearing through CTS for realisation. Customers to ensure the use of image-friendly-
coloured-inks while writing the cheques. The customers, who are used to receiving the
paid instruments (like government departments) would also receive the cheque
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images. Cheques with alterations in material fields (explained in detail later) are not
allowed to be processed under the CTS environment.
- to customers of banks
CTS brings elegance to the entire activity of cheque processing and clearing. The
benefits from CTS could be summarized as follows –
• Shorter clearing cycle: The Customers get benefited in their cheques realised faster
as clearing on T+1 basis is possible in Cheque Truncation System (CTS).
• Superior verification and reconciliation process
• No geographical restrictions as to jurisdiction
• Operational efficiency for banks and customers alike
• Reduction in operational risk and risks associated with paper clearing
• No collection charges for collection of cheque drawn on a bank located within the
grid.
- to the banking system

Grid based CTS provides significant cost savings. Consolidation of clearing locations
into a few grids minimises the investment in MICR machines and the related AMC
costs. Banks will benefit from economies of scale as the grid CTS obviates the need
for establishing inward cheque processing infrastructure at various clearing locations.
With the merger of many local clearing houses with CTS grids, the settlements which
were earlier spread across numerous clearing house locations have been subsumed
into a single settlement, thereby significantly reducing the liquidity requirements for the
banks. The banks have additional advantage of reduced reconciliation and clearing
frauds.
CTS also facilitates reduction in the cheque processing fee, reduction in operational
overhead, elimination of clearing differences and reconciliation issues etc.
In nutshell we can say:

➢ Efficient and streamlined processing of images.
➢ Elimination of transportation of physical cheque.
➢ Shorter clearing cycles.
➢ Extended cut off time for cheque submission.
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➢ Real time clearing positions available to banks throughout the day.
➢ Economies of scale with centralized National Image Archive.
➢ Automated inward signature verification process.
➢ Fraud prevention measures.
➢ Kiting made difficult.
➢ Black-listed accounts flagged.
➢ Built in anti-money laundering features.
3.3 Image specifications in CTS / Uniqueness of Images

CTS in India mandates the use of prescribed image specifications only. To ensure
only images of requisite quality move in the CTS processing cycle, there is a rigorous
quality check process at the level of the Capture Systems and the Clearing House
Interface (of the presenting bank).
Further, "CTS-2010" prescribes certain mandatory and optional security features to be

available on cheques, which adds to the uniqueness of the images.
Imaging of cheques can be based on various technology options. The cheque images
can be Black & White, Grey Scale or Coloured. These have their associated
advantages and disadvantages. Black & White images are light in terms of image-
size, but do not reveal all the subtle features that are there in the cheques. Coloured
images are ideal but increase storage and network bandwidth requirements. Grey
Scale images are mid-way. CTS in India use a combination of Grey Scale and Black
& White images. There are three images of each cheques that need to be taken - front
Grey Scale, front Black & White and back Black & White.
3.4 Cheque Standardisation and CTS 2010 Standard

Standardisation of cheque forms (leaves) in terms of size, MICR band, quality of
paper, etc., was one of the key factors that enabled mechanisation of cheque
processing. Growing use of multi-city and payable-at-par cheques for handling of
cheques at any branches of a bank, introduction of Cheque Truncation System (CTS),
increasing popularity of Speed Clearing, etc., were a few aspects that led to
prescription of certain common minimum-security features in cheques printed, issued
and handled by banks and customers uniformly across the banking industry.
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Accordingly, certain benchmarks towards achieving standardisation of cheques issued
by banks across the country have been prescribed like – quality of paper, watermark,
bank’s logo in invisible ink, void pantograph, etc., and standardisation of field
placements on cheques. In addition, certain desirable features have also been
suggested to be implemented by banks based on their need and risk perception. The
homogeneity in security features acts as a deterrent against cheque frauds, while the
standardisation of field placements on cheque forms enables straight-through-
processing by use of optical / image character recognition technology. The benchmark
prescriptions are collectively known as "CTS-2010 standard".
3.4.1 CTS 2010 Non-Compliant Cheques

Non-CTS cheques are not to be accepted in the CTS clearing System w.e.f. January
1, 2019. The separate clearing session has been discontinued from December 31,
2018. Express Cheque Clearing System (ECCS) has since been discontinued as all
Non MICR clearing centres have been closed and migrated to CTS.
3.4.2. Process Flow in Cheque Truncation System

In CTS, the presenting bank (or its branch) captures the data (on the MICR band) and
the images of a cheque using their Capture System (comprising of a scanner, core
banking or other application) which is internal to them and have to meet the
specifications and standards prescribed for data and images.
To ensure security, safety and non-repudiation of data / images, end-to-end Public

Key Infrastructure (PKI) has been implemented in CTS. As part of the requirement,
the collecting bank (presenting bank) sends the data and captured images duly signed
digitally and encrypted to the central processing location (Clearing House) for onward
transmission to the paying bank (destination or drawee bank). For the purpose of
participation in the presenting and paying banks are provided with an interface /
gateway called the Clearing House Interface (CHI) that enables them to connect and
transmit data and images in a secure and safe manner to the Clearing House (CH).
The Clearing House processes the data, arrives at the settlement figure and routes
the images and requisite data to the paying banks. This is called the presentation
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clearing. The paying banks through their CHIs receive the images and data from the
Clearing House for payment processing.
The paying bank’s CHIs also generates the return file for unpaid instruments, if any.
The return file / data sent by the paying banks are processed by the Clearing House
in the return clearing session in the same way as presentation clearing and return data
is provided to the presenting banks for processing.
The clearing cycle is treated as complete once the presentation clearing and the
associated return clearing sessions are successfully processed. The entire essence
of CTS technology lies in the use of images of cheques (instead of the physical
cheques) for payment processing.
3.4.3 Alterations/ corrections on cheque forms

No changes/ corrections can be carried out on the cheques (other than for date
validation purposes, if required). For any change in the payee’s name, courtesy
amount (amount in figures) or legal amount (amount in words), fresh cheque leaves
should be used by customers. This helps banks in identifying and controlling fraudulent
alterations.
3.4.5. Precautions to be taken by the banks/customers to avoid frauds

Banks should exercise care while affixing stamps on the cheque forms, so that it does
not interfere with the material portions such as date, payee’s name, amount and
signature. The use of rubber stamps, etc, should not overshadow the clear
appearance of these basic features in image. It is necessary to ensure that all essential
elements of a cheque are captured in an image during the scanning process and banks
/ customers have to exercise appropriate care in this regard.
3.5 Fraud Prevention Measures

Cheque related frauds like, counterfeiting of cheque, material and chemical alterations
are on the rise recently. Though advanced technology and issuance of CTS2010
standard cheques having various security features can contain frauds to a large
extent, operating staff have to be aware of fraud prevention techniques and vigilant to
plug the loopholes.
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1.While processing outward clearing instruments, cheques are first scanned through
CTS scanner and thereafter teller does data entry of beneficiary account number
and amount of the cheque. Rest of the information on the cheque viz. cheque
number, MICR code of the paying branch, instrument type and Short Account
Number (SAN) are scanned and read by the MICR reader of the CTS scanner.
2. Sometimes, MICR reader fails to read these values (either single character or
multiple characters or even entire MICR band). Such instruments are shown as
MICR Reject in the CTS and the teller is required to update the corresponding
missing values manually in the CTS application from the physical cheque. Such
failures can happen for two reasons, either cheque is fake/counterfeit or MICR band
has been damaged due to mishandling of the instrument. Care needs to be
exercised while stamping cheque forms, so that it does not interfere with the
material portions such as date, payee’s name, amount, signature and MICR Band.
3. Whenever, teller makes any changes in MICR values in CTS application, the
application updates one field, “MICR Repair flag” in the system and this information
is passed on to NPCI and eventually to the paying bank/branch along with the
cheque image/data which acts as an alert to the paying bank to exercise due
caution while paying such instruments. This flag clearly indicates the field which has
been amended, i.e., cheque number, MICR code of the paying branch, instrument
type and Short Account Number (SAN).
4. While updating MICR values in outward clearing, the tellers should be vigilant and
careful in physical verification of the cheque and should ensure the following:
i) Verify the reason for MICR reject.
ii) All the CTS2010 features of the physical instrument as advised vide e-Circular No.
NBG/BODGB/78/201213 dated 30th November 2012 are in order.
iii) Pass the instrument through all the validation/checking processes viz. Water
Droplet test, UV scanning, Watermark, VOID Pantograph etc., as advised vide
above referred e-Circular.
iv) The transaction is in order and account for which the cheque is being collected is
active.
v) Amount of the cheque presented is not inconsistent with history of transactions in
the account.
6. In case instruments are sent as Paper to Follow (P2F) in prescribed scenarios as
per existing regulations, the responsibility of ensuring the genuineness of the
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instrument remains with the presenting Bank only. In recent fraud cases wherein
even though the physical instrument was forwarded to the paying banker as P2F,
RBI held that the onus of ensuring genuineness of the instrument lies with the
presenting Banker only.
7. In case of inward clearing, where cheques drawn by our customers are presented
for payment, status of “MICR Repair flag” is also received and CTS application
generates a report showing details of such cheques where MICR Band values have
been edited. CCPC officials handling inward clearing processing should exercise
due caution while paying such cheques and ensure the genuineness of the
transaction.
8. In view of the foregoing, branches/CCPCs to exercise due caution while processing
cheques involving MICR code repair in outward as well as inward CTS clearing.
8. To minimize the risk of cheque related fraud, a new security feature in existing Multi
City Cheques (CTS-2010) is introduction of reverse printing of account number.
This is an overt feature and can be seen by naked eyes. A black box is printed after
incorporating the account number in reverse. All new MCC cheque book printed by
security printers will contain this feature along with existing security features. All
existing cheques books without this feature should be continued to be honoured as
per existing instructions. The operating functionaries at Branches / CCPCs should
take care of the new feature at the time of payment of cheques.
3.5.1 UV Band in Variable Fields

In order to further enhance security features and minimize the risk of cheque related
fraud, a new security feature of UV Band in variable fields (i.e., payee’s name, Amount
in words, Amount in figure and Account Number) is introduced in MCC (CTS- 2010)
along with the other existing security features. Under this feature, UV Band is
incorporated under the variable fields and any alteration made in these areas would
be visible, when checked under the UV Lamp.
After introduction of this feature our cheques are having 12 security features including
9 mandatory features as per CTS-2010 standards. The operating functionaries at
Branches/ CCPCs should take care of the new feature at the time of payment of
cheques in all cheques printed after the date of launch (22.08.2020).
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All new MCC cheque books printed by security printers will contain this feature along
with all other existing security features. Printing date is printed on each leaf and can
be seen on the extreme left side of cheque leaf printed along with the security printer
name and CTS-2010. All existing cheques printed before the date of launch without
this feature should be continued to be honoured as per existing instructions.
{Circular No.: NBG/BRNWM-BRANCHES/3/2020– 21dated 13th Aug 2020}
3.6 Image Quality Assessment (IQA) Failures :

Reduction of Paper to Follow (P2F) Volume (Ref: e-Circular No. 1750/2018-19
dated 27.03.2019)
Cheque Truncation System (CTS) clearing is based on transmission of instrument

images and data. Instruments are scanned and should pass the Image Quality
Assessment (IQA) test before onward transmission to the drawee bank. Instruments
which fail the IQA test are presented physically through Paper to Follow (P2F) process.
2. RBI has advised that presenting banks are required to send physical instrument
(paper) along with scanned images to drawee banks in the following situations only:
a) Instruments drawn by State Government Departments
b) Images which fail the IQA test
c) When the instrument is returned by the drawee bank with reason code 39
(image not clear present again with paper) or reason code 40 (present with
document), i.e., request by drawee bank for physical instruments.
3. RBI has advised banks that IQA failures and the resultant P2F presentations in CTS
clearing should be brought down to 0.30% of the presentments.
4. RBI has observed that some banks are deliberately marking instruments as P2F.
Such physical movement of instruments is resulting in process inefficiency and adding
to the operational costs. Viewing the same seriously, they have warned that penalty
shall be imposed on such deliberate P2F cases. It has been further advised that
instruments should not be sent by the presenting bank in P2F on suomoto basis
because of doubt about the genuineness of the instruments. Moreover, in case of
disputes, mere sending of the physical instruments as P2F to the drawee bank shall
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not absolve the presenting bank of its responsibilities related to physical verification of
the instruments submitted for clearing.
5. In view of the above, Branches/offices should take the following measures to reduce
the P2F volume and avoid imposition of penalty by RBI:
i) Maintenance of the CTS scanner be ensured through regular cleaning (with
the cleaning kit) and servicing at regular intervals.
ii) IQA failed instruments be rescanned for successful scanning.
iii) Not to send instruments as P2F deliberately where IQA test is passed and
physical instruments have not been requested for by the drawee bank.
iv) Remove perforated portion of instruments (specifically in case of interest and
dividend warrants), if any, before scanning.
v) IQA failure is also caused by skewness of the images, tilting of the physical
cheque at the time of scanning or scanning of instruments that are folded.
Necessary corrective action be done before rescanning the cheque.
vi) Educate customers regarding proper handling of cheques.
Discontinuation of the requirement of Paper to Follow (P2F) for State
Government Cheques
As per RBI Notification dated 20th June 2019, the requirement of forwarding the paid
State Government cheques in physical form (commonly known as P2F) to the State
Government Departments/Treasuries has been dispensed w.e.f. 1st July 2019.
3.7 Cheque Deposit Kiosk

CTS enabled Cheque Deposit Kiosk
Our Bank is installing CTS enabled Cheque Deposit Kiosks at its identified branches
carrying high volume of Cheque Deposit for Outward Clearing transactions. A total of
2500 CTS enabled Cheque Deposit Kiosks will be installed at branches PAN India.
The CTS enabled CDKs are proposed to be installed at branches which are CTS
enabled and having daily average number of cheques more than 50.
YONO Linked with Smart Cheque Deposit Kiosks

A new functionality in YONO mapped to the Cheque Deposit Kiosks (CDK) has been
introduced which would allow the customers to perform data entry at their convenience
in YONO leading to enhanced user experience. This would increase customer
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migration to CDKs which would further lead to more eco-friendly and operationally
efficient process.
Benefits of Smart CDKs:

1. Enhanced customer experience as time required to submit cheques will reduce
drastically when compared with the CDKs used in standalone mode.
2. Reduction in queues in front of CDKs.
3. Increased migration of customers carrying bulk cheques to CDK.
A detailed SOP of the revised process has been attached as Annexure to Circular No.:
R&DB/S&DB-YONO/45/2019 – 20 dated 14th Feb 2020
3.8 Positive Pay System (PPS) for Cheque Payments

Reserve Bank of India (RBI) introduced Positive Pay System (PPS) for Cheque
Truncation System (CTS) (vide their Circular No. RBI/2020-21/41 DPSS.CO.RPPD.
No.309/04.07.005/2020-21 dated 25th September 2020) w.e.f. 1st January 2021. The
concept of Positive Pay involves a process wherein the customer who is issuing
cheque informs the drawee bank the details of cheque issued like Cheque number,
date of issue, amount, name of payee/beneficiary etc., which are stored in the system.
When the said cheque is presented for payment, the details in respect of the cheque
stored in the system are cross-checked with the corresponding details on the
presented physical cheque/image of cheque. RBI has advised that only those cheques
which are compliant with above instructions will be accepted under dispute resolution
mechanism at the CTS Grids.
Bank has implemented the RBI directives on Positive Pay System and provision of the
facility to all our customers having cheque operated accounts. The facility is to be
provided to customers through our branches as well as alternate channels like Internet
Banking (both CINB & RINB), Mobile Banking, YONO, SMS etc. The facility is
implemented for clearing cheques as well as cheque payments over the counter (both
cash & transfer). The procedure is as under:
a) For Registration of the facility
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Customers can register for the Positive Pay facility by submitting an
application/consent at any of our branches. Registration for Positive Pay System is not
mandatory, and customers can register for the facility at their discretion. Customer
needs to select an account level limit for the facility. A front-end screen has been
developed by CBS for making registration for Positive Pay System PPS (Screen No.
51066). In this screen teller can create, amend or deactivate registration for Positive
Pay System for a customer. Registration has been enabled through alternate channels
like, Internet Banking (both CINB & RINB), Mobile Banking (Yono Lite) and YONO
(Mobile app).
b) For providing cheque details after registration

After registration, customers can provide details of cheques issued/to be issued,
through branches/alternate channels. In case the Positive Pay facility is opted by the
customer, the details of all the cheques issued/to be issued by the customer equal to
and above the account level limit selected must be provided by the customer. Another
front-end screen has been developed by CBS for capture of cheque details (Screen
No. 51075). Teller at branch need to input the cheque details provided by the customer
in this screen. In all the cheque payment screens at front end, once details are input
by the teller, the teller need to click “Fetch Lodgement Details” button wherein the
system will fetch cheque date and payee name, if available and display it on the screen
for cross checking. Teller can proceed only after fetching the details. Other validations
will be done at the back end in CBS.
Business Rules for payment of cheques at branches/CCPCs

Account Details of Payment Processing
Level Lodgement At Branches At CCPCs
Status
Customer Cheque issued Teller to click Teller to click “Fetch
has for “Fetch Lodgement Lodgement Details” button,
registered amount Details” button, verify account level limit, close
verify account level
for below popup screen and
limit, close pop-up
Positive account level screen and transmit.
Pay limit transmit.
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System Cheque Teller to click Cheque will be pushed to OLRR.
issued for “Fetch Lodgement CCPC to process this
amount equal Details” button, transaction. Teller to
to or above proceed as detailed click “Fetch Lodgement Details”
account level in paragraph 4 button, proceed as
limit but below, close the detailed in below, close the pop-
details not pop-up screen and up screen and transmit. ‘Q’ will
provided/ transmit. ‘Q’ will be be generated to checker
details generated to with capability level of
mismatch checker with 7 and above.
capability level of 7
and above.
Customer Cheque Teller to click To be processed as
has not issued for “Fetch Lodgement per existing flow
registered any amount Details” button, without validation with
for close pop-up Positive Pay System
Positive screen and
Pay transmit.
System
No cheque should be returned, if otherwise in order, till the Positive Pay System
stabilises, for the only reason of mismatch with/want of PPS data. In case details are
not provided/details mismatch, branch/CCPC should exercise caution, contact the
customer over registered mobile number and get confirmation regarding issuance of
cheque with details, record the same and honour the cheque if otherwise in order
unless specifically advised by the customer not to honour the same as is being the
practice at present for cheques of Rs.5,00,000/- and above. In cases where the
customer could not be contacted, branch/CCPC should exercise due diligence and
honour the cheque if otherwise in order as advised vide e-Circular No. R&DB/BOD-
GB/79/2018-19 dated 17.10.2018.
Under Cheque Truncation System (CTS) inward Clearing, those cheques which fail
the Positive Pay validations in CBS would be sent to Online Reject Referral (OLRR).
These OLRR entries should be handled by concerned CCPC and are expected to
process these entries as mentioned in paragraph 4 above. Separate report for OLRR
entries is being provided daily to CCPCs. Home branch to ensure that the OLRR
entries pertaining to their branches are properly dealt with by the CCPCs.
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Wide publicity should be undertaken for creating awareness among customers, even
though the PPS is not made mandatory, customers should be advised that this is a
fraud prevention measure and is in their own interest to register & provide cheque
details under the system in terms of RBI directives. The Bank may fix a mandatory
limit in due course as suggested by RBI.
POSITIVE PAY SYSTEM – R&DB/AGNYBKG-CTS/8/2020 - 21 dated 23rd Dec 2020
STANDARD OPER. PROCEDURE R&DB/AGNYBKG-RBI-I/9/2020 - 21 dated 30th Dec 2020
3.9 NCR WEB CTS Software

Pre-requisites
1. CTS Cheque Scanner should be available and installed at the Branch

2. Maker / Checker IDs should be created in NCR
• LOGIN TO NCR WEBSITE BY MAKER (URL- https://ctswgout.sbi)
• MAIN MENU FOR MAKER
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• SELECT REMOTE CAPTURE WITH YOUR BRANCH SCANNER MODEL
(LS150/TS240/PANINI)
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• INITIALIZE – TO INITIALIZE THE SCANNER AND CHECK HARDWARE
• CAPTURE – TO CREATE NEW BATCH AND START SCANNING

CHEQUES
• STOP – TO STOP SCANNING CHEQUES
• END BLOCK – TO END CREATED BATCH AFTER ALL CHEQUES HAVE

BEEN SCANNED
• EJECT – TO CLEAR SCANNER JAM
• QUIT – TO QUIT SCANNING AT ANY POINT
• SELECT TYPE –NORMAL-PRESENT for NORMAL Cheques
• I-REPRESENT PAPERTOFOLLOW (FOR CHQ RETURN WITH ‘PRESENT WITH

PAPER’)
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• Please remember that selecting I-REPRESENT PAPERTOFOLLOW will present all
the scanned cheques in P2F so please ensure sending physical cheques to Drawee
Bank in P2F session after “Paper Tracking” is done through checker.
• SELECT CAPTURE AND THEN SELECT BANK, BRANCH, CLEARING TYPE,

BATCH TYPE AND CREATE BATCH. AFTER CREATE BATCH, CLICK CLOSE,
THEN SCANNING WILL START.
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• ALL CHEQUES WILL BE SCANNED AND REFLECT LIKE THIS.
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• MEANING OF STATUS REFLECTED BEFORE CHEQUE DETAIL.
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• MEANING OF STATUS REFLECTED BEFORE CHEQUE DETAIL.
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• PRESS END BLOCK AFTER COMPLETING ALL EXERCISE.
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• NOW MAIN MENU WILL COME AGAIN. NOW START REJECT REPAIR ENTRY.
SELECT REJECT REPAIR\BATCH BALANCING
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• SELECT ONE BY ONE BATCH AND ENTER REJECT REPAIR ENTRY.
• ENTER AMOUNT IN EACH CHEQUE ENTRY AND DEPOSIT SLIP ENTRY. TOTAL
SHOULD BE BALANCED BEFORE SUBMIT BATCH.
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• YOU CAN SELECT AND DELETE ENTRY IF REQUIRED FROM THIS
SCREEN.AFTER BATCH ENTRY BALANCED, CLICK ON SUBMIT BUTTON TO
COMPLETE MAKER PROCESS.
• NOW CHECKER CAN LOGIN FOR SUPER BALANCING WORK
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• MAIN MENU FOR CHECKER ID.
• SUPER BALANCING SCREEN. IF ALL ENTRIES ARE OK THEN SIMPLY PRESS

CLICK HANDLE AND MOVE TO NEXT CHEQUE ONE BY ONE AND SUBMIT
BATCH.
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• IF YOU WANT TO MODIFY ANY CHEQUE THEN SELECT ROW, CLICK ON MICR
BUTTON AND PRESS YES. BATCH WILL BE RETURNED AND MAKER HAS TO
CORRECT THIS ENTRY AND RESUBMIT IT. THEN DO SUPER BALANCING AGAIN
IN CHECKER ID.
REPORTS:
• BRANCHES HAVE TO DOWNLOAD AND SAVE ALL REPORTS ON DAILY BASIS IN

MORNING.
• BRANCHWISE SETTLEMENT REPORT – CHEQUES IN THIS LIST WILL BE CLEARED ON

NEXT WORKING DAY.
• BRANCHWISE NONSETTLEMENT REPORT – CHEQUES IN THIS LIST WILL BE CLEARED

ON THE DAY AFTER NEXT WORKING DAY- (NOT REQUIRED TO SCAN AGAIN ON NEXT
DAY)
• RETURN REPORT- LIST OF CHEQUES RETURNED
• RETURN MEMO- TO PROVIDE RETURN MEMO TO CUSTOMERS.
• BRANCH FILE STATUS REPORT – TO CHECK STATUS OF SCANNED BATCHES
• IN NCR APPLICATION REPORTS/RECORDS WILL BE AVAILABLE FOR LAST 7 WORKING

DAYS.
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3.10 Inward Process
i. Inward File Upload
• Cheques presented by other banks on T day are received on the same
day after closure of presentation session at 07:30 PM. These cheques
are processed on T+1 (next day) till 02:30 PM (Return Session).
• For Inward clearing, 2 types of files are received-
➢ Data File – Having instrument details (Inst No, Inst Date, Act no. etc)
➢ Image File – Having Image of the instrument
• The instrument images are kept in the CBS server and the Data files (text
format) are uploaded to CBS through file upload screen (69004) as
shown in Below Screen Shot –
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• SAN File (Short Account Number) and CIL Files (CPC Inward Clearing)
are uploaded using the file upload screen, through these, accounts are
debited for respective cheque amounts through trickle feed.
ii. Technical Verification & Referral
• After uploading of these files, cheques start to show in Technical

Verification (Screen No 51100).
• User has to enter details like Branch Code, Instrument Type etc as shown
below–
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• The technical verification screen will appear as below –
• Here the teller has to verify details such as sign, amount in words and
figures etc
• After verification the user accepts/rejects the cheque and proceeds onto
the next cheque.
• Accepted instruments are passed and rejected instruments go to Referral
screen (Checker).
• The Tech status at the referral screen 51104 is “Referred” as shown
below -
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• The cheque is returned only after it is rejected by Checker in the
referral screen.
• Enquiry of cheques pending for technical verification can be done
through screen No. 51102 as below-
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3.11 OLRR (Online Rejection Referral & Return) Process
Instruments which could not be debited from respective accounts for various reasons
like Incorrect A/c no., Incorrect Cheque No., DP not available etc are sent to Branch
for correction and payment through OLRR.
How to enquire the entries of OLRR:

Navigation Menu: Clearing – Inward Clearing – Presentation – OLRR: Multi Level
Enquiry. (SCR 9574)
Enter all details in this screen i.e.

1. Transaction Date: Date of Clearing
2. Transaction Type: Cheque Clearing
3. Transacting Branch: 10407
4. Home Branch: Enter Home Branch Code No. Here
5. Clearing Type: High Value and MICR
Then Transmit as shown below-
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• All the entries of OLRR will appear at the screen.
• The Branch may contact their valuable customers accordingly, in case they
wish to honour the instruments. Sometimes, customers also deposit amount in
their accounts in order to get the cheques cleared, after they receive SMS.
Branches have to clear the respective cheques through OLRR. Navigation in
CBS, is as under:
• Clearing – Inward Clearing – Presentation – OLRR: Reversal / Enquiry (SCR
9571)
Enter all details in this screen i.e.
1. Transaction Date: Date of Clearing
2. Transaction Type: Cheque Clearing
3. Transacting Branch: 10407
4. Cheque NO.: Enter Cheque NO. from the list which Cheque to be pass.
5. Clearing Type: High Value / MICR
Then Transmit as shown below-
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• From there, record will be displayed about the selected cheque. From drop
down arrow, choose Amend and post. Then new window will open and from
here respective cheque will be paid.
Return Process
• After all the instruments have been attended in Technical Verification / OLRR,
a Dishonor file is generated through Screen No. 69088
The dishonour file is then sent to RBI through NCR Inward application. The return
submission is completed once positive acknowledgement is received from RBI for the
return files sent.
CHAPTER-3B: NACH
3.12 Electronic Clearing Service (ECS)

ECS is an electronic mode of payment / receipt for transactions that are repetitive and
periodic in nature. ECS is used by institutions for making bulk payment of amounts
towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of
amounts towards telephone / electricity / water dues, cess / tax collections, loan
instalment repayments, periodic investments in mutual funds, insurance premium etc.
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ECS includes transactions processed under National Automated Clearing House
(NACH) operated by National Payments Corporation of India (NPCI). There are two
variants of ECS - ECS Credit and ECS Debit.
All Banks have been disabled from ECS sessions. ECS has since been migrated to
ACH.
3.13 National Automated Clearing House (NACH)

National Automated Clearing House (NACH), implemented by the National Payments
Corporation of India (NPCI), is an electronic payment service for banks, financial
institutions, Corporates and Central and State Government. NACH has both Debit and
Credit variants. NACH (Debit) and NACH (Credit) aim at facilitating interbank high
volume, low value debit/credit transactions, which are repetitive in nature,
electronically using the NPCI platform. NPCI facilitates the participation of Corporates
on NACH Credit through the Direct Corporate Access (DCA) module with sponsor
bank’s control.
1. Objectives of NACH
➢ Facilitate end-to-end processing of bulk electronic payment instructions with the

objectives of creating a national eco-system covering all the banks and their
branches.
➢ Provide a technology platform to banks to route the debit/ credit transactions
through NPCI using different routes like IFSC Code, MICR Code/ IIN Code or
any other code as decided from time-to-time.
➢ Provide Direct Corporate Access (DCA) to select Corporates/ Government
Departments, major user institutions and third party to NACH system of NPCI.
➢ Provide a sound mechanism for revocations, holiday’s management,
settlement, exceptions handling, processing of returns, rejects, reversals,
refunds, unwinding, dispute handling etc.
➢ Create a robust Aadhar number with Institution Identification Number (IIN)
mapper with related governance mechanism.
➢ Create a robust Mandate Management and related governance mechanism.
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The system would leverage on Core-Banking Solution (CBS) of participating banks for
centralised posting of inward debit/ credit transactions. NPCI would be running the
Centralised service out of Chennai or Hyderabad or any other place as may be decided
from time to time, with settlement in the books of Reserve Bank of India.
NACH helped in moving back-office activities away from branches to enable them to
focus on marketing and sales, derive economies of scale by centralizing high volume
transaction processing and exercise tighter control over quality and turnaround time.
The bank customers get benefited in their funds realised faster as T+0 basis. Host to
Host and automated payment processing are enabled by NACH. Faster realization is
accompanied by a reduction in costs for the customers and the banks. It is also
possible for banks to offer innovative products and services based on NACH. The
banks have additional advantage of reduced reconciliation and clearing frauds.
2. NACH Membership
Banks in India who are members of any Payment System/ Channel approved by
Reserve Bank of India, and who intend to enter into a mutual Service Level Agreement
(SLA) with NPCI will be permitted to originate transactions in the NACH system, as
Sponsor Banks.
3. On-boarding of Corporates
The corporates can be on-boarded into NACH platform by submitting a User
Registration Form, prescribed by NPCI, on their letter head through their sponsor
bank. The form should be duly signed by authorise officials of corporates as well as
the forwarding official with their official stamp.
4. Message Format: NACH transactions routed through NPCI should comply with the
message formats discussed and decided by ACH Steering Committee Members and
specifies by NPCI as NACH file format specification. Modification if any will be
communicated by NPCI to members banks from time to ttime (Page 13 of NACH
Procedural Guidelines V 3.1). Further, Banks participating in NACH should adhere to
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the return & rejection reason code defined by NPCI. The list of codes is provided in
Annexure 4 (a) NACH Procedural Guidelines V 3.1.
3.14 Aadhar Payment Bridge System (APBS)

The member banks are required to diligently follow the SOP designed for Aadhar
seeding and other related processes. NACH system is built to validate the Aadhar
number provide din the transaction file at the time of upload and route to destination
banks as per the IIN mapping done with NPCI in the Aadhaar mapper. In case sponsor
bank provides the IIN as well in the file the same will be validated against the existing
mapping at NPCI and in case of mismatch all such transactions will be rejected.
1. File Warehousing
Sponsor Banks can upload files up to 7 days prior to the settlement date. All the future
transactions are validated and warehoused. On the settlement date, the warehouse
files get tagged to a session. In the event of bank being blocked for any reason, all
transactions that have been initiated by the bank or drawn on it for the specific
settlement date would get rejected. Such rejection will happen only on the settlement
date.
2. XML and Text format

NPCI can generate either XML / text (TXT) files. By default, the text file format is
enabled, and files are pushed to banks in TXT format only. In case, banks require XML
format, a request has to be submitted to NPCI for activation of XML files. XML format
can be enabled only for ACH 306 formats. NACH Debit (156 format) files {and APB
(Aadhar Payment Bridge System)} files are provided in TXT format only.
3. Response for Inward files

The destination banks should provide the status (success & return) of all the inward
files/ transactions received. If the status of the transactions is not received within the
stipulated cut off, then all such transactions shall be treated as deemed accepted.
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3.15 NACH Credit/ Debit 156
As per RBI directives all the transactions should be processed in ACH 306 file formats
only. The existing ECS Credit and Debit Transactions to be migrated to ACH 306 file
formats in a phased manner.
In case of ECS Debit transactions, the corporates will create data mandates and
present through their sponsor banks. The mandates will be pre-authorised. The
destination banks are expected to verify the mandates using either paper mandates
(ECS) available on their records or using the debit transactions in the customer
account. In the event of any discrepancy, destination ban can approach NPCI for
cancellation of the data mandates.
Once all transactions are migrated to ACH 306 formats, NACH will stop processing
the transactions in 156 file formats (ECS).
1. Audit by NPCI
It is obligatory for all participant Banks on NACH platform to strictly follow the NACH
Procedural Guidelines. NPCI reserves the right to conduct audit of the NACH related
documentation of a participant bank, maintained by them or with any other entity. Each
member bank should conduct annual internal audits of itself (or of outsourced agents)
in order to comply with the NACH Procedural Guidelines and submit a report to NPCI
which would be shared with RBI.
2. Processing of files on Regional Holidays

NACH working on all 365 days, NACH has been made operational on all 365 days
w.e.f. 01.08.2021. (e-Circular No. R&DB/AGNYBKG-NACH/8/2021-22 dated
19.07.2021.
3. Finality of Settlement and Settlement Arrangements

➢ The settlement shall be final and irrevocable
➢ Settlement service is provided by NPCI (Settlement Levy Fee). NPCI’s RTGS
infrastructure will arrange the necessary inter-bank settlement of credits and
debits to the banks’ respective current accounts directly with RBI-DAD
(Deposits Account Department).
➢ Settlement is handled in two different ways:
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(i)T+0 Credit/ Debit: Debit/ Credit instruction file to be made available for the
Destination Bank only after debiting/ crediting settlement account of the
Destination Bank/ Sponsor Bank, as applicable. The Sponsor Bank should
credit the beneficiary account on same day for NACH (Debit) and the
Destination Bank should credit the beneficiary account for NACH (Credit) on
receipt of funds into their settlement account.
(ii) T+1 Credit/ Debit: This is applicable to all the products that are being run on
warehousing basis for value dated credits like ECS Credit, ECS Debit migrated
to NACH and ACH 306 credit/ debit sessions specifically opened for migration
of ECS debit/ credit transactions. The inward file will be made available to the
member banks on the previous day evening. NPCI will be debiting / crediting
settlement account of the Destination Bank/ Sponsor Bank, as applicable, only
on the next working day on which settlement bank should post the settlement
files. The member banks should ensure that they process the transactions
received in inward files only after verifying that the necessary settlement entries
(i.e., debt or credit, as applicable) are signed in the settlement account,
maintained with settlement bank.
➢ At the end of the business day or within timelines stipulated by NPCI, the net
receivable or payable in respect of each member bank, will be generated and
a Daily settlement Report prepared and sent to all member Banks. The Net
Settlement Amount will be inclusive of the transaction and settlement fees and
any applicable taxes payable by Member Banks to NPCI.
Maintaining NACH Transaction records:

NACH Participants are expected to retain copies of NACH records in electronic forms.
These records of NACH documents should accurately reflect the information
contained within the document. Also, both the electronic record and a record of the
authentication can be accurately reproduced for future reference.
3.16 Overview of NACH Credit

NACH Credit is an electronic payment service used by an institution for affording
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credits to a large number of beneficiaries in their bank accounts for the payment of
dividend, interest, salary, pension etc. by raising a single debit to the bank account of
the user institution.
(i) Features of NACH Credit

Functions on ISO20022 Messaging Standard.
Online Dispute Management System (DMS).
Transaction files status tracking with ACK/NACK.
Allows multiple file processing in a single settlement.
Allows partial file processing resulting in reduced operational efforts.
Availability of Recall option before the settlement of the transaction.
Scalable system with capacity to process 10 million transactions per day.
Scope of services encompass beyond the existing 90 ECS clearing centres.
Secure web access for file upload/download, dissuading the concept of
regional NCC/Clearing House submissions.
Allows corporate clients to directly upload files using the Direct Corporate
Access (DCA) facility with sponsor bank control.
Corporates can get direct access of the NACH Credit using the DCA facility,
making it easier to check the status of their transactions without delay.
(ii) Benefits of NACH Credit

Some of the benefits of NACH Credit but not limited to include:
Customized MIS to banks.
Scope of multiple intra-day sessions.
Digitally secured transaction files with 4-eye concept.
Reduced operational cost for the banks and its customers.
Allows online end to end monitoring of the transaction files.
Online Dispute Management System (DMS) allows tracking of the transaction
dispute.
Standardization of the process allowing complete audit trail of the transaction
lifecycle for a period of 10 years.
DCA facility leads to reduction in workload of the sponsor banks, since the file
upload will be done by the corporates themselves.
Effective relationship management with banks as well as corporate customers
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resulting in enhanced customer service and support.
(iii) Network Connectivity to participate in NACH Credit

Banks need to get connected to NPCI for accessing the NACH application. NPCI
allows the access of NACH application to the participating banks either through
NPCINet or Internet. NPCI allows the access of NACH application to the corporates
through Internet.
Internet connectivity is completely safe for participation in NACH Credit. For the
purpose of participation in NACH Credit through Internet, participating banks need to
share a public static IP address with NPCI. This public static IP address is enabled in
the firewall of NPCI in order to allow the banks to access NACH System through
Internet.
(iv) Requirement of Digital Signature Certificate to participate in NACH Credit

Both Banks and Corporates require Class 2 Digital Signature Certificates for the
individual users. The same can be procured from any of the authorised CAs. Digital
Signature Certificate is required for digitally signing the NACH Credit files. In case of
Host to Host (H2H) * integration, Banks need to procure Class 3 Digital Signature
Certificates for the servers.
(*H2H: Mechanism for seamless file transfer between Banks and Clearing House in a
secured way.)
(v) Requirement of Signing Tool to participate in NACH Credit

Both Banks and Corporates require a Signing Tool enabled with PKCS#7 algorithm to
participate in NACH Credit. Signing Tool is used for the encryption and decryption of
the transaction files which are uploaded/download in the NACH Credit.
(vi) Participation of RBI in NACH Credit

The residual ECS credit transactions processed in 156 formats on ECS platform
migrated to NACH platform to NACH credit product with RBI as sponsor bank effective
from December 26, 2019. All member banks except RBI have been mapped as
destination banks only for NACH credit product. Session timings are as under:
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Product: NACH Credit (156 format)
Session: Monday to Saturday
Presentation (Previous day to settlement i.e. T- 1):
Start Time: 10:00 AM, End Time: 6:00 PM
Return (On settlement date)
Start Time: 10:00 AM
End Time: 4:00 PM
As these transactions are received through ECS system and processed successfully,
it is to be ensured that the same transactions received through NACH are treated at
par and returns are kept at minimum. For any further clarification, queries may be
raised through Customer Relationship Management (CRM) tracker of NPCI.
PARTICIPATION OF RESERVE BANK NBG/AGNYBKG-NACH/21/2019 - 20 dated 13th Dec 2019
OF INDIA IN NACH CREDIT
(vii) NACH Holidays

Settlement does not take place on Sundays and National holidays.
(viii) Settlement for NACH Credit transactions

The settlement for NACH Credit (156-character file format) takes place in the current
account of the participating banks which is maintained with Deposit Accounts
Department (DAD), RBI, Mumbai. The settlement for NACH Credit (306-character file
format) takes place in the RTGS account of the participating banks maintained with
Deposit Accounts Department (DAD), RBI, Mumbai.
(ix) Bank not having Current Account or RTGS account with RBI/ Sub-
membership Model
NPCI permits the banks not having Current Account or RTGS account with RBI to
participate in NACH Credit through the sub-membership model.
(x) Steps for banks to join NACH Credit
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Banks willing to participate in NACH Credit needs to comply with the following:
Prescribed System Requirements
Execute On-boarding Documents
Establish Network Connectivity
Procure Digital Signature Certificates, Signing Tool and Public Static IP
Address
Undergo UAT for File Format Testing
Initiate On-us Transaction for Testing
NPCI permits the participation of sub-member banks in NACH Credit through their
sponsor banks using the sub-membership model. For the purpose of participation, all
the transaction files pertaining to sub-member bank will be uploaded/received directly
by the sub-member bank itself through the NACH application. However, the settlement
of the transactions will take place in the settlement account of its sponsor bank.
(xi) Direct Corporate Access (DCA)

Direct Corporate Access (DCA) functionality facilitates the access of NACH Credit to
the Corporates thus leading to ease of operations both for the Corporates as well as
their Sponsor Banks. DCA functionality comes with the sponsor bank’s control thereby
allowing the tracking of transactions, reports and MIS by all the concerned entities
without having a dependency on the sponsor bank.
3.17 Overview of NACH Debit
NACH Debit is the product of NPCI to provide a better and efficient Mandate based
debit services to the banks. Following are the key features of the NACH Debit:
Automated processing and exchange of mandate information electronically with
well-defined timelines for acknowledgement/confirmation.
Each mandate needs to be accepted/authorized by the debtor bank before the User
can initiate a transaction.
Each mandate is uniquely identified by Unique Mandate Reference Number
(UMRN) which makes tracking of multiple mandate details easier for customers.
Defined and agreed SLA’s to be implemented-provide Governance model and
defined timelines for mandate processing.
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Enable the usage of standardized Mandate Forms.
Mandate repository containing Mandate details to be maintained for the purpose of
validating mandate UMRN available on the NACH transaction files, at the time of
NACH transaction processing.
MMS would allow processing of debtor and creditor-initiated mandates.
MMS would allow processing of e-mandates as well as paper mandates, where e-
mandates would consist of only data file upload while paper mandates would
consist of mandate image and Data file uploads. E-mandates can be initiated only
by a debtor bank.
Bank can leverage on the existing CTS instrument scanning infrastructure for
scanning and maintaining repository of the mandate images.
(i) Benefits of NACH Debit to Banks
➢ Standardization and digitization of mandates allowing complete audit trail of the

Mandate lifecycle.
➢ Simplification of the mandate acceptance and recording process.
➢ Will result in reduced operational cost for the banks and its clients.
➢ Will result in higher revenues for the banks and its clients as the scope of
services expand pan India - beyond the 90 clearing centres.
➢ Unique identifier number allocated to each mandate (UMRN – Unique Mandate
Reference Number).
➢ Secure web access for file upload/download, dissuading the concept of regional
NCC/ Clearing House submissions.
➢ Mandates can be processed by the member for any branch across the country.
➢ Allows corporate clients to directly upload files for approval (DCA).
➢ Functions on International Messaging Standard - ISO 20022.
➢ Minimal time taken to activate the Mandate – same day processing possible.
➢ Corporates get to have direct access to the NACH systems, making it easier for
them to get access to status of transaction/mandate without delay.
➢ Reduction of the uploading work to the sponsor banks, since the file upload will be
done by the corporates themselves.
(ii) Mandatory fields to be captured on the Mandate form

All the fields are mandatory other than the fields mentioned below:
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a) Field No. 13 which is Consumer Reference Number.
b) Field No. 14 which is Scheme/ Plan reference Number.
c) Field No. 20, 21 & 22 (Telephone, Mobile & Mail-ID).
d) Field No. 19 which is Customer Additional Identification.
3.18 Mandate Management System (MMS)

Mandate Management System (MMS) is an essential part of NACH Service. The
Mandates are necessary from the regulatory perspective in order to process NACH
transactions. In the MMS, mandate information is captured on a standard cheque like
mandate form, thus streamlining the process and making it more customer and
participant friendly.
1. Key Features of MMS

➢ MMS may utilise the existing CTS infrastructure
➢ Automated processing and exchange of mandate information electronically
with well-defined timelines for acknowledgement/ confirmation.
➢ Each mandate is uniquely identified by Unique Mandate Reference Number
(UMRN) which makes tracking of multiple mandate details easier for
customers.
➢ Defined and agreed SLAs to be implemented-provide Governance model a
defined timeline for mandate processing.
➢ Enhanced mandate data and information synchronisation among banks and
service providers.
➢ Enable the usage of standardised Mandate forms.
➢ Mandate Repository containing mandate details to be maintained for the
purpose of validating mandate UMRN available on the NACH transaction files,
at the time of NACH transaction processing.
➢ MMS would allow processing of Debit and Credit mandates.
➢ MMS would allow processing of debtor and Creditor initiated mandates.
➢ MMS would allow processing of e-mandates as paper mandates, where e-
mandates would consist of data file upload while paper mandates would
consist of Mandate Image and Data file uploads.
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Mandate Management System is a service of NACH Debit which facilitates the
process of Mandate Creation, Mandate Amendment, Mandate Cancellation and offers
all MIS related to the Mandate.
a) Mandate Creation: Creation of a new mandate in favour of the User Institution.
b) Mandate Amendment: Amendment of any of the variables of an existing Mandate,
which is active. An amendment may be executed in a similar way the new mandate
is initiated. The UMRN needs to be quoted for Amendment.
c) Mandate Cancellation: Cancellation of an active mandate – UMRN is required to be
quoted.
2. Methods for creation of a Mandate

There are two methods for creation of a mandate:
a) User Interface (UI) based: The user can log into the NPCI provided MMS utility
and initiate a mandate using a user interface.
b) File based: The MMS utility also gives the user the facility to upload more than
once mandate through a file upload method. File format accepted will be XML
only.
It is the responsibility of the destination bank to accept/ reject the mandate received
within 10 business days the date of receipt of the mandate. If not processed within the
specifies TAT, the mandate will be expired by the system.
3. E-Mandate
As an alternate solution to paper-based mandates and as a measure in furthering the
cause of digitisation, NPCI has introduced a mandate variant called E-Mandate. E-
Mandate facilitates issuance and confirmation of mandate by the customer through
alternate/any time channels. Appropriate authority has approved mandate registration
process through E-Mandates (both Internet Banking and Debit Card based mandate
variants) in our Bank.
As per NPCI Circular No. NPCI/2019-20/NACH/Circular No. 003 dated April 24, 2019,
RBI accorded approval for full-fledged implementation of E-Mandates (both internet
banking and debit card-based mandate variants). All banks have been advised to take
measures to implement both the variants. The limit for each E-Mandate shall be Rs.1
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Lakh and depending on the usage this shall be reviewed in due course (maximum
value limit for physical mandate is Rs. 1.0 Cr). NACH mandates can be used for
business to business (B2B) collections, all types of investments and insurance
products, utility payments, government payments, trade receivables, all types of loan
repayments, asset rentals and collection of education/society charges. The copies of
E-Mandate should be preserved in electronic form for 10 years.
4 Steps involved in initiating a mandate through Sponsor Bank via Corporates/

Service Provider
a) Step 1: The Corporates/ Service Providers that holds an account with Sponsor
Bank send an application to the sponsor Bank for getting Utility Code, which
would allow them to participate in the NACH process.
b) Step 2: A customer who has purchased or subscribed the service from
corporate/service provider and desires to pay through a mandate arrangement
would fill up NACH mandate form provided by the corporate and sign it for
authorizing debit to his bank account. Customer will hand over duly filled up
mandate form to corporate/service provider, who in turn would submit the same
to the sponsor bank.
c) Step 3: The sponsor bank will capture the Destination Bank IFSC / MICR details &
other mandatory mandate transaction details and send it to NPCI.
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d) Step 4: The mandate image and the related mandate transaction data will be routed
to the concerned destination banks over the MMS system within the timelines
stated by NPCI.
e) Step 5: The Destination Bank will validate the transaction date and the details given
on the image of mandate. It will send the mandate verification and acceptance
confirmation message to sponsor bank via NPCI, and updates records at its end.
f) Step 6: The Sponsor bank sends mandate information update with UMRN to
corporate for their record updates to ensure the NACH transaction file carry the
UMRN reference against the transactions sent for processing in future. Once a
mandate is uploaded, Corporate can view the same, since access has been
enabled to them directly by NPCI.
Steps involved in the process of customer initiating mandate request through

Destination Bank
a) Step 1: The end customer that holds an account with Destination Bank sends the
mandate initiation request through Internet/ IVR/ Paper (Mandate form) to the
Destination bank.
b) Step 2: Destination bank receives the mandate request along with the mandate
data and sends the mandate information over the MMS (e-Mandate).
c) Step 3: The mandate transaction data will be routed to the concerned sponsor
banks with UMRN generated by NACH system.
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d) Step 4: Sponsor bank updates its record and forward it to corporate/ service
provider.
e) Step 5: Corporate /service provider updates its record and sends the confirmation
to Sponsor bank.
f) Step 6: Sponsor bank sends the confirmation to NPCI.
g) Step 7: NPCI routes the confirmation toward the Destination bank.
h) Step 8: Upon receiving the confirmation from Sponsor bank/ Corporate via NPCI
MMS the destination banks provide update to its customer on the status of the
mandate.
5. Options for creating a mandate
The UI (User Interface) option allows the bank to create Mandate and approve it at
any point of time during the day (between SOD and EOD), without linkage to the MRC
and MARC cycles. The file-based method for creation of a mandate is particularly for
supporting the banks automated process of initiating more than one mandate at a time.
6. Initiation of Mandate
The Mandate Creation/Amendment/Cancellation request can be initiated by both, the
Creditor Bank or the Debtor Bank. In the case where the Mandate is initiated by the
Creditor Bank, a scanned copy of the physical mandate along with the data file will
have to be submitted for Acceptance of the Debtor bank. In the case where the
Mandate is initiated by the Debtor Bank, the scanned copy of the physical mandate
may not accompany the data file when submitted for acceptance of the Creditor Bank.
Banks can send multiple separate mandates create/amend/cancel files to NPCI
throughout a day.
The UMRN is generated by NPCI immediately after the initiating bank/party creates
the mandate using a GUI or the xml file upload. The ACK/NACK file generated
immediately after mandate submission will reflect the UMRN.
The GUI allows the Destination bank to view and approve/reject all mandated,
irrespective of the fact that the mandate has been created by the Sponsor bank using
the GUI or an xml file upload. There is Standard encrypt/decrypt process followed by
NACH for the banks to encrypt the mandate files being uploaded to MMS and decrypt
the INW mandate received for acceptance.
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Banks receive multiple mandates Create/Amendment/Cancel zip files from NPCI
through the day. Bank will receive a separate file for create/amend/cancel/ accept,
throughout a day. No bundling will be done at NPCI.
7. Responsibility for managing the physical mandates

It will be responsibility on the sponsor bank to retain a physical copy of the mandate
for the period as per RBI guidelines. Sponsor bank should also ensure that the image
copy and mandate transaction date to be retained as per RBI guidelines.
8. Time available to the instructed agent to accept the mandate

It is the responsibility of the instructed agent, i.e., the receiving bank, to accept / reject
the mandate received within 10 business days from the date of the receipt of the
mandate. If not processed within the specified TAT, the mandate will be expired by the
system.
9. Reject Reason Code

Reject Reason Codes are the codes defined by NPCI. The instructed agent while
rejecting a mandate will assign one of these codes as a reason for rejecting the
mandate.
10.Rationalisation of MMS Return Reasons

MMS reason codes have been rationalised. Reasons which are
added/modified/removed are given in the circular.
NACH- MANDATE MANAGEMENT NBG/AGNYBKG-NPCI/19/2019 - 20 dated 6th Dec 2019
SYSTEM - PROPOSED CHANGES
11. Penalty for using specific MMS Returns:

1. Drawer signature not updated in CBS
2. Mandate presented with thumb impression
3. Appropriate NACH Mandate not uploaded
(The penalty amount plus GST will be passed on to the sponsor bank or the destination
bank as the case may be.)
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12. Session Timings for MMS
Start of Day (SOD) All Days 10:00 AM
Weekdays 10:00 AM to 12:30 PM
Saturday 10:00 AM to 11:30 PM
Weekdays 12:30 PM to 05:00 PM
Saturday 11:30 AM to 03:00 PM
Weekdays 05:00 PM
Saturday 03:00 PM
Mandate Request Cut-off (MRC)
Mandate Acceptance Report Cut-off (MARC)
End of Day (EOD)
13. Centralised Mandate Validation Service

The Centralised Mandate Validation service was launched on October 7, 2013. The
service ensures that only ‘good to debit’ transactions are sent to the bank by NPCI for
debit processing after validating parameters like the customer account number, bank
IFSC/MICR, amount, start date/end date of the underlying active mandate. Fields
which will be validated at NPCI includes:
UMRN – Active/Non-Active
Customer Account Number
Destination Bank IFSC/MICR
Amount
Maximum Amount
Start Date
End Date/Until cancelled
Status of the Mandate (Active/Inactive)
If the input transactions fail above validations, NPCI will reject those transactions at
Sponsor Bank end’s itself and these transactions will not be sent to destination bank
for processing.
14. Increase in limit for mandates with frequency ‘As & when’ presented:
The maximum amount for the mandate category S001 (Low value mandate) with
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frequency “As & when presented” will be increased from Rs.1000 to Rs.25000
effective from December 15, 2019. Mandates need to be processed accordingly.
15. New category code for banks own retail loan portfolio mandate:
A new MMS category code has been introduced for sponsor bank’s own lending
portfolio mandates effective from November 15, 2019. Following are the details of
the new category code.
16. Category Code Category Description
O001 Own retail portfolio Mandate – EMI
O002 Own retail portfolio Mandate – loan security
The new mandate category has been created to accommodate mandates which are
presented for sponsor bank’s own retail lending portfolios. This will help the destination
banks to consider the nature of transaction at the time of processing the mandate and
honour the new category mandates subject to mandates conforming to all the
validations as per bank’s policy.
17. File format to be used for Mandate Creation/ Amendment/ Cancellation

a) Mandate Creation: Pain009
b) Mandate Amendment: Pain010
c) Mandate Cancellation: Pain 011
Response and Acknowledgement for each of the requests will be provided in Pain012
format. {Refer section 2.3 of the Bank Specification Document (BSD)}
18. Size and Format of the Mandate

The mandate has to be in the size of a standard cheque i.e. 8” x 3 2/3”. It is mandatory
to restrict the mandate to the size mentioned above. Specification of the scanned
mandate:
a) Front Image
The Image should be in black & white.
The Image should be in TIFF Format
DPI for the Image is 200
b) Front Grayscale Image
The Image should be in grayscale
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The image should be in JPEG Format
DPI for the Image should be 100
The banks can upload any number of mandates to the MMS system at a time, provided
a single image file doesn’t exceed 100 KB and a single zip file with multiple image and
data files doesn’t exceed 10 MB. The utility allows the bank to upload multiple zip files.
19. Annual Maintenance Charges for Mandates
NPCI, vide their Circular No. NPCI/ 2020-21/NACH/006 dated 23.06.2020 decided to
levy annual maintenance charges for mandates effective for the financial year 2020-
21.
Out of all the mandates stored in NACH database, a large number of mandates
remained dormant without a single transaction being presented. Member banks have
been advised to reconcile their registered mandates and deactivate those mandates
which are not used at all or the underlying commitment has come to an end. Annual
maintenance fee for dormant mandates are as under:
Dormant Period Maintenance Fee
(per mandate per annum)
First year Re.1/-
Second & third year Rs.2/-
Fourth & fifth year Rs.3/-
Sixth year onwards Rs.5/-
{(eCircular Sl.No .463/2020–21; (Circular No.: R&DB/AGNYBKG-NACH/4/2020-21
dated 29th Jul 2020)}
20. Migration of PDC/ EMI Cheques to NACH (Debit)

NPCI, vide their Circular No. NPCI/ 2020-21/NACH/007 dated 30.06.2020 advised for
conversion of Post-dated cheques (PDCs) to NACH (Debit) mandates.
RBI Circular No. DPSS.CO.PD.No. 497/ 02.12.004/2011-12 dated September 21,

2011: Section 25 of Payment and Settlement Act, 2007 accords the same rights and
remedies to the payee (beneficiary) against dishonour of electronic fund transfer
instructions under insufficiency of funds as are available under Section 138 of
Negotiable Instruments Act, 1881. Considering the protection available, there is no
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need to obtain additional cheques, if any, from customers in addition to ACH Debit
mandates.
As per NPCI, migration of ECS to NACH has been completed for all locations across
India and banks should not accept PDC or Security PDC from its customers and all
existing PDCs/ Security PDCs may be converted into NACH (Debit) mandates.
In view of the above, RACPCs/RACCs/SMECCs/SECCs/SMECCCs/Branches/ Other

BPR outfits who have accepted PDCs/ Security PDCs from customers have been
advised to convert all such PDCs to NACH (Debit) mandates and ensure that they
accept only NACH (Debit) mandates and not PDCs from customers in future.
{eCircular Sl.No.: 511/2020–21 (Circular No.: R&DB/AGNYBKG-NPCI/5/2020-21
dated 7th Aug 2020)}
3.19 Dispute Management System (DMS)

Dispute Management System (DMS) is a part of NACH system, which ensures
creation, escalation and resolution of disputes raised by banks. These disputes can
be raised on NACH payment transaction or mandate transaction. Corporate
participants are required to route their disputes to their sponsor banks in order to
create disputes on the DMS application. Dispute Management System (DMS)
functionality provides a common platform to all the participating banks to raise and
resolve transaction related issues in a time bound manner with provisions of pre-
arbitration, arbitration and good faith*. In the event of unresolved disputes, the
participants are governed by Dispute Resolution Mechanism.
(* Any dispute raised after 45 business days up to 120 business days from the date of
transaction is considered as good faith dispute)
NPCI will set up a Panel for Resolution of Disputes (PRD) consisting of four member
banks and the panel-chairman to look into unresolved interbank settlement disputes
as per the directives of the Department of Payments and Settlement Systems of the
Reserve Bank of India (Ref: DPS .CO.CHD.No.:654/03.01.03/2010-2-11 dated 24th
Sept 2010).
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1. Penalty for representation of debit transactions returned for specific reasons
If any bank continues to present the returned transactions more than twice, then from
the third instance of presentation of such returned instruments will attract penalty of
Rs.25/- per instance of presentation, along with Taxes as applicable. Penalty is
applicable for debit transactions returned with following reasons:
ACH Debit (306): Account Closed.
2.Queries Related to PAIN009

What is a ‘User Number’? Can a single corporate have two or more user
numbers?
It is the ID issued to a corporate that is linked to the Sponsor bank. The corporate will
have to get a new User number if it changes its bank or will have to maintain multiple
user number if it is transacting with more than one bank.
Does NPCI validate the User Number?
Yes, User number is being validated during the transaction leg and NPCI will reject
the transaction, without sending it to destination bank, in case of incorrect User
number.
Scenarios in which User number will be considered invalid:
a) If the user number mentioned in the transaction file does not match with the one
that was mentioned in the mandate.
b) If the user number does not exist.
c) If the user number does not match with the Username.
What is a “Utility Code”?
Utility Code/ Corporate User ID refer to the User Number that has been allocated by
NPCI, to the Corporates.
3. Queries Related to PAIN010

What are the fields that can’t be amended?
The fields that can’t be amended are:
a) UMRN
b) Payment Type
c) Debtor Bank Name
d) Debtor Bank ID
e) Name of Debtor Account Holder
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4. Queries Related to PAIN012
Is the process similar to the NACH debit file whereby banks can get an ACK,
partial ACK or a NACK?
For every mandate, there is an ACK or NACK generated. Since bank will get the
Pain012 messages for each mandate, there will not be any partial ACK, as done in
ACH.
Do banks need to send one mandate response file (PAIN012 – Mandate

Acceptance) for each file they receive from NPCI, or can they send one
consolidated PAIN012 containing details of all acceptance and rejections for
mandate initiation, updating and cancellation requests?
For every acceptance, there is a pain012 message is sent. Consolidated file upload
process is not available.
For the 3 separate files that the bank receives, can they send back a single
pain012 file containing records which could pertain to mandate creation,
amendment or cancellation.
The banks cannot use a single Acceptance xml file for all three types of mandates –
Creation, Amendment and Cancellation. Each mandate will have to be accepted
individually.
If the bank receives 5 mandates on day 0, can it stagger the approval/rejection

over the next 5 days i.e. approve one mandate on day 1, two mandates on day 2
and remaining mandates on day 5.
Once the inward for a mandate is generated, it is the responsibility of the instructed
agent, i.e., the receiving bank, to accept /reject the mandate received within 10
business days from the date of receipt of the mandate. The Instructed agent may
decide to stagger the Approval /rejection over the period of these 10 days. However,
if not processed within the specified TAT the mandate will be expired by the system.
5. Queries of ACH Debit (At Transaction Level)

For every single Input file (Transaction File), does the destination bank receive
separate inward file?
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No, the destination bank will not get different inwards for different input files. Instead it
will get a single consolidated inward file for all the input files initiated on the bank. Only
in case where the transaction count exceeds 20000 records, the file gets split into
multiple files with 20000 or less records in each.
6. Miscellaneous
i. Revised Interchange Fee effective from October 1, 2018: NPCI provides
interchange fee (commission) of Rs.0.50 to destination banks for processing debit
(156/306) transactions and Rs.0.25 for credit (156/306) transactions.
Interchange fee will not be paid to destination banks who clear transactions in NACH
debit (156) format which have been returned initially for technical reasons, when
presented in ACH (306) format.
Interchange fee will not be paid to the banks that are only participating in NACH
Debit (156) format.
ii. Penalty effective from October 1, 2018

Penalty of Re.1 per transaction will be levied on sponsor banks that will present
transactions directly in NACH Debit (156) format.
If any sponsor bank is found to misuse this facility, then NPCI may bar the sponsor
bank from presenting in special session for representing technical returns of ACH
(306) format.
Sponsor banks will be allowed to present in NACH debit (156) format under the
following circumstances:
a) Transactions returned in ACH Debit Legacy (306) format due to technical reasons.
b) Transactions drawn on banks that are participating only in NACH debit (156) format.
iii. Processing Fee effective from November 1, 2018

Processing fee of Rs.0.70 (NPCI charges Rs.0.20 and Sponsor bank charges
Rs.0.50) per transaction will be levied on destination banks for technical returns of
ACH Debit Legacy (306) format represented in NACH Debit (156) format and
cleared by them.
Processing fee of Rs.0.70 (NPCI charges Rs.0.20 and Sponsor bank charges
Rs.0.50) per transaction will be levied on destination banks that are participating
only in NACH Debit (156) format.
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iv. Session timings effective from September 25, 2018
NPCI will open NACH Debit (156) format presentation/return sessions twice a week
effective September 25, 2018 as per schedule below:
Presentation and Return Timings
Presentation Session Timings Return Session Timings
Session Session
Date/Day Date/Day
Tuesday 08:00 hrs to 13:00 hrs Wednesday 07:00 hrs to 16:00 hrs
Thursday 08:00 hrs to 13:00 hrs Friday 07:00 hrs to 16:00 hrs
v. Destination banks not contributing to technical returns in ACH debit Legacy (306)
format would not be enabled in NACH Debit (156) format effective from October 1,
2018. The list of such 211 banks is provided in annexure to the NPCI Circular.
vi. In view of the above, following mechanism to be followed:

a) RACPCs/RASMECCs/Branches/Other BPR outfits should present all outward
transactions in ACH (306) format only. In case of technical return by any destination
bank, those transactions are to be presented in NACH (156) format in the sessions
provided by NPCI, twice a week, as mentioned above. It should be ensured that
these transactions are not presented directly in NACH Debit (156) format.
b) Uploading of ECS Inward legacy mandates to CBS has been completed and GITC
has completed stamping all the records from backend. Migration as a destination
bank to ACH format has been communicated to NPCI.
Processing charges on NACH E-Mandates presented with effect from 1st January
2019 (Circular No. NPCI/2018 19/NACH/Circular/042 dated 24 December 2018):
Type of Service NPCI Charges Remarks
EMandate– Mandate Rs.1.00 per mandate Rs.0.50 on initiating
initiation/ modification bank.
Cancellation Rs.0.50 on initiating
bank.
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3.20 Customer Relationship Management (CRM) Tracker
National Payments Corporation of India (NPCI) vide its letter dated 3rd January 2020
have advised about upgradation of their Customer Relationship Management (CRM)
query application and launching of new version with effect from January 06, 2020. The
additional features in CRM application is as under:
i. Reassigning the query to another member of the internal team.
ii. Reopen closed queries.
iii. Query summary report.
NPCI has advised to ensure that all NACH related queries are routed through this
utility only. They have also advised that queries raised through mails will not be
addressed. CRM tracker can be accessed with existing NACH user credentials NACH
Portal ACH Utilities CRM Tracker. User manual provided by NPCI is enclosed as
annexure to Agency Banking Department eCircular No.: NBG/AGNYBKG-
NACH/23/2019– 20 dated 6th Jan 2020.
1. Revised NACH Mandate Format

NPCI, vide their Circular No. NPCI/2019-20/NACH/021 dated 13.01.2020 has advised
that effective from 13th January 2020, NACH mandate format has been revised in
order to provide additional space for the users to affix their signature. The specimen
of the new format is given in Annexure-1 to the above NPCI Circular.
i. The current format will continue to be valid.

ii. Mandates received in the current format should not be returned with the
reason “Mandate not in standard format”.
iii. Fresh stationery be printed in the new format only.
(eCircular No. NBG/AGNYBKG-NPCI/25/2019–20 dated 14 Jan 2020)
2 Harmonisation of Turn-Around-Time (TAT) and Customer Compensation

(Reserve Bank of India (RBI) issued Circular No. RBI/2019-20/67 DPSS.CO.PD
No.629/02.01.014/2019-20 dated 20.09.2019 and National Payments Corporation of
India (NPCI) issued their circular No. NPCI/NACH/2019-20/014 dated 17.10.2019 on
the Harmonisation of Turn-Around-Time (TAT) and Customer Compensation)
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Large number of customer complaints emanate on account of unsuccessful or failed
transactions not directly attributable to the customers. RBI has advised the framework
for turn-around time (TAT) for failed transactions using authorised Payment Systems
and compensation payable thereon by banks. As instructed by RBI, wherever financial
compensation is involved, the same shall be affected to the customer’s account suo
moto, without waiting for a complaint or claim from the customer.
TAT and customer compensation payable in respect is as under:
SN Description Timeline (TAT) Compensation
Payable
1. Delay in crediting -Destination bank to credit penalty if Rs.100/- per
beneficiary’s reversal response is delayed day delay is
account or beyond T+1 day for a failed beyond T+1
reversal of transaction. day.
amount
-Destination bank to credit penalty if
delay in crediting beneficiary
account i.e. beyond T+1 day.
2. Account debited Customer’s bank will be responsible Rs.100/- per
despite for such debit. Resolution to be day if
revocation of completed within T+1 day. delay is beyond
debit mandate T+1
with the bank by day.
the customer
T is the day of transaction and refers to value date. The prescribed TAT is the outer
limit for resolution of failed transactions.
2. NACH branch, Mumbai is handling all the inward NACH transactions for the Bank
as a whole. However, outward transactions are being handled by
branches/RACPCs/Other BPR outfits who are initiating transactions in respect of our
outward mandates. For ensuring compliance of RBI/NPCI guidelines in respect of
Harmonisation of TAT and customer compensation for failed transactions with regard
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to NACH, the branches/RACPCs/Other BPR outfits who are initiating NACH
transactions are advised to ensure as under:
a) Upload of outward credit/debit transaction files to NACH platform at least before
T-2 (T minus 2) days in order to provide sufficient margin for error rectification, if any.
NPCI allows data warehousing upto T-7 (T minus 7) days.
b) In respect of outward debit presentations by units, NACH Branch, Mumbai

raises IBTS entries for credit to our customers’ accounts. These entries to be
responded on the same day of receipt and credit passed on to customer’s account on
the same day.
c) When some destination banks avail extension in NPCI sessions for uploading
response files, presenting units may not receive entire credits in respect of a file
uploaded on the same day. In such cases, the funds already received may not be held
back pending receipt of entire amount of the uploaded file, and whatever funds
received in respect of customers’ accounts should be passed on to the respective
customers’ accounts on the same day of receipt.
d) The presenting units should arrange to cancel the outward mandates in respect
of which the underlying commitment is over/loan is since closed etc. immediately on
the event and ensure that further outward transactions are not initiated in such cases.
e) Branches/Other units receiving mandate cancellation requests from customers and
initiating these cancellations in the system should ensure from the concerned sponsor
bank that such mandate does not pertain to any existing EMI/loan repayment or the
corresponding loan account has already been closed. It should also be ensured that
no further transactions are initiated in respect of these mandates before actual
cancellation in NACH system.
{eCircular Sl.No.: 1143/2020-21 (Circular No.: R&DB/AGNYBKG-NACH/7/2020 -
21 dated 19 Dec 2020)}
3. Updated NACH Procedural Guidelines

NPCI, vide their Circular No. NPCI/ 2020-21/NACH/009 dated 03.07.2020 issued the
updated version of NACH procedural Guidelines (Version 3.1). Readers may refer the
guidelines for detailed information and clarification.
Page 117 of 225
{eCircular Sl.No. 512/2020–21 (Circular No. R&DB/AGNYBKG-NPCI/16/2020-21
dated 7th Aug 2020)}
4. NACH ECS RACPC Manual
Files are received from RACPC on at least one day before the scheduled dates for
running; time of legacy file for claim is before 1:00 pm, before this time the file cannot
be run.
RACPC sends the forwarding letter and a text file, you should match the number
of records and amount from the forwarding letter.
The txt file and forwarding letter save in batch upload>ecs box in the folder of
particular dates in the folder of particular RACPC (REPORTS/ECS RACPC NAME
OF RACPC, FILES).
Take print out of forwarding letter and match the data from the txt file.
File will be copied from folder and pasted into C://>NACH>SIGN>SOURCE OF THE
FILE AND RENAME THE FILE AS:
ACH-DR-SBIN-SBINUSERNAME-TODAYS DATE-FILE NAME-INP.txt
(THEN RUN THE MAPLE.)
You are required digital signature for maple. In maple you are going to click sign
button, then a security window will open with name of whose digital signature is used,
open file of navigation my computer>C:>NACH>SIGN>SOURCE click ok, open other
window for entering password of digital signature.
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files will automatically be seen in MY COMPUTER>C://>NACH>SIGN>SIGNED
FILE UPLAOD BY MAKER

NAVIGATION – MY COMPUTER>C://>NACH, THEN NACH LOGIN
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THEN CLICK ON “NACH MEMBER LOGIN”
YOU ARE REQUIRED TO ENTER MAKER ID PASSWARD (USER-SBINXXXXXXX,

and password in requisite place)
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then go to upload/Download, then again enter ID and password of my file gate way
(generally these two passwords, login or my file gateway are same)
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click on upload files
Then enter the following

MAILBOX PATH-”/”
FILE-BROWSE> PATH, MY COMPUTER/THIS PC>C:>NACH>SIGN>SINGNED
SELECT AND SEND
A NUMBER GENERATED CALLED MASSAGE ID WRITTEN ON FORWARDING

LETTER
APPROVAL BY CHECKER
LOGIN WITH CHECKER ID AND PASSWORD

AND APPROVED BY FOLLOW THE BELOW MENTION NAVIGATION
ACH>ROUTING>OPERATIONS>APPROVE
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FILE TYPE -DEBIT, CLICK OK
A LIST SHOWN WITH YOUR FILE NAME, DATE OF SETTELEMENT, AMOUNT,
ACCOUNT ETC.
SELECT AND PRINT OUT

CLICK ON APPROVE
THEN GO TO LIST, FILE TYPE DEBIT AND ENTER IN FILE NAME -ACH-DR-SBIN-
SBINXXXXXXX AND CLICK OK
THEN STATUS OF FILE IS CHANGED FROM APPROVE TO PARTIAL/ACCEPTED
TAKE PRINT OUT OF THE PAGE
NOW
ENTER IN THE REGISTAR
DATE OF MAIL
DATE OF SETTELEMENT
NUMBER OF ACCOUNT (TO BE CLAIMED)
TOTAL AMOUNT
MASSAGE ID
THEN GO TO THE FOLLOWING NAVIGATION
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REPORTS>RACPC RETURN FORMAT>RACPC RETURN FORMAT.ODS ENTER
ENTER THE DATA IN THE EXCEL SHEET
ON THE SETTELEMENT DAY (IE 5,10,15,20,25)

ONLY CREDIT IS COMING ON SETTELEMENT DAY
WHAT YOU WILL DO ON SETTELEMENT DAY
YOU TAKE PRINT OUT OF THE EXCEL SHEET

CREDIT IBTS TO VARIOUS RACPC ACCORDING TO FORWARDING LETTER
AND DEBIT 98751104075
NOTE CONSOLIDATED CREDIT IBTS COME FROM OUR NACH BRANCH CODE
61076.
ON THE NEXT DAY OF SETTELEMENT FILE (T+1)

TWO STEPS
1.UPLOADING OF RES FILE AND PDF FILE FROM NPCI MAKER ID LOGIN AND
MAIL THE RESPECTIVE RACPC FOR RECONCILE OF FILE.
2. DEBIT IBTS GIVEN TO RESPECTIVE RACPC
GENERATING PDF AND COPY

FOLLOW THE FOLLOWING NAVIGATION OF MAKER ID
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THIS PC>C:>NACH>NACH LOGIN>ENTER MAKER ID PASSWORD>UTILITIES>
then click on user-wise generation report

under this value date = settlement date (5,10,15,20,25) and product name =ACH debit,
then click on initiate user wise generation report
after 2-3 min go to upload/download> enter my file gateway ID, PASSWORD>

download files> search for ACHDebit>click filter a file name shown (for example
ACHDebit-20012020-21012020-User-wise-report.zip) click on file >save as
somewhere in DESKTOP
EXTRACT THE FILE BY RIGHT CLICK THEN THE SYSTEM AUTOMATICALLY

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CREATED A FOLDER WHICH IS TO BE OPEN AND COPY THE FOLLOWING NAME
PDF
AND PASTE IN BATCH UPLOAD>ECS RACPC NAME OF PARTICULAR RACPC

EMAIL>PANDEY SIR >MAKE FOLDER (SETTELEMENT DATE) SAVE IT, AND TAKE
PRINTOUT OF TWO COPIES OF SUMMARY PAGE. AND ACCORDING TO PDF
PRINT OUT WE PREPARE A SUMMARISED STATEMENT
THEN AGAIN GO TO MAKER NACH LOGIN AND FOLLOW THE FOLLOWING

STEPS FOR DOWNLODING RES FILE
ACH>ROUTING>FILES>
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IN THIS FILE TYPE change TO DEBIT
FILE NAME ENTER ACH-DR-SBIN-SBINXXXXXXX (XXXXXX MEANS PF ID OF
MAKER)
BUSINESS DATE = SETTELEMENT DATE (TO) AND FROM DATE IS TODAY
WHICH IS DEFAULT
THEN CLICK OK
ALL RES FILE SHOWN ONE BY ONE SELECT AND DOWNLOAD AND SAVE IN
BATCH UPLOAD (IN THE SAME FOLDER WHERE PDF IS SAFE).
Note that there is no gap in the res file otherwise, the next day or in the later hour of
the same day res 2 file is generated and the revised file is to be send to RACPC.
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YOU HAVE TO MAIL BOTH PDF AND RES FILE TO RACPC
TAKE PRINTOUT OF EXCEL SHEET WHICH CONTAINS TOTAL OF REJECTED

AND RETURN COUNT WITH PRINTOUT OF PDF SUMMARY PAGE AND A
CONSOLIDATED DEBIT GIVEN TO VARIOUS RACPC
IN CBS THE FOLLOWING ENTRIES HAVE BEEN PASSED
RETURN DEBIT IBTS (VARIOUS RACPC)

CONSOLIDATED CREDIT IBTS 98731404079 SUSPENSE OTHERS
3.21 Operational Risk Management

1. OUTWARD CLEARING
(i) All the instruments directly received at CCPC for processing are dealt with in the
manner as laid down in e-Circular No. NBG/AGNYBKG-CTS/2014-15 dt. 21.01.2015.
(ii) Each bunch of CTS Clearing is scrutinized to ensure that the number of cheques
actually attached to the pay-in-slip tally with the same mentioned in the pay-in-slip.
(iii) In case of missing instruments, efforts are made to trace them, and if not traced,
the amount thereof is reduced from the amount of pay-in-slip under due authorization
and recorded in a Register for further follow up.
(iv) The bunches are scanned/sent to hub for scanning after being recorded in a
Transit Book.
(v) Cheques received for Collection are processed through SC module.
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(vi) The outward presentation tallies with Bank’s total presentation and is reflected in
the CHI / CH / NPCI Report.
(vii) The difference, if any, between the amount as per the funds settlement advice
received from CH/NPCI and the amount as per CBS even after passing of corrective
entries is transferred from Outward Clearing Suspense Account to Sundry Deposits
Account (Clearing Differences) if credit or Suspense Account (Clearing Differences) if
debit. The entries in Sundry Deposits Account (Clearing Differences) and Suspense
Account (Clearing Differences) are followed up for expeditious reversal.
(viii) (a) Reports received from NPCI/ CTS Vendor are checked with outward
presentation report.
(b) The differences between the Presentation of all branches/ hubs and report from
CTS vendor/ NPCI are investigated and corrective action taken. If necessary, the
matter is taken up with NPCI and/or the concerned banks for reconciliation of the
difference.
(ix) Pay-in slips and outward cheques scanned and processed during the day are kept
securely.
2. INWARD RETURNS CLEARING

i) Clearing returns are received from the CH/CHI/NPCI along with relative objection
(reason) memos and a list containing full particulars of the returned instruments.
ii) The files are sent to outward processing hubs/ branches promptly for returning the
instruments to customers along with return memo.
iii) (a) Makers record returned instruments in CBS through ‘Mark Return’ screen along
with the reasons for return.
(b) The instruments for which Mark Return functionality ‘failed’ during authorization are
posted manually in respective accounts.
iv) (a) Checker authorizes the return file data.
(b) Discrepancies in the file are advised to CH/CHI/NPCI for funds settlement
adjustments
v) (a) The reduction in debit balance in Outward Clearing Suspense Account on
account of return is reconciled with the Funds Settlement amount conveyed by
Clearing House towards inward returns. In case of any discrepancy, necessary entries
are passed for rectification of errors.
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(b) If the difference is caused by an error at Clearing House in sending the inward
returns presentation or advising the Funds Settlement amount, the exact nature of the
error is advised to Clearing House for remedial action at their end.
(c) The amount of difference between the reduction in the debit balance of Outward
Clearing Suspense Account and Funds Settlement amount is transferred to Suspense
Account/Sundry Deposits Account (Clearing Diff.) as the case may be for follow up till
reversal
3. CTS INWARD CLEARING AND OUTWARD RETURNS

i) CTS Inward files downloaded from NPCI/CHI are uploaded in CBS for SAN (Short
Account Number) validation. The data is entered wherever SAN validation fails.
ii) (a) Tele-calls are made on registered phone numbers of customers for cheques of
Rs.5.00 lacs and above (as per Circular No.: R&DB/BOD-BO/120/2019 – 20 dated 10 Feb
2020) and record of such calling is maintained.
(b) If a customer cannot be reached for any reason, the home branch of the customer
is contacted.
iii) The data entry work is distributed among available users by way of a roster.
iv) If the data entry is correct but the correct account number for the instrument is not
found or if the instrument is not drawn on a linked branch, the user inputs
99999999995 as dummy account number and moves to the next record.
v) Data entry for payee’s name is also done by referring to the image for all the
cheques including those where account number has been auto populated.
vi) (a) Each Trickle Feed report is scrutinized to ensure that the number of records in
the report tally with the number of records as per the summary report. If case of any
discrepancy, the matter is taken up with Service Desk for resolution.
(b) Posting of proper financial transactions in CBS is checked for records having an
unusual processing status in the reports. c. Bankers’ Cheques, Demand Drafts and
Inter-Office Instruments rejected during Trickle Feed are posted manually.
vii) The instruments appearing in the P2F Report and which are not received by the
CTS centre are marked for return based on the advice of CTS centre.
viii) Cheques Dishonoured Report (SY2005) is extracted and kept in Reports folder on
CBS branch server.
ix) (a) The aggregate amount of all Presenting Bank-wise lists tallies with the balance
in OLRR Dishonour account.
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(b) Reason memos, Presenting Bank-wise list (and Return summary Report, where
necessary) is transmitted to Clearing House Interface (CHI).
x) (a) Data entry is checked by referring to the cheque images for the cheques that
have gone to OLRR.
(b) Intimations from home branches/account owner regarding any possible data entry
error is also checked promptly.
(c) Errors in data entry are advised to home branches promptly for rectification and
payment, if otherwise in order.
xi) In case of errors in data entry for multi-city / At Par instruments, the rectification is
done at CCPC and paid, if otherwise in order, through OLRR Screen.
xii) It is ensured that the balance in OLRR Suspense Account is zero. If case of any
residual balance, the causes are investigated, and necessary transactions posted in
concerned accounts.
xiii) It is ensured that the claim settlement amount advised by the Clearing House
towards outward returns for the previous working day tallies with the Returns Summary
report for that day. The difference, if any, is investigated and necessary transactions
posted in the concerned accounts. Thereafter, claim amount for the previous working
day’s outward returns is credited to OLRR Dishonour Account (BGL 98575).
xiv) Any residual and unreconciled amount in Inward Clearing Suspense Account and
OLRR Suspense account is immediately transferred to Sundry Deposits Account
(Clearing Differences) or Suspense Account (Clearing Differences) as the case may
be with meaningful narration.
xv) It is ensured that the balance in OLRR Dishonour Account at the end of the day is
equal to the current day’s outward returns. Any difference amount is immediately
transferred to Sundry Deposits Account (Clearing Differences) or Suspense Account
(Clearing Differences) as the case may be with meaningful narration.
xvi) (a) Cheques drawn on Government accounts received in P2F session are branded
with Clearing Transfer rubber stamp and sent to the respective home branches along
with a list and covering letter.
(b) The CCPC marks the cheques Pay/No Pay as advised by home branches and
necessary reconciliation of entries passed.
xvii) Instruments (other than cheques drawn on Government accounts) received in
P2F session are scrutinised at the P2F location for genuineness and based on their
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Pay/No Pay decision instruments are paid/not paid at CCPC. The cheques are
retained at respective P2F centre.
3.22 Irregularities Pointed Out in RFIA

1. A Cheque was presented in clearing by ABC Bank 16.04.2020. As sufficient fund
was not available in the account, the cheque was to be returned with the reason
“insufficient fund” but due to technical failure, the CCPC could not mark return in CTS.
Implication: The presenting Bank i.e. ABC Bank released the funds to the payee of the
cheque and on not receiving payment from the Bank filed a suit against the CCPC for
the payment.
2. It is not ensured that the Payees name and account number are mentioned on the
reverse of instruments received in the Drop Box.
Compliance Required: A register should be maintained for recording the instruments
received in drop box and ensured that the payee name and account numbers are
mentioned on the reverse of instruments
3. Cheque referred and returned are recorded in a kuccha register. Proper checking
on evidenced.
Compliance Required: The standard register of cheque referred and returned should
be maintained and proper checking should be done.
4. Omissions noticed with respect to instructions contained in e-Circular No.

NBG/AGNYBKG-CTS/2014-15 dated 21.01.2015.
Compliance Required:
(i) Water droplet test should be conducted for instruments of Rs 25000/- and
above.
(j) Verification of instruments for amount Rs 50000/- and above under Ultra- Violet
(UV) Lamp should be made.
(k) Tele-calling of customers should be made at CCPCs on the registered phone
number of customers for cheques of Rs.5.00 lacs and above and record of such
calling will be maintained. When a customer cannot be reached either due to
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non-availability of the contact person or number is in correct, the home branch
of the customer should be contacted.
5. Status of some cheques are showing pending on a particular date, officials advised
that due to technical reason it can neither be accepted nor be rejected.
Compliance Required: The instruments can neither be accepted nor be rejected in
CBS as there are certain deficiencies in these instruments i.e. account closed,
incorrect account number, account number does not exist, inoperative account,
posting restrictions, instrument paid, etc. These cheques should be referred to
branches in their OLRR and the cheques should be returned to RBI with proper
reasons.
6. Modus operandi of frauds described in circulars issued by the Bank from time to
time not discussed with staff.
Compliance Required: Branch Manager should discuss the modus operandi of frauds
described in circulars issued from time to time to create awareness amongst staff.
Preventive vigilance committee meeting should be conducted at stipulated periodicity
and the modus operandi of frauds should be discussed in it.
-----------
KEY LEARNINGS
➢ In CTS, the presenting bank branch captures the data on the MICR band and
the images of a cheque using their Capture System which should meet the
specifications and standards prescribed for data and images.
➢ The collecting bank/presenting bank sends the data and captured images duly
signed digitally and encrypted to the Clearing House for onward transmission
to the paying/destination/drawee bank through Clearing House Interface (CHI).
➢ The Clearing House processes the data, arrives at the settlement figure and
routes the images and requisite data to the paying banks.
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➢ The paying bank’s CHIs also generates the return file for unpaid instruments, if
any.
➢ The return file/ data sent by the paying banks are processed by the Clearing
House in the return clearing session in the same way as presentation clearing
and return data is provided to the presenting banks for processing.
➢ The clearing cycle is treated as complete once the presentation clearing and
the associated return clearing sessions are successfully processed.
➢ Cheques presented by other banks on T day are received on the same day
after closure of presentation session. These cheques are processed on T+1
(next day) till 02:30 PM (Return Session).
➢ For Inward clearing, 2 type of files are received- Data File (having instrument
details Inst No, Inst Date, Account no. etc. and Image File (having Image of the
instrument)
➢ SAN File (Short Account Number) and CIL Files (CPC Inward Clearing) are
uploaded using the file upload screen, through these, accounts are debited for
respective cheque amounts through trickle feed.
➢ After uploading of the files, Technical Verification is done.
➢ Instruments that cannot be debited from respective accounts for various
reasons like Incorrect A/c no., Incorrect Cheque No., DP not available etc are
sent to Branch for correction and payment through OLRR (Online Rejection
Referral)
➢ After all the instruments have been attended in Technical Verification/ OLRR, a
Dishonour file is generated.
➢ The dishonour file is sent to RBI through NCR Inward application. The return
submission is completed once positive acknowledgement is received from RBI
for the return files sent.
➢ Sometimes MICR reader of CTS Scanner fails to read the values (either single
character or multiple characters or even entire MICR band). Such instruments
are shown as MICR Reject in the CTS and the teller is required to update the
corresponding missing values manually in the CTS application from the
physical cheque.
➢ Whenever, teller makes any changes in MICR values in CTS application, the
application updates one field, “MICR Repair flag” in the system and this
information is passed to the paying bank/branch, along with the cheque
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image/data, through NPCI. It acts as an alert to the paying bank to exercise due
caution while paying such instruments.
➢ Branches/CCPCs to exercise due caution while processing cheques involving
MICR code repair in outward as well as inward CTS clearing.
➢ Instruments are scanned and should pass the Image Quality Assessment (IQA)
test before onward transmission to the drawee bank.
➢ Presenting banks are required to send physical instrument along with scanned
images to drawee banks in case of (a) Images which fail the IQA test and (b)
the instrument is returned by the drawee bank with reason code 39 (image not
clear present again with paper) or reason code 40 (present with document), i.e.,
request by drawee bank for physical instruments.
➢ Even in case P2F is sent, ultimate responsibility rests with the presenting bank.
➢ Mandate Management System is a service of NACH Debit which facilitates the
process of Mandate Creation, Mandate Amendment, Mandate Cancellation and
offers all MIS related to the Mandate.
Inward Clearing: Two type of files are received:

(i) Data File – Having instrument details (Instrument No., Instrument Date, Account
No. etc.)
(ii) Image File – Having Image of the instrument
The instrument images are kept in the CBS server and the Data files (text format)
are uploaded to CBS through file upload screen (69004)
SAN File (Short Account Number) and CIL Files (CPC Inward Clearing) are uploaded
using the file upload screen and accounts are debited for respective cheque amounts
through trickle feed.
Technical Verification & Referral: After uploading of the files, cheques appear in
Technical Verification (Screen No 51100). Here the teller has to verify details such as
sign, amount in words and figures etc. After verification the user accepts/rejects the
cheque and proceeds onto the next cheque. Accepted instruments are passed and
rejected instruments go to Referral screen (Checker). The cheque is returned only
after it is rejected by Checker in the referral screen.
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OLRR (Online Rejection Referral): Instruments that cannot be debited from
respective accounts for various reasons like Incorrect A/c no., Incorrect Cheque No.,
DP not available etc. are sent to Branch for correction and payment through OLRR.
Return Process: After all the instruments have been attended in Technical
Verification / OLRR, a dishonour file is generated through Screen No. 69088
Image Quality Assessment (IQA) Failures: Cheque Truncation System (CTS)

clearing is based on transmission of instrument images and data. Instruments are
scanned and should pass the Image Quality Assessment (IQA) test before onward
transmission to the drawee bank. Instruments which fail the IQA test are presented
physically through Paper to Follow (P2F) process.
National Automated Clearing House: NACH has both Debit and Credit variants.
NACH (Debit) & NACH (Credit) aims at facilitating interbank, high volume, debit/credit
transactions, which are bulk and repetitive in nature. NPCI facilitates the participation
of Corporates on NACH Credit through the Direct Corporate Access (DCA) module
with sponsor bank’s control. Direct Corporate Access (DCA) functionality facilitates the
access of NACH Credit to the Corporates thus leading to ease of operations both for
the Corporates as well as their Sponsor Banks.
Dispute Management System: DMS functionality provides a common platform to all

the participating banks to raise and resolve transaction related issues in a time bound
manner with provisions of pre-arbitration, arbitration and good faith.
Mandate Management System: MMS is a service of NACH Debit which facilitates

the process of Mandate Creation, Mandate Amendment, Mandate Cancellation and
offers all MIS related to the Mandate. E-Mandate facilitates issuance and confirmation
of mandate by the customer through alternate/any time channels.
CHECK YOUR PROGRESS
Q1: In CTS, the states are group in three grids, West Bengal comes under
(a) Northern grid
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(b) Western grid
(c) Southern grid
(d) None of the above
Q2: How many CTS Grids are there in our country?

a. 4 b. 3
c. 2 d. 1
Q3: What is long form of NACH?

a. Notional Adjustment of Cheque at Home Branch
b. Notional Adjustment of Cheques
c. National Automated Clearing House
d. National Accounting of Cheques & Hundis
Q4: Clearing House Interface (CHI) is a……

a. Software
b. Hardware
c. Malware
d. None of the above.
Q5: All NACH related queries should be routed

a) Through email
b) Through CRM utility developed by NPCI
c) Through Letters
d) Over telephone calls
Q6: Tele-calling of customers should be made at CCPCs on the registered phone

number of customers for cheques of ………. above and record of such calling will be
maintained. When a customer cannot be reached either due to non-availability of the
contact person or number is in correct, the cheque should be returned.
a) Rs.2.00 lacs
b) Rs.2.50 lacs
c) Rs.5.00 lacs
d) Rs.3.00 lacs
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Q7. A mandate related to NACH Debit can be initiated by the
(a) Creditor Bank only
(b) Debtor Bank only
(c) Either by the Creditor Bank or the Debtor Bank
(d) By the Collecting Bank
Q8. Which of the following is not a benefit of NACH Debit?

(a) Simplification of the mandate acceptance and recording process.
(b) Reduction in operational cost for the banks.
(c) Reduction in operational cost for the clients.
(d) Secured as Corporates cannot have direct access to the NACH systems
Q9. Please check whether the statements are true or false:

(a) CTS Inward files downloaded from NPCI/CHI are uploaded in CBS for validation
of Short Account Number (SAN).
(b) In case of errors in data entry for multi-city/ at par instruments, the rectification is
done at Branch and paid, if otherwise in order, through OLRR Screen.
(c) In Inward Returns Clearing, the Makers record returned instruments in CBS
through ‘Mark Return’ screen along with the reasons for return.
(d) Mandate Management System is a service of NACH Debit which facilitates the
process of Mandate Creation, Mandate Amendment, Mandate Cancellation and offers
all MIS related to the Mandate.
Que 1 2 3 4 5
Ans c b c a b
Que 6 7 8 9
Ans c c d True a), c), d)
CASE STUDY
In Clearing process at CCPC, lots of clearing related files are downloaded and
uploaded on a daily basis. These files are received from NPCI server. NPCI is playing
Page 138 of 225

a vital role in CTS clearing. One day RFIA team landed at the Branch and started
interacting will the staff to get an idea about their level of understanding and
commitment towards work. They put some questions to a newly appointed junior
associate who found it very difficult to answer the questions of the Inspecting official.
1. What is NPCI?
(a) National Payment Corporation of India
(b) National Payment Company of India
(c) National Processing Corporation of India
(d National Payment Centre of India
2. NPCI is an initiative of ….
(a) RBI (b) IBA
(c) SBI (d) RBI & IBA
3. Which is not a flagship product of NPCI

(a) RuPay Card (b) IMPS
(c) NEFT (d) CTS
4. National Financial Switch which is maintained by NPCI is located at….

(a) Mumbai (b) Hyderabad
(c) Bengaluru (d) Pune
5. NPCI facilitates the participation of Corporates on NACH Credit through the

……………module with sponsor bank’s control.
(a) Direct Corporate Access (DCA)
(b) Mandate Management System (MMS)
(c) User Interface (UI)
(d) E-Mandate
Answers-
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Que 1 2 3 4 5
Ans (a) (d) (c) (b) (a)
RELEVANT CIRCULARS
POSITIVE PAY SYSTEM – R&DB/AGNYBKG-CTS/8/2020 - 21 dated 23rd Dec 2020
STANDARD OPER. PROCEDURE R&DB/AGNYBKG-RBI-I/9/2020 - 21 dated 30th Dec 2020
NACH – HARMONISATION OF R&DB/AGNYBKG-NACH/7/2020 - 21 dated 19th Dec 2020
TURN-AROUND-TIME (TAT)
CTS-UV BAND IN VARIABLE FIELDS NBG/BRNWM-BRANCHES/3/2020 - 21 dated 13th Aug
2020
MIGRATION OF PDC/EMI CHEQUES R&DB/AGNYBKG-NPCI/5/2020 - 21 dated 7th Aug 2020
NACH PROCEDURAL GUIDELINES R&DB/AGNYBKG-NPCI/6/2020 - 21 dated 7th Aug 2020
NACH- AMC FOR MANDATES R&DB/AGNYBKG-NACH/4/2020 - 21 dated 29th Jul 2020
SMART CDK YONO LINKED R&DB/S&DB-YONO/45/2019-20 dated 14th Feb 2020
NON-HOME CHEQUES R&DB/BOD-BO/120/2019 - 20 dated 10th Feb 2020

CONTACTING DRAWER BEFORE
PAYMENT
NACH MANDATE FORMAT NBG/AGNYBKG-NPCI/25/2019 - 20 dated 14th Jan 2020
CRM TRACKER UPGRADE NBG/AGNYBKG-NACH/23/2019 - 20 dated 6th Jan 2020
PARTICIPATION OF RESERVE BANK NBG/AGNYBKG-NACH/21/2019 - 20 dated 13th Dec 2019

OF INDIA IN NACH CREDIT
NACH- MANDATE MANAGEMENT NBG/AGNYBKG-NPCI/19/2019 - 20 dated 6th Dec 2019
SYSTEM - PROPOSED CHANGES
CTS –PRINTING OF REVERSE NBG/CPC/3/2019 - 20 dated 7th Sep 2019
ACCOUNT NUMBER
CTS ENABLED CHEQUE DEPOSIT R&DB/P&SP/CDK/3/2019 - 20 dated 26th Apr 2019
KIOSK
CTS- IMAGE QUALITY NBG/AGNYBKG-CTS/33/2018 - 19 dated 27th Mar 2019
ASSESSMENT (IQA) FAILURES
Page 140 of 225

CTS- ROLE MANNUAL AND NBG/AGNYBKG-CTS/8/2014 - 15 dated 21st January 2015
PROCESS MANNUAL FOR CCPCs
(CTS-2010) STANDARDISATION NBG/BOD-GB/78/2012 - 13 dated 30th November 2012
AND ENHANCEMENT OF SECURITY
FEATURES IN CHEQUE FORMS
WORK FROM ANYWHERE (WFA) R&DB/AGNYBKGCTS/6/2021-22
PROJECT FOR CCPC STAFF - SOP
PAYMENT OF NON-HOME R&DB/AGNYBKGCTS/10/2021-22

CHEQUES CONTACTING DRAWER
BEFORE PAYMENT —
CONFIRMATION CALL E-REGISTER.
STANDARD OPERATING R&DB/AGNYBKGCTS/13/2021-22
PROCEDURE (SOP) — INWARD
CLEARING OPERATIONS ON DAYS
OF STRIKES AT CCPCS.
INTEGRATED PAYMENT HUB (IPH) R&DB/AGNYBKGNACH/14/2021-22
NACH — OUTWARD PROCESS
USER MANUAL.
NACH — ROLE & PROCESS R&DB/AGNYBKG-NACH/16/2021-22
MANUAL.
NACH — COMPENSATION FOR R&DB/AGNYBKGNACH/17/2021-22
FAILED TRANSACTIONS
UNRESOLVED WITHIN TAT — BGL
ACCOUNT.
CTS — OLRR & BLANKET REJECTION R&DB/AGNYBKGCTS/13/2022-23
— CBS PROMOTIONS - DECEMBER
2022
NACH ACH DEBIT TRANSACTION R&DB/AGNYBKGNACH/14/2022-23
ENQUIRY CBS PROMOTIONS
DECEMBER 2022.
Page 141 of 225

CTS UNIFORM HOLIDAYS LIST FOR R&DB/AGNYBKGCTS/16/2022-23
CALENDAR YEAR 2023 — GRID-
WISE
NACH - INCREASE IN LIMIT FOR R&DB/AGNYBKGNACH/17/2022-23
MANDATE REGISTRATION UNDER
TREDS PLATFORM — CBS
PROMOTIONS — DECEMBER 2022.
POSITIVE PAY SYSTEM (PPS) — R&DB/AGNYBKGCTS/1/2023-24
CREATION OF DASHBOARD FOR
SUMMARY DATA.
Page 142 of 225

CHAPTER-4: LAWS RELATING TO CLEARING & COLLECTION
Learning Objectives: We need to know different acts/ institutions which are

applicable to banking activities. These acts cover physical and electronic modes of
payments and deal with conditions for payments as well as penalties related to default
in services. We will learn main features of NI Act, Payment & Settlement Systems Act,
Banking Ombudsman Scheme, Ombudsman Scheme for DIGITAL Transactions,
Consumer Protection Act, Banking Codes and Standards Board of India.
4.1 Negotiable Instruments Act 1881

The Negotiable Instruments Act was enacted in 1881. Prior to its enactment, the
provisions of the English Negotiable Instrument Act were applicable in India. The
present Act has been modified to suit the present day needs of the country in this
regard. It has 147 sections spread over 17 Chapters. It extends to the whole of India.
The Act operates subject to the provisions of Sections 31 and 32 of the Reserve Bank
of India Act, 1934.
Section 31 of the Reserve Bank of India Act provides that no person in India other than
the Bank or as expressly authorised by this Act, the Central Government shall draw,
accept, make or issue any bill of exchange, hundi, promissory note or engagement for
the payment of money payable to bearer on demand. This Section further provides
that no one except the RBI or the Central Government can make or issue a promissory
note expressed to be payable or demand or after a certain time. Section 32 of the
Reserve Bank of India Act makes issue of such bills or notes punishable with fine
which may extend to the amount of the instrument.
Negotiable instrument means a written document which creates a right in favour of

some person, and which is freely transferable. Although the Act mentions only three
instruments (promissory note, a bill of exchange and cheque), it does not exclude the
possibility of adding any other instrument. As such, documents like share warrants
payable to bearer, debentures payable to bearer and dividend warrants are negotiable
instruments. But the money orders and postal orders, deposit receipts, share
certificates, bill of lading, dock warrant, etc. are not negotiable instruments.
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Although they are transferable by delivery and endorsements, yet they are not able to
give better title to the bona fide transferee for value than what the transferor has.
Promissory Note (PN) (sec.4) – A document which contains a promise to pay on

demand a certain sum of money only to a specified person is a PN though there may
be no words of negotiability. The unconditional understanding to pay a specified
amount to the specified person is sine qua non in a PN. The promise to pay is not
dependent upon a contingency. If indebtedness is acknowledged in a document for a
defined sum of money payable “on demand” that is enough to make the document a
PN. PN has two parties to the contract the promisor and the promisee.
Bill of Exchange (BOE) (sec.5) – a BOE has three parties to the contract, maker
(Drawer), specified person (Beneficiary or Payee) and a third party (Drawee) who is
directed by the maker to pay a certain sum of money only to or to the order of a Payee
or to the bearer of the instrument. Essential conditions for a BOE include - It must be
in writing and must be signed by the drawer. The drawer, drawee and payee must be
certain, and the sum payable must also be certain. It should be properly stamped (As
per applicability of Central or State Stamp Acts). It must contain an express order to
pay money and money alone.
Cheque (sec.6) – is a BOE, which is drawn on a specified banker (Drawee) and not
expressed to be payable otherwise than on demand and it includes the electronic
image of a truncated cheque and a cheque in the electronic form (Amendment Act
2002).
4.1.1. Characteristics of a Negotiable Instrument:

1. Property - The possessor of the negotiable instrument is presumed to be the owner
of the property contained therein and also has the right on that property. In the case
of bearer instrument, the property passes by mere delivery to the transferee. In the
case of an order instrument, endorsement and delivery are required for the transfer
of property.
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2. Title – The transferee of a negotiable instrument is known as holder in due course.
A holder in due course (sec.9) has a better title to the instrument subject to certain
conditions (consideration for the amount mentioned in the NI and received without
having sufficient cause to believe that any defect existed in the title of the person
from whom he has received the NI). Therefore, it is not affected by defect in title on
the part of previous holders of instrument.
3. Rights - A negotiable instrument can be transferred any number of times till it is at

maturity (sec.22). The maturity is of an NI that is expressed to be payable on
Demand is the date at which it falls due. For all others the maturity is on the third
day after the day on which it is expressed to be payable. When the day on which a
PN or BOE is at maturity is a public holiday, the instrument shall be deemed to be
due on the next preceding business day. The transferee of the negotiable
instrument can sue in his own name, in case of dishonour. The holder of the
instrument need not give notice of transfer to the party liable on the instrument to
pay.
4. Presumptions - Certain presumptions apply to all negotiable instruments

a. Consideration - It is presumed that; consideration is present in every negotiable
instrument until the contrary is presumed (e.g. NI obtained from its lawful owner by
means of fraud or undue influence).
b. Date - Where a NI is dated, the presumption is that it has been made or drawn on
such date, unless the contrary is proved.
c. Time of acceptance – Where acceptance of the instrument is undated Unless the
contrary is proved, every accepted bill of exchange is presumed to have been
accepted within a reasonable time after its issue and before its maturity. If the
acceptance is dated, it will prima facie be taken as evidence of the date on which it
was made.
d. Time of Transfer - Unless the contrary is presumed it shall be presumed that every
transfer of a negotiable instrument was made before its maturity.
e. Order of endorsement - Until the contrary is proved it shall be presumed that the
endorsements appearing upon a negotiable instrument were made in the order in
which they appear thereon.
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f. Stamp - Unless the contrary is proved, it shall be presumed that a lost promissory
note, bill of exchange or cheque was duly stamped (Subject to Central and State
Stamp Acts).
g. Holder in Due Course - it shall be presumed that the holder of a negotiable
instrument is the holder in due course, unless otherwise proved.
h. Proof or Protest - Section 119 lays down that in a suit upon an instrument which
has been dishonoured, the court shall on proof of the protest, presume the fact of
dishonour, unless and until such fact is disproved.
5. Prompt Payment - A negotiable instrument enables the holder to expect prompt

payment because a dishonour means the ruin of the credit of all persons who are
parties to the instrument. This is the reason that dishonour of Cheque due to
insufficiency of money in an account is treated as a Criminal Offence and not a civil
offence under the Indian Penal Code and sec. 138 of NI Act.
The most important part of any NI is the negotiation. According to section 14 of the
Act, ‘when a promissory note, bill of exchange or cheque is transferred to any
person so as to constitute that person the holder thereof, the instrument is said to
be negotiated. Therefore, Negotiation requires that there must be a transfer of the
instrument to another person and the transfer must be made in such a manner as
to constitute the transferee the holder of the instrument.
4.1.2. Negotiation can be done by way of:

a) By Delivery (sec.47) – A bearer NI is negotiated by delivery.
b) By Endorsement and Delivery (Sec. 48) – A NI that is payable to order is
negotiated by endorsement and delivery.
Every sole maker, drawer, payee or endorsee, or all of several joint makers, drawers,
payees or endorsees can endorse an NI and negotiate if negotiability of such
instrument has not been restricted or excluded as per section 50 of the NI act. When
the holder transfers or indorses the instrument to anyone else, the holder becomes
the ‘endorser’. The person to whom the bill is indorsed is called an ‘endorsee’.
4.1.3. Assignment - Transfer by assignment takes place when the holder of a

negotiable instrument sells his right to another person without endorsing it. The
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assignee is entitled to get possession and can recover the amount due on the
instrument from the parties thereto (actionable claims are assigned e.g. Insurance
policies can be assigned). NI act only recognises negotiation as the method of transfer.
Endorsement is signing a negotiable instrument for the purpose of negotiation.
4.1.4. Essentials of a valid endorsement

a) The endorsement may be on the back or face of the instrument and if no space is
left on the instrument, it may be made on a separate paper attached to it called
Allonge.
b) Must be made by the maker or holder of the instrument and not by a stranger.
c) It must be signed by the endorser. Full name is not essential. Initials may suffice.
Thumb-impression should be attested. Signature may be made on any part of the
instrument. A rubber stamp is not accepted but the designation of the holder can be
done by a rubber stamp.
d) It may be made either by the endorser merely signing his name on the instrument
(it is a blank endorsement) or by any words showing an intention to endorse or
transfer the instrument to a specified person (it is an endorsement in full).
e) When in a bill or note payable to order the endorsee’s name is wrongly spelt, he
should when he endorses it, sign the name as spelt in the instrument and write the
correct spelling within brackets after his endorsement.
f) It must be completed by delivery of the instrument. Where a person endorses an
instrument to another and keeps it in his papers where it is found after his death
and then delivered to the endorsee, the latter gets no right on the instrument.
g) It must be an endorsement of the entire bill. Endorsement is complete after the
condition is fulfilled for a conditional delivery.
4.1.5. Classes of endorsements are as under:
a) Blank or General Endorsement (sec.16 and 54) - Endorsement in blank specifies
no endorsee. It only consists of the signature of the endorser. A negotiable
instrument even though payable to order becomes a bearer instrument if endorsed
in blank.
b) Special or Full Endorsement (sec.16) – When the endorsement contains both the
signature of the endorser and also the name of the person in whose favour the
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endorsement is made. E.g. “Pay to A or A’s order”. A blank endorsement can be
converted into a full endorsement.
c) Partial Endorsement (sec.56) – where only part of the amount is purported to be
endorsed. It is not a valid negotiation.
d) Restrictive Endorsement (sec.50) – which restricts the further negotiation of a bill.
The endorsee under a restrictive endorsement acquires all the rights of the endorser
except the right of negotiation.
e) Conditional or Qualified Endorsement - where the endorsee limits or
negatives his liability by putting some condition in the instrument. It does not affect the
negotiability of the instrument. E.g. are Sans recourse (without recourse)
endorsement, Facultative endorsement (endorser extends his liability or abandons
some right under a NI), Sans frais endorsement (endorser does not want the endorsee
or any subsequent holder, to incur any expense on his account on the instrument),
Liability dependent upon a contingency (endorser makes his liability depend upon the
happening of a contingent event, or makes the rights of the endorsee to receive the
amount depend upon any contingent event e.g. Pay A or order on his marriage with
B).
A person cannot pass a better title than he himself possesses. A person who is a mere
finder of a lost goods or a thief or one who obtains any article by fraud or for an unlawful
consideration does not get any title to the thing so acquired. The Negotiable
Instruments Act provides protection to those persons who acquire the instruments in
good faith and for valuable consideration. The moment an instrument comes into the
hands of a holder in due course, not only does he get a title which is free from all
defects but having passed through his hands the instrument is cleaned of all defects.
Where the holder of a bill or note loses it, the finder gets no title to it. But if the
instrument is transferable by mere delivery and there is nothing on its face to show
that it does not belong to the finder, a holder obtaining it from the finder in good faith
and for valuable consideration and before maturity is entitled to the instrument and
can recover payment from all the parties thereof. The holder of the instrument when it
is lost must give a notice of loss to all the parties liable on it and also a public notice
by advertisement. A person who obtains an instrument by fraud gets a defective title.
But if such an instrument passes into the hands of a holder in due course, the plea of
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fraud will not be available against him. An instrument given for an illegal consideration
is void and does not convey a valid title to the holder.
Bankers are specially protected against forged endorsement under section 85 of the
Act.
4.1.6. Important points for Bankers

Every person capable of contracting, according to the law to which he is subject, may
bind himself and be bound by the making, drawing, acceptance, endorsement, delivery
and negotiation of a promissory note, bill of exchange or cheque. A minor may draw,
endorse, deliver and negotiate such instruments to bind all parties except himself.
(i) Holder in Due Course (sec.9) - must be a holder for valuable, not void or illegal
consideration. Must have become a holder before the date of maturity. Must have
become holder of the NI in good faith. A holder in good faith purges the defective title
of the NI but all prior parties continue to be liable to him until the instrument is duly
satisfied. His rights are not affected in case of an inchoate instrument (incomplete –
begun but not completed). No effect of absence of consideration or presence of an
unlawful consideration.
An NI can be dishonoured by non-acceptance (sec.91) or by non-payment (sec.92).
When a negotiable instrument is refused acceptance or payment notice of such refusal
must immediately be given to parties to whom the holder wishes to make liable. Failure
to give notice of the dishonour by the holder would discharge all parties other than the
maker or the acceptor (Sec. 93). the holder of the instrument or some party to it who
is liable thereon must give a notice of dishonour to all the prior parties whom he wants
to make liable on the instrument (Section 93). The agent of any such party may also
be given notice of dishonour. A notice given by a stranger is not valid. The notice must
be given in a reasonable time and in calculating such time public holidays shall be
excluded (sec. 105). The notice of dishonour may be oral or written or partly oral and
partly written. It may be sent by post.
(ii) Section 106 lays down two different rules for determining reasonable time in
connection with the notice of dishonour
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(a) When the holder and the party to whom notice is due carry-on business or live in
different places - the notice of dishonour must be dispatched by the next post or on
the day next after the day of dishonour.
(b) When the parties live or carry-on business in the same place - the notice of
dishonour should reach its destination on the day next after dishonour.
The notice may be served at the place of business or at the residence. If the party
entitled to the notice cannot after due search be found, notice of dishonour is
dispensed with. When a promissory note or bill of exchange has been dishonored by
non-acceptance or non-payment, the holder may cause such dishonor to be noted (not
certified) by a notary public upon the instrument, or upon a paper attached thereto, or
partly upon each (sec.99 & 100). When a promissory note or bill of exchange has been
dishonored by non-acceptance or non-payment, the holder may, within a reasonable
time, cause such dishonor to be noted and certified by a notary public. Such
certificate is called a protest.
After the formality of noting and protesting is gone through, the holder may bring a suit
against the parties liable for the recovery of the amount due on the instrument.
(iii) Section 131 of NI act gives protection to the collecting banker - A banker who
has in good faith without negligence received payment for a customer of a cheque
crossed generally or specially, shall not, in case the title to the cheque proves
defective, incur any liability to the true owner of the cheque by reason for having
received such payment. A banker receives payment of a crossed cheque for a
customer within the meaning of this section not withstanding that he credits his
customer’s account with the amount of the cheque before receiving payment thereof.
Hence in order to be eligible for protection under section 131, the banker should
ensure the following:
a) There should not be any dishonesty and or negligence on the part of the banker.
The banks therefore take introduction while opening the accounts.
b) The cheque should be collected only for a customer. It is therefore essential
that before the cheque is collected the relationship of the customer and the
banker is established. It is because of this that the customer account is first
opened and then the cheque is collected.
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c) The cheque should be crossed before it comes into the hands of collecting
banker. Once these precautions are taken, the bank is protected, and no
charge of conversion can be made against him.
(iv) A Cheque can be

a) An open cheque – payable at the counter of the bank.
b) Bearer Cheque – payable to the person who presents the cheque for encashment.
Transferable by mere delivery.
c) Order Cheque – payable to the person named in the cheque. When the word
bearer is cancelled it becomes an order cheque.
d) Crossed Cheque – cheque with two parallel transverse lines are drawn with or
without the words between the lines. It can only be credited to the account of the
payee.
e) Stale Cheque – a Cheque whose validity period is over. An Out-dated cheque.
f) Ante-dated cheque – a cheque contains the date on which it is drawn. If it bears a
prior date or back date, it is called ante-dated cheque.
g) Post-dated cheque – cheque bearing a date later than the date on which it is
drawn.
h) Mutilated cheque – torn into pieces.
(v) Modes of Crossing a Cheque

a) General Crossing - cheque bearing two transverse parallel lines at the left-hand
top corner, with or without words (not negotiable).
b) Special crossing – when a cheque bears the name of the bank with or without the
words (not negotiable) between the transverse lines.
c) Restrictive crossing / Account payee Crossing – cheque can be paid by way of
credit to account only. Marked as a/c payee between the lines.
d) Double Crossing – when a second bank act as an agent of the first collecting
banker it is said to be doubly crossed.
(vi) Sec.87 Material alteration

Any material alteration of negotiable instrument renders the same void as against
anyone who is a party thereto unless it was made in order to carry out the common
intention of the original parties. Any such alteration, if made by an endorsee,
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discharges his endorser from all liability to him in respect of the consideration thereof.
Sec.89 - When a Promissory note, BOE, or Cheque has been materially altered but
does not appear to have been so altered or where a cheque is presented for payment
which does not at the time of presentation appear to be crossed or to have had a
crossing which has been obliterated Payment thereof by a person or banker liable to
pay and paying the sum according to the apparent tenor thereof at the time of payment
or otherwise in due course, shall discharge such person or banker from all liability
thereon and such payment shall not be questioned for the reason ‘the instrument has
been altered’, or the cheque crossed.
(vii) Penalties for Bouncing of Cheques (sec. 138 to 142)

Where any cheque drawn by a person on an account maintained by him with a banker
for payment of any amount of money to another person from out of that account for
the discharge, in whole or in part, of any debt or other liability, is returned by the bank
unpaid, either because of the amount of money standing to the credit of that account
is insufficient to honor the cheque or that it exceeds the amount arranged to be paid
from that account by an agreement made with that bank, such person shall be deemed
to have committed an offence and shall without prejudice to any other provisions of
this Act, be punished with imprisonment for "a term which may extend to two years",
or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless

a. The cheque has been presented to the bank within a period of 3 months from the
date on which it is drawn or within the period of its validity), whichever is earlier.
b. The payee or the holder in due course of the cheque, as the case may be, makes
a demand for the payment of the said amount of money by giving a notice, in writing,
to the drawer, of the cheque, "within 30 days" of the receipt of information by him
from the bank regarding the return of the cheques as unpaid, and
c. The drawer of such cheque fails to make the payment of the said amount of money
to the payee or, as the case may be, to the holder in due course of the cheque,
within Thirty days of the receipt of the said notice. Explanation: For the purpose of
this section, "debt or other liability" means a legally enforceable debt or other
liability.
Page 152 of 225

d. Court empowered to take cognizance of offence even if complaint filed beyond one
month.
e. Summary trial procedure permitted for imposing punishment up-to one year and
fine even exceeding Rs 5,000. Offence can be compounded.
f. Summons can be issued by speed post or courier service. Summons refused will
be deemed to have been served.
g. Evidence of complainant through affidavit permitted. Bank’s slip or memo indicating
dishonour of cheque will be prima facie evidence unless contrary proved.
4.2 Payment and Settlement Systems Act’ 2007

With the advent of Technology in Financial transactions there was a need to regulate
the electronic payments in India and its settlement across spectrum. NI Act lagged in
this aspect and RBI Act did not empower RBI to be the regulator for electronic
settlement systems.
RBI, as the central bank of the country, is the sole authority for the issue of currency
notes under the RBI Act 1934. Under this act RBI can frame regulations for clearing
houses and fund transfers through electronic means between banks or between banks
and other financial institutions. Hitherto Clearing houses were governed by Uniform
Regulations and Rules for Bankers’ Clearing Houses (URRBCH) and each system’s
local procedural guidelines were contractually agreed between the clearing house and
its members. These contracts are now legally covered under the Payment and
Settlement Systems Regulations, 2008. RBI regulates foreign currency payments and
receipts (Foreign Exchange market) under provisions of the Foreign Exchange
Management Act 1999 (FEMA).
The Banking Regulation Act, 1949, defines Banking and empowers RBI to regulate
the Banking system in the country. Under this Act RBI also regulates clearing houses
that are in turn managed by banks, can inspect the books and accounts of banks and
calls for periodical financial reports and data from the banks (Risk Based Supervision).
NBFCs that are accepting deposits and other financial institutions also come under
the purview of RBI within this Act.
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The Negotiable Instruments Act, 1881 (NI Act), defines promissory notes, bills of
exchange and cheques. In 2002, amendments were made to the NI Act to provide for
electronic cheques and cheque truncation and changes in penal provisions and filing
of suit.
The Information Technology Act, 2000, covers all aspects related to electronic
transaction processing, security features that are necessary to maintain the
confidentiality, integrity and authenticity of such transactions, digital signatures and
encryption of data. It also provides for treating electronically stored information as
equivalent to documentary evidence in a court of law (This was not covered earlier
under the Indian Evidence Act).
The Indian Contract Act, 1872, explains and governs contracts and agreements in
India, including mutual rights and obligations of the parties involved. This Act was
amended over a period of time, wherein besides other changes the sections covering
sale of goods and sections covering Partnership were obliterated. Therefore, the
Payment and Settlement Systems Act 2007 that came into force in 2008. The Payment
and Settlement Systems Act, 2007, empowers the RBI to
1) Regulate and oversee all payment and settlement systems in the country and call
for regular reports.
2) Provide settlement finality and a sound legal basis for netting.
3) Mandatory obtain RBI authorisation to set up and operate a payment system.
4) Audit and conduct on and off-site inspections of the system.
To exercise its powers and perform its functions and discharge its duties, the RBI is
authorized under the Act to constitute a committee of its central board, which is known
as the Board for Regulation and Supervision of Payment and Settlement Systems
(BPSS). Although BPSS became operational in 2005 it was reconstituted after the Act
came into force.
(i) Impact of Payment and Settlement Systems Act (PSS Act):

Apart from RTGS System, NEFT System, Electronic Clearing Services (ECS), Cheque
Truncation System (CTS) and Speed Clearing the Payment and Settlement Systems
Act (PSSA) had the impact on the following:
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• National Payments Corporation of India (NPCI) - an umbrella organisation for
operating retail payments and settlement systems in India, is an initiative of Reserve
Bank of India (RBI) and Indian Banks’ Association (IBA). It is promoted by ten core
promoter banks namely State Bank of India, Punjab National Bank, Canara
Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank,
Citibank N. A. and HSBC. In 2016 the shareholding was broad-based to 56 member-
banks to include more banks representing all sectors. It is Not for Profit Company
under the Companies Act 2013 and has been set up to provide infrastructure to the
entire Banking system in India for physical as well as electronic payment and
settlement systems. The Flagship products of NPCI have been – RuPay payment
settlement systems resulting in RuPay cards, Immediate Payment Service (IMPS),
National Financial Switch (NFS), Cheque Truncation System (CTS), Bharat Bill
Payment System (BBPS), Unified Payments Interface (UPI), National Common
Mobility Card (NCMC) and National Electronic Toll Collection (NETC).
• Institute for Development and Research in Banking Technology (IDRBT) – was

setup in 1996 with a brief to spearhead technology absorption in the banking and
financial sector of the country. Over the period of years, the institute has helped in
development and spreading of FinTech in the country especially after the enactment
of PSA. For e.g., NFS was established by IDRBT to facilitate connectivity among the
ATM switches of all Banks, addressing the limitations of other ATM networks and
creating a reliable national infrastructure.
• Committee on Payments and Market Infrastructures (CPMI) - The Committee

on Payments and Market Infrastructures (CPMI) promotes the safety and efficiency of
payment, clearing, settlement and related arrangements, thereby supporting financial
stability and the wider economy. The CPMI monitors and analyses developments in
these arrangements, both within and across jurisdictions. It also serves as a forum for
central bank cooperation in related oversight, policy and operational matters, including
the provision of central bank services. The CPMI is a global standard setter in this
area. It aims at strengthening regulation, policy and practices regarding such
arrangements worldwide. It works under the aegis of Bank for International
Settlements.
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• US Dollar Cheque Collection - There are various ways of collecting (realising)
USD denominated cheques. The collection process followed by banks (presenting
banks) varies depending on the institutional arrangements put in place by them. These
are various types of arrangements adopted by banks–
➢ Cash Letter Arrangement (CLA)
➢ Direct Collection Arrangement (DCA)
➢ Final Credit Services (FCS)
➢ Check-21 Facility
(Details available in Chapter 5.)
• Indo Nepal Remittance Facility Scheme - Indo-Nepal Remittance Facility is a

cross-border remittance scheme to transfer funds from India to Nepal, enabled under
the NEFT Scheme. The scheme was launched to provide a safe and cost-efficient
avenue to migrant Nepalese workers in India to remit money back to their families in
Nepal. A remitter can transfer funds up to Indian Rupees 50,000 (maximum
permissible amount) from any of the NEFT-enabled branches in India. The beneficiary
would receive funds in Nepalese Rupees. Further details on the NEFT system and the
NEFT-enabled branches are available on the website of Reserve Bank of India at
http://www.rbi.org.in/scripts/neft.aspx. there is no need for the remitter to maintain an
account with a bank branch in India and also no need for the beneficiary to maintain
an account with a bank branch in Nepal.
• The Payment and Settlement Systems Act (PSSA) impacts the lives of all Indians in
Electronic Payments and Settlements through Cards, ATMS, Internet Banking, Point
of Sale Infrastructure, and Instant Money Orders from India Post etc.
(ii) The PSS Act has 8 chapters and 38 sections that cover all the aspects of an act,
namely:
1) Applicability – it extends to whole of India
2) Designated Authority and its committee– i.e. RBI and Board for Regulation
and Supervision of Payment and Settlement Systems
3) Authorisation of Payment Systems– RBI is empowered to set up and operate or
permit set up and operate any payment system in India.
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4) Regulation and Supervision by the RBI – its powers to call for inspection and
reports.
5) Rights and Duties of System Provider – to operate the system under the terms
and conditions specified by RBI and duty to maintain the standards as prescribed
under the Act.
6) Settlement of Disputes – the system provider shall make rules and regulations to
decide the disputes between system participants or refer to the panel set up by
RBI or RBI wherever applicable.
7) Offences and Penalties –
(a) Penalty for contravention of section 4 of the Act (unlicensed / unauthorised
operations of a payment system) or failure to comply with terms and conditions of the
authorisation shall be punishable with imprisonment ranging from minimum 1 year to
10 years or fine up-to Rs. 1 crore or both and with further fine of Rs. 1 lac for every
day the contravention continues.
(b) Failure to disclose a material information in the application for setting up of a
payment system to RBI shall be punishable with imprisonment for a term which may
extend to three years and shall also be liable to fine which shall not be less than ten
lakh rupees and which may extend to fifty Iakh rupees.
(c) Failure to produce documents required / asked for by RBI shall be punishable
with fine which may extend to ten Iakh rupees in respect of each offence and if he
persists in such refusal, to a further fine which may extend to twenty-five thousand
rupees for every day for which the offence continues.
(d) Disclosure of prohibited information (section 22 of the Act) by a person shall be
punishable with imprisonment for a term which may extend to six months, or with fine
which may extend to five lakh rupees or an amount equal to twice the amount of the
damages incurred by the act of such disclosure, whichever is higher or with both.
(e) Failure to comply with the direction of RBI under this act or where the penalty
imposed by the Reserve Bank under section 30 is not paid within a period of thirty
days from the date of the order, the system provider or the system participant which
has failed to comply with the direction or to pay the penalty shall be punishable with
imprisonment for a term which shall not be less than one month but which may extend
to ten years, or with fine which may extend to one crore rupees or with both and
where the failure to comply with the direction continues, with further fine which may
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extend to one lakh rupees for every day, after the first during which the contravention
continues. There are further stringent penalties that are mentioned under this
chapter.
8) Miscellaneous - the heading suggests covers certain other provisions related to

penalties, RBI powers to make regulations consistent with this act by way of notice.
(iii) Some key definitions under Payment and Settlement Systems Act (PSSA)
The Section 2(1) (i) of the PSS Act 2007 defines that a payment system enables
payment to be effected between a payer and a beneficiary, involving clearing, payment
or settlement service or all of them, but does not include a stock exchange. It is further
stated a ‘payment system’ includes the systems enabling credit card operations, debit
card operations, smart card operations, money transfer operations or similar
operations except stock exchanges and clearing corporations set up under stock
exchanges.
Settlement means the settlement of payment instructions received and these include
settlement of securities, foreign exchange or derivatives or other transactions.
Settlement can take place either on a net basis or on a gross basis. Both netting and
gross settlement system are defined under the Act.
Payment obligation is defined as what is owed by one participant in a payment system

to another such participant, which results from clearing or settlement or payment
instructions relating to funds, securities or foreign exchange or derivatives or other
transactions.
“Netting” means the determination by the system provider of the amount of money or
securities, due or payable or deliverable, as a result of setting off or adjusting, the
payment obligations or delivery obligations among the system participants, including
the claims and obligations arising out of the termination by the system provider, on the
insolvency or dissolution or winding up of any system participant or such other
circumstances as the system provider may specify in its rules or regulations or bye-
laws (by whatever name called), of the transactions admitted for settlement at a future
date so that only a net claim be demanded or a net obligation be owned.
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“Gross” settlement systems mean a payment system in which each settlement of funds
or securities occurs based on separate or individual instructions.
(Source & Reference: 1. Principles of Insurance and Banking by Dr. S. S. Kundu
2. RBI website for FAQs and Notifications.)
4.3 Indian Contract Act
Agreements and contracts

All agreements are contracts if they are made by the free consent of parties competent
to contract, for a lawful consideration and with a lawful object, and are not hereby
expressly declared to be void. Nothing herein contained shall affect any law in force in
India, and not hereby expressly repealed, by which any contract is required to be made
in writing or in the presence of witnesses, or any law relating to the registration of
documents.
Section 11. Who are competent to contract?

Every person is competent to contract who is of the age of majority according to the
law to which he is subject, and who is sound mind and is not disqualified from
contracting by any law to which he is subject.
Section 12. What is a sound mind for the purposes of contracting?

A person is said to be of sound mind for the propose of making a contract, if, at the
time when he makes it, he is capable of understanding it and of forming a rational
judgement as to its effect upon his interest. A person who is usually of unsound mind,
but occasionally of sound mind, may make a contract when he is of sound mind. A
person who is usually of sound mind, but occasionally of unsound mind, may not make
a contract when he is of unsound mind.
Section 13. "Consent"

Two or more person are said to consent when they agree upon the same thing in the
same sense.
Section 15. "Coercion"
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"Coercion" is the committing, or threatening to commit, any act forbidden by the Indian
Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain, any
property, to the prejudice of any person whatever, with the intention of causing any
person to enter into an agreement.
Section 17. "Fraud”

"Fraud" means and includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agents, with intent to deceive another party
thereto his agent, or to induce him to enter into the contract.
(1) the suggestion as a fact, of that which is not true, by one who does not believe it
to be true.
(2) the active concealment of a fact by one having knowledge or belief of the fact.
(3) a promise made without any intention of performing it.
(4) any other act fitted to deceive.
(5) any such act or omission as the law specially declares to be fraudulent.
Section 18. "Misrepresentation"

"Misrepresentation" means and includes -
(1) the positive assertion, in a manner not warranted by the information of the person
making it, of that which is not true, though he believes it to be true.
(2) any breach of duty which, without an intent to deceive, gains an advantage to the
person committing it, or anyone claiming under him; by misleading another to his
prejudice, or to the prejudice of anyone claiming under him.
(3) causing, however innocently, a party to an agreement, to make a mistake as to the
substance of the thing which is subject of the agreement.
Section 19. Voidability of agreements without free consent

When consent to an agreement is caused by coercion, fraud or misrepresentation, the
agreement is a contract voidable at the option of the party whose consent was so
caused. A party to contract, whose consent was caused by fraud or mis-presentation,
may, if he thinks fit, insist that the contract shall be performed, and that he shall be put
on the position in which he would have been if the representations made had been
true.
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Section 19-A. Power to set aside contract induced by undue influence - When
consent to an agreement is caused by undue influence, the agreement is a contract
voidable at the option of the party whose consent was so caused.
Any such contract may be set aside either absolutely or, if the party who was entitled
to avoid it has received any benefit thereunder, upon such terms and conditions as to
the Court may seem just.
Section 20. Agreement void where both parties are under mistake as to matter
of fact
Explanation: An erroneous opinion as to the value of the things which forms the
subject-matter of the agreement is not be deemed a mistake as to a matter of fact.
Section 21. Effect of mistake as to law

A contract is not voidable because it was caused by a mistake as to any law in force
in India; but mistake as to a law not in force in India has the same effect as a mistake
of fact.
Section 22. Contract caused by mistake of one party as to matter of fact

A contract is not voidable merely because it was caused by one of the parties to it
being under a mistake as to a matter of fact.
Section 23. What consideration and objects are lawful, and what not?
The consideration or object of an agreement is lawful, unless -It is forbidden by law;
or is of such nature that, if permitted it would defeat the provisions of any law or is
fraudulent; of involves or implies, injury to the person or property of another; or the
Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be
unlawful. Every agreement of which the object or consideration is unlawful is void.
Section 24. Agreements void, if consideration are objects unlawful in part

If any part of a single consideration for one or more objects, or any one or any part of
any one of several consideration of a single object, is unlawful, the agreement is void.
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Section 25. Agreement without consideration, void, unless it is in writing and
registered or is a promise to compensate for something done or is a promise to
pay a debt barred by limitation law -
An agreement made without consideration is void, unless –
(1) it is expressed in writing and registered under the law for the time being in force for
the registration of documents and is made on account of natural love and affection
between parties standing in a near relation to each other; or unless.
(2) it is a promise to compensate, wholly or in part, a person who has already

voluntarily done something for the promisor, or something which the promisor was
legally compellable to do; or unless.
(3) it is a promise, made in writing and signed by the person to be charged therewith
or by his agent generally or specially authorised in that behalf, to pay wholly or in
part debt of which the creditor might have enforced payment but for the law for the
limitation of suits. In any of these cases, such an agreement is a contract.
Explanation 1: Nothing in this section shall affect the validity, as between the donor
and donee, of any gift actually made.
Explanation 2: An agreement to which the consent of the promisor is freely given is

not void merely because the consideration is inadequate; but the inadequacy of the
consideration may be taken into account by the Court in determining the question
whether the consent of the promisor was freely given.
4.4 The Banking Ombudsman Scheme

As an officer working in operations, it is pertinent for bankers to be aware of important
legal provisions / Rules of the Acts/ Codes applicable to the bank. The awareness of
such provisions helps us in discharging our duties responsibly and effectively leading
to better customer service. Deficiency in customer service leads to complaints. There
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are SOPs in our bank to reduce the deficiencies and thereby improve customer
service.
The following committees have made recommendations towards improving the

customer service in Indian Banks (prominent suggestions / recommendations as
under):
1. Saraiya Committee (Banking Commission 1972)– Recommendations to improve
customer service.
2. Talwar Committee (1977)– Recommendations on standardization of procedures,
customer service centres at circle office 1 Head office level, provision for 'may I help
you', counter at branches and provision for time norm board.
3. Goiporia Committee (1991)- Recommendations related to one or more teller
counters at area I centres, compensation for delay in collection of outstation
cheques, credit cards/ ATM facilities, infrastructure facilities at branches and display
of business timing.
4. Tarapore Committee- On its recommendations BCSBI was set up.
It was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with
effect from 1995– the scheme caters to the complaints pertaining to the banking
services, considers them and facilitates their settlement by making agreements or
recommendations or awards. The purpose of Ombudsman is to ensure speedy relief
to the aggrieved customers without any costs and legal complications such as time-
consuming processes.
Presently the Integrated Ombudsman Scheme (I O S) 2021 Strengthening of

Grievance Redress Mechanism in Banks is in operation. As per the RBI notification
dated 27.01.2021, the framework for strengthening grievance redress mechanism in
banks will have the following major components:
i. Enhanced disclosures on complaints
ii. Recovery of cost of redress of complaints from banks
iii. Intensive Review of Grievance Redress Mechanism
The new IOS 2021, integrates the existing three Ombudsman schemes of RBI namely,
i. The Banking Ombudsman Scheme, 2006.
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ii. The Ombudsman Scheme for Non-Banking Financial Companies, 2018;
and
iii. The Ombudsman Scheme for Digital Transactions, 2019.
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India
to redress customer complaints against deficiency in certain banking services. The
new scheme adopts ‘One Nation One Ombudsman’ approach by making the RBI
Ombudsman mechanism jurisdiction neutral. Some of the salient features of new IOS
2021 are as under:
➢ It will no longer be necessary for a complainant to identify under which scheme
he/she should file complaint with the Ombudsman.
➢ The Scheme defines ‘deficiency in service’ as the ground for filing a complaint,
with a specified list of exclusions.
➢ Therefore, the complaints would no longer be rejected simply on account of “not
covered under the grounds listed in the scheme”.
➢ The Scheme has done away with the jurisdiction of each ombudsman office.
➢ A Centralised Receipt and Processing Centre has been set up at RBI,
Chandigarh for receipt and initial processing of physical and email complaints
in any language.
➢ The Regulated Entity shall, on receipt of the complaint, file its written version in
reply to the averments in the complaint enclosing therewith copies of the
documents relied upon, within 15 days before the Ombudsman for resolution.
➢ Provided that the Ombudsman may, at the request of the Regulated Entity in
writing to the satisfaction of the Ombudsman, grant such further time as may
be deemed fit to file its written version and documents.
➢ The Regulated Entity will not have the right to appeal in cases where an Award
is issued by the ombudsman against it for not furnishing satisfactory and timely
information/documents.
The Executive Director-in charge of Consumer Education and Protection Department

of RBI would be the Appellate Authority under the Scheme. Complaints can continue
to be filed online on https://cms.rbi.org.in. The Complaints can also be filed through
the dedicated e-mail or sent in physical mode to the ‘Centralised Receipt and
Processing Centre’ set up at Reserve Bank of India, 4th Floor, Sector 17, Chandigarh
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- 160017 in the prescribed format. The Scheme is effective from 12.11.2021 and all
existing ombudsman scheme as mentioned in para 5 above have been repealed.
As per the information available on the website of RBI, there are twenty-two offices of
Banking Ombudsman in the country. Their offices are located mostly in state capitals.
The contact details of the nearest office of the Banking ombudsman need to be
displayed at branch of the bank.
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-
operative Banks are covered under the Scheme. The Banking Ombudsman can
receive and consider any complaint relating to the following deficiency in banking
services:
1. non-payment or inordinate delay in the payment or collection of cheques, drafts,

bills etc.
2. non-acceptance, without sufficient cause, of small denomination notes tendered for
any purpose, and for charging of commission in respect thereof.
3. non-acceptance, without sufficient cause, of coins tendered and for charging of
commission in respect thereof.
4. non-payment or delay in payment of inward remittances.
5. failure to issue or delay in issue of drafts, pay orders or bankers’ cheques.
6. non-adherence to prescribed working hours.
7. failure to provide or delay in providing a banking facility (other than loans and
advances) promised in writing by a bank or its direct selling agents.
8. delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-
observance of the Reserve Bank directives, if any, applicable to rate of interest on
deposits in any savings, current or other account maintained with a bank.
9. complaints from Non-Resident Indians having accounts in India in relation to their
remittances from abroad, deposits and another bank related matters.
10. refusal to open deposit accounts without any valid reason for refusal.
11. levying of charges without adequate prior notice to the customer.
12. Non-adherence to the instructions of Reserve Bank on ATM / Debit Card and
Prepaid Card operations in India by the bank or its subsidiaries.
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13. Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank
on credit card operations.
14. Non-adherence to the instructions of Reserve Bank with regard to Mobile Banking
/ Electronic Banking service in India by the bank.
15. Non-disbursement or delay in disbursement of pension (to the extent the
grievance can be attributed to the action on the part of the bank concerned, but
not with regard to its employees).
16. Refusal to accept or delay in accepting payment towards taxes, as required by
Reserve Bank/Government.
17. Refusal to issue or delay in issuing, or failure to service or delay in servicing or
redemption of Government securities.
18. Forced closure of deposit accounts without due notice or without sufficient reason.
19. Refusal to close or delay in closing the accounts.
20. Non-adherence to the fair practices codes as adopted by the bank.
21. Non-adherence to the provisions of the Code of Bank's Commitments to
Customers issued by Banking Codes and Standards Board of India and as
adopted by the bank.
22. Non-observance of Reserve Bank guidelines on engagement of recovery agents
by banks.
23. Non-adherence to Reserve Bank guidelines on para-banking activities like sale of
insurance / mutual fund /other third-party investment products by banks.
24. Any other matter relating to the violation of the directives issued by the Reserve
Bank in relation to banking or other services.
A customer can also lodge a complaint on the following grounds of deficiency in

service with respect to loans and advances:
1) non-observance of Reserve Bank Directives on interest rates.

2) delays in sanction, disbursement or non-observance of prescribed time schedule
for disposal of loan applications.
3) non-acceptance of application for loans without furnishing valid reasons to the
applicant; and
4) non-adherence to the provisions of the fair practices code for lenders as adopted
by the bank or Code of Bank’s Commitment to Customers, as the case may be.
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5) Non-observance of any other direction or instruction of the Reserve Bank as may
be specified by the Reserve Bank for this purpose from time to time.
6) The Banking Ombudsman may also deal with such other matter as may be specified
by the Reserve Bank from time to time.
One can file a complaint before the Banking Ombudsman if the reply is not received
from the bank within a period of one month after the bank concerned has received
one's complaint, or the bank rejects the complaint, or if the complainant is not
satisfied with the reply given by the bank.
One's complaint will not be considered if:

1) One has not approached his bank for redressal of his grievance first.
2) One has not made the complaint within one year from the date of receipt of the reply
of the bank or if no reply is received, and the complaint to Banking Ombudsman is
made after the lapse of more than one year and one month from the date of
complaint made to the bank.
3) The subject matter of the complaint is pending for disposal / has already been dealt
with at any other forum like court of law, consumer court etc.
4) Frivolous or vexatious complaints.
5) The institution complained against is not covered under the scheme.
6) The subject matter of the complaint is not pertaining to the grounds of complaint
specified under Clause 8 of the Banking Ombudsman Scheme. If the complaint is for
the same subject matter that was settled through the office of the Banking
Ombudsman in any previous proceedings.
One can file a complaint with the Banking Ombudsman simply by writing on a plain
paper. One can also file it online or by sending an email to the Banking Ombudsman.
There is a form along with details of the scheme in RBI website. However, it is not
mandatory to use this format.
One may lodge his/ her complaint at the office of the Banking Ombudsman under
whose jurisdiction, the bank branch complained against is situated.
For complaints relating to credit cards and other types of services with centralized
operations, complaints may be filed before the Banking Ombudsman within whose
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territorial jurisdiction the billing address of the customer is located. The complaint can
be filed by one’s authorized representative (other than an advocate). The Banking
Ombudsman does not charge any fee for filing and resolving customers’ complaints.
The amount, if any, to be paid by the bank to the complainant by way of compensation
for any loss suffered by the complainant is limited to the amount arising directly out of
the act or omission of the bank or ₹ 20 lakhs (₹ Two Million), whichever is lower. The
Banking Ombudsman may award compensation not exceeding ₹ 1 lakh (₹ One
Hundred Thousand) to the complainant for mental agony and harassment. The
Banking Ombudsman will consider the loss of the complainant's time, expenses
incurred by the complainant, harassment and mental anguish suffered by the
complainant while passing such award.
Details required in the application - Name and address of the complainant, the
name and address of the branch or office of the bank against which the complaint is
made, facts giving rise to the complaint supported by documents, if any, the nature
and extent of the loss caused to the complainant, the relief sought from the Banking
Ombudsman and a declaration about the compliance with conditions which are
required to be complied with by the complainant under Clause 9(3) of the Banking
Ombudsman Scheme.
Once a complaint is received, the Banking Ombudsman endeavours to promote,

through conciliation or mediation, a settlement of the complaint by agreement between
the complainant and the bank named in the complaint. If the terms of settlement
(offered by the bank) are acceptable to one in full and final settlement of one's
complaint, the Banking Ombudsman will pass an order as per the terms of settlement
which becomes binding on the bank and the complainant.
The Banking Ombudsman may reject a complaint at any stage if it appears to him
that a complaint made to him is:
1) not on the grounds of complaint referred to above

2) Compensation sought from the Banking Ombudsman is beyond ₹ 20 lakh (₹ Two
Million).
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3) requires consideration of elaborate documentary and oral evidence and the
proceedings before the Banking Ombudsman are not appropriate for adjudication
of such complaint
4) the complaint is without any sufficient cause
5) the complaint that it is not pursued by the complainant with reasonable diligence
6) In the opinion of the Banking Ombudsman there is no loss or damage, or
inconvenience caused to the complainant.
If a complaint is not settled by an agreement within a period of one month, the Banking
Ombudsman proceeds further to pass an Award. Before passing an award, the
Banking Ombudsman provides reasonable opportunity to the complainant and the
bank, to present their case. It is up to the complainant to accept the award in full and
final settlement of or to reject it.
Any person aggrieved by an Award issued under Clause 12 or the decision of the
Banking Ombudsman rejecting the complaint for the reasons specified in sub-clause
(d) to (g) of Clause 13 of the Banking Ombudsman Scheme 2006 (As amended up to
July 1, 2017) can approach the Appellate Authority. The Appellate Authority is vested
with a Deputy Governor of the RBI.
Other recourse and/or remedies available to him/her as per the law (COPRA or Civil
Court etc.) can also be explored. The bank also has the option to file an appeal before
the Appellate Authority under the Scheme.
One can file the appeal against the award or decision of the Banking Ombudsman
rejecting the complaint within 30 days of the date of receipt of the Award, The Appellate
Authority may, if he/ she is satisfied that the applicant had sufficient cause for not
making an application for appeal within time, also allow a further period not exceeding
30 days.
The appellate authority may:
1. dismiss the appeal; or
2. allow the appeal and set aside the Award; or
3. send the matter to the Banking Ombudsman for fresh disposal in accordance with
such directions as the appellate authority may consider necessary or proper; or
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4. modify the Award and pass such directions as may be necessary to give effect to
the modified award; or
5. Pass any other order as it may deem fit.
Integrated Ombudsman Scheme (I O S) 2021 : The Scheme has been introduced

with the objective to facilitate the satisfaction or settlement of complaints regarding
digital transactions undertaken by customers of System Participants as defined
under the Scheme.
➢ ‘Complaint' means any representation in writing or through electronic means
containing grievance/s alleging deficiency in service by the System
Participants as mentioned in Clause 8 of the Scheme.
➢ ‘Digital Transaction' means a payment transaction in a seamless system
effected without the need for cash at least in one of the two legs, if not in
both. This includes transactions made through digital / electronic modes
wherein both the originator and the beneficiary use digital / electronic
medium to send or receive money.”
➢ ‘System Participant' means any person other than a bank participating in a
payment system as defined under Section 2 of the Payment and Settlement
Systems Act, 2007 excluding a ‘System Provider'.
Jurisdiction, Powers and Duties of the Ombudsman for Digital Transactions:

The RBI shall specify the territorial limits on the authority of each Ombudsman for
Digital Transactions. The Ombudsman for Digital Transactions shall receive and
consider complaints relating to deficiency in services on the grounds mentioned in
Clause 8 irrespective of the pecuniary value. He / She shall, to the satisfaction of
the parties involved, dispose of the complaint through:
(i) Settlement by agreement between parties; OR

(ii) Conciliation and mediation between parties; OR
(iii) Passing an Award as per the provisions of the Scheme.
Procedure for Redressal of Grievance: Grounds of Complaint: Any person

may file a complaint free of cost with the Ombudsman for Digital Transactions
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having jurisdiction on any one of the following grounds alleging deficiency in
service:
(1) Prepaid Payment Instruments: Non-adherence to the instructions of

Reserve Bank by System Participants about Prepaid Payment Instruments
on any of the following:
a) Failure in crediting merchant's account within reasonable time.
b) Failure to load funds within reasonable time in wallets / cards.
c) Unauthorized electronic fund transfer.
d) Non-Transfer / Refusal to transfer/ failure to transfer within reasonable time, the
balance in the Prepaid Payment Instruments to the holder's ‘own' bank account
or back to source at the time of closure, expiry of validity period etc., o f the
Prepaid Payment Instrument.
e) Failure to refund within reasonable time / refusal to refund in case of
unsuccessful / returned / rejected / cancelled / transactions.
f) Non-credit / delay in crediting the account of the Prepaid Payment Instrument
holder as per the terms and conditions of the promotion offer(s) from time to
time, if any.
g) Non-adherence to any other instruction of the Reserve Bank on Prepaid
Payment Instruments.
Mobile/Electronic Fund Transfers: Non-adherence to the instructions of the

Reserve Bank on Mobile / Electronic fund transfers by System Participants
on any of the following:
a) Failure to effect online payment / fund transfer within reasonable time.

b) Unauthorized electronic fund transfer.
c) Failure to act upon stop-payment instructions within the time frame and
under the circumstances notified to the customers within prescribed timeline.
d) Failure to reverse the amount debited from customer account in cases of failed
payment transactions within prescribed timeline.
e) Non-adherence to any other instruction of the Reserve Bank on Mobile/
Electronic fund transfers.
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Non-adherence to instructions of Reserve Bank / respective System Provider
to System Participants, on payment transactions through Unified Payments
Interface (UPI) / Bharat Bill Payment System (BBPS) / Bharat QR Code / UPI
QR Code on the following grounds:
a) Failure in crediting funds to the beneficiaries' account.

b) Failure to return within reasonable time the payment to the originating member
in case of failure to credit the funds to the beneficiary's account.
c) Failure to / delay in refund of money back to account in case of transaction
failure or declined transactions i.e., failed transactions.
d) Non-adherence to any other instruction of the Reserve Bank on payment
transactions/through Unified Payments Interface (UPI) / Bharat Bill Payment
System (BBPS)/ Bharat QR Code / UPI QR Code.
(4) Non-reversal / failure to reverse within reasonable time, funds wrongly
transferred to the beneficiary account due to lapse at the end of System
Participant.
(5) Any other matter relating to the violation of the directives including on fees/
charges, if any, issued by the Reserve Bank in relation to digital transactions.
Procedure for Filing Complaint:

(1) The complaint may be lodged online through the portal designed for the
purpose (https://cms.rbi.org.in).
(2) The complaint may also be submitted through electronic or physical mode to
the Centralised Receipt and Processing Centre as notified by the Reserve Bank.
The complaint, if submitted in physical form, shall be duly signed by the
complainant or by the authorized representative. The complaint shall be submitted
in electronic or physical mode in such format and containing such information as
may be specified by Reserve Bank.
The complaint in writing shall be duly signed by the complainant or his authorized
representative and shall be, as far as possible, in the form specified or as near as
thereto as circumstances admit, stating clearly:
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I. The name and the address of the complainant.
II. The name and address of the branch or office of the System Participant against
which the complaint is made.
III. The facts giving rise to the complaint.
IV. The nature and extent of the loss caused to the complainant; and
V. The relief sought for.
Resolution of Complaints:
(1) The Ombudsman/Deputy Ombudsman shall endeavor to promote settlement
of a complaint by agreement between the complainant and the Regulated Entity
through facilitation or conciliation or mediation.
(2) The proceedings before the Ombudsman shall be summary in nature and shall
not be bound by any rules of evidence. The Ombudsman may examine either party
to the complaint and record their statement.
(3) The Regulated Entity shall, on receipt of the complaint, file its written version
in reply to the averments in the complaint enclosing therewith copies of the
documents relied upon, within 15 days before the Ombudsman for resolution.
Provided that the Ombudsman may, at the request of the Regulated Entity in
writing to the satisfaction of the Ombudsman, grant such further time as may be
deemed fit to file its written version and documents.
(4) In case the Regulated Entity omits or fails to file its written version and
documents within the time as provided in terms of sub-clause (3), the Ombudsman
may proceed ex-parte based on the evidence available on record and pass
appropriate Order or issue an Award. There shall be no right of appeal to the
Regulated Entity in respect of the Award issued on account of non-response or
non-furnishing of information sought within the stipulated time.
(5) The Ombudsman/Deputy Ombudsman shall ensure that the written version or
reply or documents filed by one party, to the extent relevant and pertaining to the
complaint, are furnished to other party and follow such procedure and provide
additional time as may be considered appropriate.
(6) In case the complaint is not resolved through facilitation, such action as may
be considered appropriate, including a meeting of the complainant with the officials
of Regulated Entity, for resolution of the complaint by conciliation or mediation may
be initiated.
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(7) The parties to the complaint shall cooperate in good faith with the
Ombudsman/Deputy Ombudsman, as the case may be, in resolution of the dispute
and comply with the direction for production of any evidence and other related
documents within the stipulated time.
(8) If any amicable settlement of the complaint is arrived at between the parties,
the same shall be recorded and signed by both the parties and thereafter, the fact
of settlement may be recorded, annexing thereto the terms of settlement, directing
the parties to comply with the terms within the stipulated time.
(9) The complaint would be deemed to be resolved when:
(a) it has been settled by the Regulated Entity with the complainant upon the
intervention of the Ombudsman; or
(b) the complainant has agreed in writing or otherwise (which may be
recorded)
that the manner and the extent of resolution of the grievance is satisfactory;
or
(c) the complainant has withdrawn the complaint voluntarily.
Award by the Ombudsman:

(1) Unless the complaint is rejected under clause 16, the Ombudsman shall pass
an Award in the event of:
(a) non-furnishing of documents/information as enumerated in clause 14(4); or
(b) the matter not getting resolved under clause 14(9) based on records placed,
and after affording a reasonable opportunity of being heard to both the parties.
(2) The Ombudsman shall also take into account, in addition, the principles of
banking law and practice, directions, instructions and guidelines issued by the
Reserve Bank from time to time and such other factors as may be relevant, before
passing a reasoned Award.
(3) The Award shall contain, inter alia, the direction, if any, to the Regulated Entity
for specific performance of its obligations and in addition to or otherwise, the
amount, if any, to be paid by the Regulated Entity to the complainant by way of
compensation for any loss suffered by the complainant.
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(4) Notwithstanding anything contained in sub-clause (3), the Ombudsman shall
not have the power to pass an Award directing payment by way of compensation,
an amount which is more than the consequential loss suffered by the complainant
or Rupees 20 lakh whichever is lower. The compensation that can be awarded by
the Ombudsman shall be exclusive of the amount involved in the dispute.
(5) The Ombudsman may also award a compensation not exceeding Rupees one
lakh to the complainant, taking into account the loss of the complainant’s time,
expenses incurred, harassment and mental anguish suffered by the complainant.
(6) A copy of the Award shall be sent to the complainant and the Regulated Entity.
(7) The Award passed under sub-clause (1) shall lapse and be of no effect unless
the complainant furnishes a letter of acceptance of the Award in full and final
settlement of the claim to the Regulated Entity concerned, within a period of 30
days from the date of receipt of the copy of the Award. Provided that no such
acceptance may be furnished by the complainant if he has filed an appeal under
sub-clause (3) of clause 17.
(8) The Regulated Entity shall comply with the Award and intimate compliance to
the Ombudsman within 30 days from the date of receipt of the letter of acceptance
from the complainant unless it has preferred an appeal under sub-clause (2) of
clause 17.
Rejection of a Complaint:
(1) The Deputy Ombudsman or the Ombudsman may reject a complaint at any
stage if it appears that the complaint made:
(a) is non-maintainable under clause 10; or
(b) is in the nature of offering suggestions or seeking guidance or explanation
(2) The Ombudsman may reject a complaint at any stage if:

(a) in his opinion there is no deficiency in service; or
(b) the compensation sought for the consequential loss is beyond the power of
the Ombudsman to award the compensation as indicated in clause 8(2); or
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(c) the complaint is not pursued by the complainant with reasonable diligence.
or
(d) the complaint is without any sufficient cause; or
(e) the complaint requires consideration of elaborate documentary and oral
evidence and the proceedings before the Ombudsman are not appropriate for
adjudication of such complaint; or
(f) in the opinion of the Ombudsman there is no financial loss or damage, or
inconvenience caused to the complainant.
Appeal before the Appellate Authority:

(1) There shall not be any right of appeal to a Regulated Entity for an Award issued
for non-furnishing of documents/information under clause 15(1)(a).
(2) The Regulated Entity may, aggrieved by an Award under clause 15(1)(b) or
closure of a complaint under clauses 16(2)(c) to 16(2)(f), within 30 days of the date
of receipt of communication of Award or closure of the complaint, prefer an appeal
before the Appellate Authority.
(a) Provided that in the case of an appeal by a Regulated Entity, the period of
30 days for filing an appeal shall commence from the date on which the
Regulated Entity receives the letter of acceptance of Award by the
complainant:
(b) Provided further that an appeal may be filed by a Regulated Entity only with
the previous sanction of the Chairman or the Managing Director/Chief
Executive Officer or, in their absence, the Executive Director/Official of equal
rank.
(c) Provided that the Appellate Authority may, if he is satisfied that the
Regulated Entity had sufficient cause for not making the appeal within the time,
may allow a further period not exceeding 30 days.
(3) The complainant may, aggrieved by an Award under clause 15(1) or rejection
of a complaint under clauses 16(2)(c) to 16(2)(f), within 30 days of the date of
receipt of the Award or rejection of the complaint, prefer an appeal before the
Appellate Authority. Provided that the Appellate Authority may, if he is satisfied
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that the complainant had sufficient cause for not making the appeal within the time,
may allow a further period not exceeding 30 days.
(4) The Appellate Authority’s Secretariat shall scrutinize and process the Appeal.
(5) The Appellate Authority may, after giving the parties a reasonable opportunity
of being heard:
(a) dismiss the appeal; or
(b) allow the appeal and set aside the Award or order of the Ombudsman; or
(c) remand the matter to the Ombudsman for fresh disposal in accordance with
such directions as the Appellate Authority may consider necessary or proper,
or
(d) modify the order of the Ombudsman or Award and pass such directions as
may be necessary to give effect to the order of the Ombudsman or Award so
modified; or
(e) pass any other order as it may deem fit.
(6) The order of the Appellate Authority shall have the same effect as the Award
passed by Ombudsman under clause 15 or the order rejecting the complaint under
clause 16, as the case may be.
4.6 Consumer Protection Act (COPRA) 2019: (Gazette Notification of

Ministry of Consumer Affairs: CG-DL-E-16072020-220546/2351(E) dated 25.07.2020)
The Consumer Protection Act 1986 changed the face of consumerism in India. It
aimed to provide protection to a consumer by checking the unfair trade practices,
defects in goods and deficiencies in services. Its empowered consumers in India and
led to changed face of doing business in India.
The Consumer Protection Act 2019 received the assent of the President on the 9th
August 2019. The Ministry of Consumer Affairs, Food and Public Distribution by its
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notification declared the 20th July 2020 as the date on which the provisions of
Consumer Protection Act 2019 would come into force. With this, the Consumer
Protection Act 1986 has been repealed and Consumer Protection Act 2019 came into
force which has further strengthened the framework for protection of the interest and
rights of the consumers in the country.
It is An Act to provide for protection of the interests of consumers and for that purpose
to establish authorities for timely and effective administration and settlement of
consumers' disputes and for matters connected therewith.
The Act has 107 sections spread over 8 chapters. The act provides for setting up of
Consumer Protection Councils (Chapter- II), Central Consumer Protection Authority
(Chapter-III) and Consumer Disputes Redressal Commission (Chapter-IV), Mediation
(Chapter-V), Product Liability (Chapter-VI), Offences and Penalties (Chapter-VII).
This act defines of branch office as any establishment described as a branch by the
opposite party or any establishment carrying on either the same or substantially the
same activity carried on by the head office of the establishment.
A complainant under this act could be
(i) a consumer; or
(ii) any voluntary consumer association registered under any law for the time
being in force; or
(iii) the Central Government or any State Government; or
(iv) the Central Authority; or
(v) one or more consumers, where there are numerous consumers having the
same interest; or
(vi) in case of death of a consumer, his legal heir or legal representative; or
(vii) in case of a consumer being a minor, his parent or legal guardian.
Definition of complaint: The Act defines a complaint as any allegation in writing,

made by a complainant for obtaining any relief provided by or under the Act, that:
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(i) an unfair contract or unfair trade practice or a restrictive trade practice has been
adopted by any trader or service provider.
(ii) the goods bought by him or agreed to be bought by him suffer from one or more
defects.
(iii) the services hired or availed of or agreed to be hired or availed of by him suffer
from any deficiency.
(iv) a trader or a service provider, as the case may be, has charged for the goods
or for the services mentioned in the complaint, a price in excess of the price—
(a) fixed by or under any law for the time being in force; or
(b) displayed on the goods or any package containing such goods; or
(c) displayed on the price list exhibited by him by or under any law for the
time being in force; or
(d) agreed between the parties.
(v) the goods, which are hazardous to life and safety when used, are being offered
for sale to the public—
(a) in contravention of standards relating to safety of such goods as
required to be complied with, by or under any law for the time being in force.
(b) where the trader knows that the goods so offered are unsafe to the
public.
(vi) the services which are hazardous or likely to be hazardous to life and safety
of the public when used, are being offered by a person who provides any service
and who knows it to be injurious to life and safety.
(vii) a claim for product liability action lies against the product manufacturer,
product seller or product service provider, as the case may be.
"Consumer" means any person who_

(i) buys any goods for a consideration which has been paid or promised or partly paid
and partly promised, or under any system of deferred payment and includes any user
of such goods other than the person who buys such goods for consideration paid or
promised or partly paid or partly promised, or under any system of deferred payment,
when such use is made with the approval of such person, but does not include a
person who obtains such goods for resale or for any commercial purpose;
or
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(ii) hires or avails of any service for a consideration which has been paid or promised
or partly paid and partly promised, or under any system of deferred payment and
includes any beneficiary of such service other than the person who hires or avails of
the services for consideration paid or promised, or partly paid and partly promised, or
under any system of deferred payment, when such services are availed of with the
approval of the first mentioned person, but does not include a person who avails of
such service for any commercial purpose.
"Service" means service of any description which is made available to potential

users and includes, but not limited to, the provision of facilities in connection with
banking, financing, insurance, transport, processing, supply of electrical or other
energy, telecom, boarding or lodging or both, housing construction, entertainment,
amusement or the purveying of news or other information, but does not include the
rendering of any service free of charge or under a contract of personal service;
Consumer Protection Councils: The Act provides for setting up of councils at

District, State and National Levels to render advice on promotion and protection of
consumer rights under this Act within their jurisdictions.
1. Central Consumer Protection Council (Central Council): The Central Government
shall establish the Central Consumer Protection Council. The Central Council shall be
an advisory council with the Minister-in-charge of the Department of Consumer Affairs
in the Central as its Chairperson. The Central Council shall meet as and when
necessary, but at least one meeting of the Council shall be held every year. The
objects of the Central Council shall be to render advice on promotion and protection
of the consumers' rights under this Act.
2. State Consumer Protection Council (State Council): Every State Government shall
establish a State Consumer Protection Council. The State Council shall be an advisory
council with the Minister-in-charge of Consumer Affairs in the State Government as its
Chairperson. The State Council shall meet as and when necessary but not less than
two meetings shall be held every year. The objects of every State Council shall be to
render advice on promotion and protection of consumer rights under this Act within the
State.
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3. District Consumer Protection Council (District Council): The District Council shall be
an advisory council with Collector of the District as its chairperson and shall meet as
and when necessary but not less than two meetings shall be held every year. The
objects of every District Council shall be to render advice on promotion and protection
of consumer rights under this Act within the district.
Central Authority (Central Consumer Protection Authority)

The Act provides for establishment of a Central Consumer Protection Authority, to be
known as the Central Authority, by Central Government, to regulate matters relating
to violation of rights of consumers, unfair trade practices and false or misleading
advertisements which are prejudicial to the interests of public and consumers and to
promote, protect and enforce the rights of consumers as a class.
The Central Authority shall consist of a Chief Commissioner and such number of other
Commissioners as may be prescribed, to be appointed by the Central Government to
exercise the powers and discharge the functions under the Act.
The Central Authority shall have an Investigation Wing headed by a Director-General
for the purpose of conducting inquiry or investigation under this Act as may be directed
by the Central Authority.
The Central Government may appoint a Director-General and such number of

Additional Director-General, Director, Joint Director, Deputy Director and Assistant
Director, from amongst persons who have experience in investigation and possess
such qualifications.
A complaint relating to violation of consumer rights or unfair trade practices or false or

misleading advertisements which are prejudicial to the interests of consumers as a
class, may be forwarded either in writing or in electronic mode, to any one of the
authorities, namely, the District Collector or the Commissioner of regional office or the
Central Authority.
The Central Authority shall
(a) protect, promote and enforce the rights of consumers as a class, and prevent
violation of consumers rights under this Act.
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(b) prevent unfair trade practices and ensure that no person engages himself in
unfair trade practices.
(c) ensure that no false or misleading advertisement is made of any goods or
services which contravenes the provisions of this Act or the rules or regulations
made thereunder.
(d) ensure that no person takes part in the publication of any advertisement which
is false or misleading.
A person aggrieved by any order passed by the Central Authority may file an appeal
to the National Commission within a period of thirty days from the date of receipt of
such order.
Whoever, fails to comply with any direction of the Central Authority, shall be punished
with imprisonment for a term which may extend to six months or with fine which may
extend to twenty lakh rupees, or with both.
Consumer Disputes Redressal Commission: The Act provides for setting up of-
1. District Consumer Disputes Redressal Forum (DCDRF): Also known as the "District
Forum" is to be established by the State Government in each district of the State. The
District Commission will take up complaints where the value of the goods or services
paid as consideration does not exceed Rupees One Crore. A complaint shall be
instituted in a District Commission within the local limits of whose jurisdiction,
(a) the opposite party or each of the opposite parties, where there are more than
one, at the time of the institution of the complaint, ordinarily resides or carries on
business or has a branch office or personally works for gain; or
(b) any of the opposite parties, where there are more than one, at the time of the
institution of the complaint, actually and voluntarily resides, or carries on business
or has a branch office, or personally works for gain, provided that in such case the
permission of the District Commission is given; or
(c) the cause of action, wholly or in part, arises; or
(d) the complainant resides or personally works for gain.
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2. State Consumer Disputes Redressal Commission (SCDRC): Also known as the
"State Commission" is to be established by the State Government in the State. The
State Commission has jurisdiction:
(a) to entertain—
(i) complaints where the value of the goods or services paid as consideration,
exceeds Rupees One Crore, but not exceeding Rupees Ten Crores.
ii) complaints against unfair contracts, where the value of goods or services paid
as consideration does not exceed ten crore rupees.
(iii) appeals against the orders of any District Commission within the State; and
(b) to call for the records and pass appropriate orders in any consumer dispute which
is pending before or has been decided by any District Commission within the State,
where it appears to the State Commission that such District Commission has
exercised a jurisdiction not vested in it by law or has failed to exercise a jurisdiction so
vested or has acted in exercise of its jurisdiction illegally or with material irregularity.
3. National Consumer Disputes Redressal Commission (NCDRC): To be established

by the Central Government, the National Commission has jurisdiction—
(a) to entertain—
(i) complaints where the value of the goods or services paid as consideration
exceeds rupees ten crore: Provided that where the Central Government deems it
necessary so to do, it may prescribe such other value, as it deems fit.
(ii) complaints against unfair contracts, where the value of goods or services paid
as consideration exceeds ten crore rupees.
(iii) appeals against the orders of any State Commission.
(iv) appeals against the orders of the Central Authority; and
(b) to call for the records and pass appropriate orders in any consumer dispute which
is pending before or has been decided by any State Commission where it appears to
the National Commission that such State Commission has exercised a jurisdiction not
vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in
the exercise of its jurisdiction illegally or with material irregularity.
The District Commission, the State Commission or the National Commission shall not
admit a complaint unless it is filed within two years from the date on which the cause
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of action has arisen. A complaint may be entertained after even after two years, if the
complainant satisfies the District Commission, the State Commission or the National
Commission, as the case may be, that he had sufficient cause for not filing the
complaint within such period. Provided that no such complaint shall be entertained
unless the District Commission or the State Commission or the National Commission,
as the case may be, records its reasons for condoning such delay.
Every order made by a District Commission, State Commission or the National

Commission shall be enforced by it in the same manner as if it were a decree made
by a Court in a suit before it and the provisions of Order XXI of the First Schedule to
the Code of Civil Procedure, 1908 shall, as far as may be, applicable, subject to the
modification that every reference therein to the decree shall be construed as reference
to the order made under this Act.
Appeal against the order of redressal commissions: Any person aggrieved by an

order made by the District Commission may prefer an appeal against such order to
the State Commission on the grounds of facts or law within a period of forty-five days
from the date of the order, in such form and manner, as may be prescribed. The State
Commission may entertain an appeal after the expiry of the said period of forty-five
days, if it is satisfied that there was sufficient cause for not filing it within that period.
Provided further that no appeal by a person, who is required to pay any amount in
terms of an order of the District Commission, shall be entertained by the State
Commission unless the appellant has deposited fifty per cent. of that amount in the
manner as may be prescribed.
Any person aggrieved by an order made by the State Commission may prefer an
appeal against such order to the National Commission within a period of thirty days
from the date of the order in such form and manner as may be prescribed. The National
Commission shall not entertain the appeal after the expiry of the said period of thirty
days unless it is satisfied that there was sufficient cause for not filing it within that
period. Provided further that no appeal by a person, who is required to pay any amount
in terms of an order of the State Commission, shall be entertained by the National
Commission unless the appellant has deposited fifty per cent. of that amount in the
manner as may be prescribed.
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Any person aggrieved by an order made by the National Commission may prefer an
appeal against such order to the Supreme Court within a period of thirty days from the
date of the order. Supreme Court may entertain an appeal after the expiry of the said
period of thirty days if it is satisfied that there was sufficient cause for not filing it within
that period.
Mediation: The State Government shall establish, by notification, a consumer

mediation cell to be attached to each of the District Commissions and the State
Commissions of that State.
The Central Government shall establish, by notification, a consumer mediation cell to

be attached to the National Commission and each of the regional Benches.
A consumer mediation cell shall consist of such persons as may be prescribed. Every
consumer mediation cell shall maintain-
(a) a list of empanelled mediators.
(b) a list of cases handled by the cell.
(c) record of proceeding; and
(d) any other information as may be specified by regulations.
Every consumer mediation cell shall submit a quarterly report to the District
Commission, State Commission or the National Commission to which it is attached, in
the manner specified by regulations.
For the purpose of mediation, the National Commission or the State Commission or
the District Commission, as the case may be, shall prepare a panel of the mediators
to be maintained by the consumer mediation cell attached to it, on the
recommendation of a selection committee consisting of the President and a member
of that Commission.
Finality of orders: Every order of a District Forum, the State Commission or the
National Commission shall, if no appeal has been preferred against such order under
the provisions of this Act, be final.
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4.7 Banking Codes and Standards Board of India (BCSBI): BCSBI is an
independent and autonomous institution to monitor and ensure that the Banking
Codes and Standards adopted by the banks are adhered to in true spirit while
delivering their services.
The Banking Codes and Standards Board of India is registered as a society under the
Societies Registration Act, 1860. Membership of BCSBI is voluntary and open to
scheduled banks, Regional Rural Banks and select Urban Co-operative Banks.
The general superintendence, direction and control of the affairs and funds of the
Society is vested in the Governing Council (constituted by RBI) consisting of members
drawn from different disciplines such as banking, economics, service etc.
The main objectives of the BCSBI are:
➢ To plan, evolve, prepare, develop, promote and publish comprehensive Codes

and Standards for banks, for providing for fair treatment to their customers.
➢ To function as an independent and autonomous body to monitor, and to ensure
that the Codes and Standards adopted by banks are adhered to, in letter and
spirit, while delivering services to their customers.
BCSBI has in collaboration with the Indian Banks' Association (IBA), evolved two
codes - Code of Bank’s Commitment to Customers and the Code of Bank’s
Commitment to Micro and Small Enterprises - which set minimum standards of
banking practices for member banks to follow when they are dealing with individual
customers and micro and small enterprises. These Codes are subject to periodical
review and revision. The central objective of these Codes is promoting good banking
practices, setting minimum standards, increasing transparency, achieving higher
operating standards and above all, promoting a cordial banker-customer relationship
which would foster confidence of the common man in the banking system.
Both these Codes set minimum standards of banking practices we will follow as a
member of BCSBI while dealing with individual customers and MSME as defined as
per MSMED Act 2006. It provides protection to customers and explains how a member
bank is required to deal with customers in its day-to-day operations.
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The Code does not replace or supersede regulatory or supervisory instructions of the
Reserve Bank of India (RBI) and we will comply with such instructions / directions
issued by RBI from time to time. The Code may have set higher standards than those
prescribed in the regulatory instructions and such higher standards will prevail as the
Code represents the best practices voluntarily agreed to by us as our commitment to
you.
We will endeavour to adopt higher standards of banking practices to extend better

customer service and achieve higher levels of customer satisfaction. In the Code, ‘you’
denotes the customer and ‘we’ / ‘us’, the bank, the customer deals with. Branch
includes Banking Outlet / Part-time Banking Outlet.
---------------
KEY LEARNINGS
NI Act - The Negotiable Instruments Act was enacted in 1881. Negotiable instrument
means a written document which creates a right in favour of some person, and which
is freely transferable. The Act mentions three instruments specifically, which are
promissory note, a bill of exchange and cheque.
Character of NI:
➢ It is transferable by mere delivery in respect of bearer instrument and by
endorsement and delivery in respect of order instrument
➢ Transferee on the instrument can sue on the instrument in his own name and
without making the transferor a part to the suit
➢ Notice of transfer is not necessarily to be given to the party liable on the
instrument
➢ A Holder in Due Course gets a better title than transferor.
Banking Ombudsman Scheme:

Enables an expeditious and inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks. The Banking Ombudsman
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Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI
with effect from 1995.
Agreement vs. Contract

An agreement is any understanding or arrangement reached between two or more
parties. A contract is a specific type of agreement that, by its terms and elements, is
legally binding and enforceable in a court of law
Consumer Protection Act, 2019

Act of the Parliament of India to protect the interests of consumers in India. It makes
provision for the establishment of Central Consumer Protection Authority, Consumer
Protection Councils and Consumer Disputes Redressal Commissions for the
settlement of consumers' disputes and for matters connected therewith.
The Payment & Settlement Act, 2007

It provides for the regulation and supervision of payment systems in India and
designates the Reserve Bank of India (Reserve Bank) as the authority for that purpose
and all related matters.
The Act also provides the legal basis for “netting” and “settlement finality”. This is of
great importance, as in India, other than the Real Time Gross Settlement (RTGS)
system all other payment systems function on a net settlement basis.
CHECK YOUR PROGRESS
1. A bearer cheque with general crossing is paid across the counter to the bearer
of the cheque. Later on, it was found that the cheque was stolen. In this case
the banker is:
a) Will not be liable since it is a bearer cheque
b) Liable to the original owner of the cheque
c) Liable to the true owner of the cheque
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d) None is correct
2. Banking Codes and Standards Board of India (BCSBI) has evolved……code(s)

a) 3 (b) 2
c) 4 (d) 1
3. The District Consumer Disputes Redressal Forum (District Forum) takes up

complaints where the value of goods or services paid as consideration does not
exceed
a) Rs. 10 lacs b) Rs. 20 lacs
c) Rs. 1 crore d) Rs. 10 crores
4. The Central Consumer Protection Authority (Central Authority) has to regulate

matter(s) relating to
a) Violation of rights of consumers
b) Unfair trade practices
c)False or misleading advertisement
d) All are correct
Q5. Protection is available to Bankers against forged endorsement under

section…………... of Negotiable Instruments Act.
(a) 5 (b) 6
(c) 85 (d) 89
Key:
Que 1 2 3 4 5
Ans (a) (b) (c) (d) (c)
CASE STUDY
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One Senior Assistant has recently joined CCPC. Before joining the CCPC, he had
worked in several branches as a Single Window Operator and cash officer. He has
never dealt with Cheques/DD in the branches. His senior and other colleague have
advised him to go through the Negotiable Instruments Act (NI Act) while working in
CCPC.
1. The Negotiable Instrument Act was enacted in ……
(a) 1884 (b) 1881
(c) 1882 (d) 1883
2. The NI Act does not cover the following instruments.

(a) Promissory Note (b) Bill of Exchange
(c) Bill of Lading (d) Cheque
3. An NI can be dishonoured by non-acceptance (sec.91) or by non-payment ….

(a) non-acceptance (b) non-payment
(c) None is correct (d) Both are correct
4. The Banking Ombudsman may award compensation for any loss suffered by the
complainant which is limited
(a) to the amount arising directly out of the act or omission of the bank
(b) ₹ 20 lakhs
(c) Lower of (a) and (b)
(d) None of the Above
5. Protection to Banker is available under section ……. of NI Act.

(a) Sec 85 (b) Sec 131
(c) Sec 87 (d) Sec 138 to 142
Key:
Que 1 2 3 4 5
Ans b c d c a
Page 190 of 225

RELEVANT CIRCULARS
➢ Circular issued by Reserve Bank of India vide its Notification No.

CEPD.CO.PRD.Cir.No.01/13.01.013/202021 dated 27.01.2021.
➢ eCircular issued by department of Customer Service Sl. No.: 897/2021 – 22

Circular No.: R&DB/CM&CS - CS/3/2021 – 22 Date: Tue 7 Dec 2021
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CHAPTER-5: PAYMENT SYSTEMS IN INDIA
Learning Objective: In this chapter we will learn different aspects of payment systems
like Real Time Gross Settlement System (RTGS), National Electronics Funds Transfer
(NEFT), Indo-Nepal Remittance Facility Scheme and US Dollar Cheque Collection
Facility. A brief introduction of Committee on Payments and Market Infrastructures
(CPMI) has also been made at the end of the chapter.
5.1. Real Time Gross Settlement (RTGS)
The acronym 'RTGS' stands for Real Time Gross Settlement, which can be defined as
the continuous (real-time) settlement of funds transfers individually on an order-by-
order basis (without netting). 'Real Time' means the processing of instructions at the
time they are received rather than at some later time; 'Gross Settlement' means the
settlement of funds transfer instructions occurs individually (on an instruction-by-
instruction basis). Considering that the funds settlement takes place in the books of
the Reserve Bank of India, the payments are final and irrevocable.
The RTGS system is primarily meant for large value transactions. The minimum
amount to be remitted through RTGS is 2.00 lakhs. There is no upper ceiling for RTGS
transactions. Under normal circumstances the beneficiary branches are expected to
receive the funds in real time as soon as funds are transferred by the remitting bank.
The beneficiary bank has to credit the beneficiary's account within 30 minutes of
receiving the funds transfer message.
All the bank branches in India are not RTGS enabled. For a funds transfer to go
through RTGS, both the sending bank branch and the receiving bank branch would
have to be RTGS enabled. The list of such branches, which provide the service is
available on the website of RBI. The remitting bank receives a message from the RBI
that money has been credited to the receiving bank. Based on this, the remitting bank
can advise the remitting customer through SMS that money has been credited to the
receiving bank.
Funds, received by a RTGS member for the credit to a beneficiary customer’s account,
will be returned to the originating RTGS member within one hour of the receipt of the
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payment at the PI (Payment Interface) of the recipient bank or before the end of the
RTGS Business Day, whichever is earlier, if it is not possible to credit the funds to the
beneficiary customer’s account for any reason e.g. account does not exist, account
frozen, etc. Once the money is received back by the remitting bank, the original debit
entry in the customer's account is reversed. With effect from 14th December 2020,
RTGS service is available round the clock on all days of the year.
1. Information that the remitting customer would have to furnish to a bank for
the remittance to be affected
The remitting customer has to furnish the following information to a bank for initiating
a RTGS remittance:
1. Amount to be remitted
2. Remitting customer’s account number which is to be debited
3. Name of the beneficiary bank and branch
4. The IFSC Number of the receiving branch
5. Name of the beneficiary customer
6. Account number of the beneficiary customer
7. Sender to receiver information, if any
2. Grievance Redressal: The customer has to contact his bank / branch. If the issue
is not resolved satisfactorily, complaint may be lodged with “The Chief General
Manager, Customer Education and Protection Department, 1st Floor, Amar Building,
Fort Reserve Bank of India, SBS Road, Fort, Mumbai, 400 001”.
Compensation for delay in returning the payment: In case of any delay in returning
the failed payment, the originating customer is eligible to receive compensation at
current repo rate plus 2%.
3. Initiation of a transaction for a future date

The RTGS system accepts future value dated transactions from the remitting bank for
settlement on RTGS working days up to three days’ in advance. Such transactions will
be placed in the queue and shall be settled on the basis of the value date of the
transaction.
4. Benefits of using RTGS
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RTGS offers many advantages over the other modes of funds transfer:
• It is a safe and secure system for funds transfer.
• RTGS transactions / transfers have no amount cap.
• The system is available on all days.
• There is real time transfer of funds to the beneficiary account.
• The remitter need not use a physical cheque or a demand draft.
• The beneficiary need not visit a bank branch for depositing the paper
instruments.
• The beneficiary need not be apprehensive about loss / theft of physical
instruments or the likelihood of fraudulent encashment thereof.
• Remitter can initiate the remittances from his / her home / place of work using
internet banking, if his / her bank offers such service.
• The transaction charges have been capped by RBI.
• The transaction has legal backing.
5.2 National Electronic Funds Transfer (NEFT)

National Electronic Funds Transfer (NEFT) is a nation-wide payment system
facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and
corporates can electronically transfer funds from any bank branch to any individual,
firm or corporate having an account with any other bank branch in the country
participating in the Scheme.
For being part of the NEFT funds transfer network, a bank branch has to be NEFT-
enabled. The list of bank-wise branches which are participating in NEFT is provided in
the website of Reserve Bank of India at http://www.rbi.org.in/scripts/neft.aspx .
Individuals, firms or corporates maintaining accounts with a bank branch can transfer
funds using NEFT. Except for the cash-based maximum remittance of Rs.50,000 per
transaction, there is no limit – either minimum or maximum – on the amount of funds
that could be transferred using NEFT. Even such individuals who do not have a bank
account (walk-in customers) can also deposit remit maximum Rs.50,000 per
transaction by depositing cash at the NEFT-enabled branches. Such customers have
to furnish full details including complete address, telephone number, etc.
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Individuals, firms or corporates maintaining accounts with a bank branch can receive
funds through the NEFT system. It is, therefore, necessary for the beneficiary to have
an account with the NEFT enabled destination bank branch in the country. The NEFT
system also facilitates one-way cross-border transfer of funds from India to Nepal, the
facility known as the Indo-Nepal Remittance Facility Scheme.
There is no restriction of centres or of any geographical area within the country. The
NEFT system takes advantage of the core banking system in banks. Accordingly, the
settlement of funds between originating and receiving banks takes places centrally at
Mumbai, whereas the branches participating in NEFT can be located anywhere across
the length and breadth of the country.
NEFT facility has been made available on 24X7 basis from 16th December 2019. There
are 48 half-hourly batches every day. The settlement of first batch commences after
00:30 hours and the last batch ends at 00:00 hours. The system is available on all
days of the year, including holidays (e-Circular Sl. No. 1321/2019–20, Circular No.
IT/GLOBALIT-ITRSNC/25/2019-20 dated 18th Dec 2019).
1. Operation of the NEFT system
Step-1: An individual / firm / corporate intending to originate transfer of funds through

NEFT has to fill an application form providing details of the beneficiary (like name of
the beneficiary, name of the bank branch where the beneficiary has an account, IFSC
of the beneficiary bank branch, account type and account number) and the amount to
be remitted. The application form will be available at NEFT enabled originating bank
branch. The remitter authorizes his/her bank branch to debit his account and remit the
specified amount to the beneficiary. Customers enjoying net banking facility offered by
their bankers can also initiate the funds transfer request online. Some banks offer the
NEFT facility even through the ATMs. Walk-in customers will, however, have to give
their contact details (complete address and telephone number, etc.) to the branch.
This will help the branch to refund the money to the customer in case credit could not
be afforded to the beneficiary’s bank account or the transaction is rejected / returned
for any reason.
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Step-2: The originating bank branch prepares a message and sends the message to
its pooling centre (also called the NEFT Service Centre).
Step-3: The pooling centre forwards the message to the NEFT Clearing Centre
(operated by National Clearing Cell, Reserve Bank of India, Mumbai) to be included
for the next available batch.
Step-4: The Clearing Centre sorts the funds transfer transactions destination bank-
wise and prepares accounting entries to receive funds from the originating banks
(debit) and give the funds to the destination banks(credit). Thereafter, bank-wise
remittance messages are forwarded to the destination banks through their pooling
centre (NEFT Service Centre).
Step-5: The destination banks receive the inward remittance messages from the
Clearing Centre and pass on the credit to the beneficiary customers’ accounts.
2. Indian Financial System Code (IFSC)

Indian Financial System Code is an alpha-numeric code that uniquely identifies a
bank-branch participating in the NEFT system. This is an 11-digit code with the first 4
alpha characters representing the bank, and the last 6 characters representing the
branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the
originating / destination banks / branches and also to route the messages
appropriately to the concerned banks / branches. Bank-wise list of IFSCs is available
with all the bank-branches participating in NEFT. List of bank-wise branches
participating in NEFT and their IFSCs is available on the website of RBI
at http://www.rbi.org.in/scripts/neft.aspx . Banks have to print the IFSC of the branch
on cheques issued to their customers.
3. Processing or service charges for NEFT transactions
The structure of charges that can be levied on the customer for NEFT is given below:
a) Inward transactions at destination bank branches (for credit to beneficiary
accounts)– Free, no charges to be levied on beneficiaries.
b) Outward transactions at originating bank branches – charges applicable for
the remitter (Please refer to latest instruction on charges).
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c) Charges applicable for transferring funds from India to Nepal using the NEFT
system (under the Indo-Nepal Remittance Facility Scheme) is available on the
website of RBI at http://rbi.org.in/scripts/FAQView.aspx?Id=67
The beneficiary can expect to get credit for the NEFT transactions within two business
hours from the batch in which the transaction was settled. In case of non-credit or
delay in credit to the beneficiary account, the NEFT Centre (CFC) of the respective
bank can be contacted (the remitter can contact his bank’s CFC; the beneficiary may
contact the CFC of his bank). Details of NEFT Customer Facilitation Centres of banks
are available on the websites of the respective banks. The details are also available
on the website of RBI at http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2070.
If the issue is not resolved satisfactorily, the NEFT Help Desk (or Customer Facilitation
Centre of Reserve Bank of India) at National Clearing Cell, Reserve Bank of India,
Mumbai may be contacted through email or by letter.
If it is not possible to afford credit to the account of the beneficiary for whatever reason,
destination banks are required to return the transaction (to the originating branch)
within two hours of completion of the batch in which the transaction was processed.
On receiving such a returned transaction, the originating bank has to credit the amount
back to account of the originating customer.
NEFT can be used to transfer funds from /to NRE and NRO accounts in the country.
This, however, is subject to the adherence of the provisions of the Foreign Exchange
Management Act, 2000 (FEMA) and Wire Transfer Guidelines.
No remittances can be sent abroad using NEFT, except the facility to send outward
remittances to Nepal under the Indo-Nepal Remittance Facility Scheme.
4. Other transactions that could be initiated using NEFT

Besides personal funds transfer, the NEFT system can also be used for a variety of
transaction including payment of credit card dues to the card issuing banks, payment
of loan EMI etc. In such cases, the IFSC and account number specified by card issuing
bank or loan disbursing bank needs to be provided by the remitting customer.
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NEFT is a credit-push system i.e., transactions can be originated by the payer /
remitter/sender only to pay/ transfer / remit funds to a beneficiary.
In case of successful credit to the beneficiary's account, the bank which had originated
the transaction is expected to send a confirmation to the originating customer (through
SMS or e-mail) advising of the credit as also mentioning the date and time of credit.
For the purpose, remitters need to provide their mobile number / e-mail-id to the branch
at the time of originating the transaction. The remitter can track the NEFT transaction
through the originating bank branch or its Customer Facilitation Centre (CFC) using
the Unique Transaction Reference (UTR) number provided at the time of initiating the
funds transfer. The originating bank branch can keep track of the status of the NEFT
transaction at all times.
Following are the pre-requisites for putting through a funds transfer transaction using
NEFT:
• Originating and destination bank branches should be part of the NEFT network
• Beneficiary details such as beneficiary name, account number and account type,
name and IFSC of the beneficiary bank branch should be available with the
remitter.
5. Benefits of using NEFT : NEFT offers many advantages over the other modes of
funds transfer:
• The remitter need not send the physical cheque or Demand Draft to the
beneficiary.
• The beneficiary need not visit his / her bank for depositing the paper instruments.
• The beneficiary need not be apprehensive of loss / theft of physical instruments
or the likelihood of fraudulent encashment thereof.
• Cost effective.
• Credit confirmation of the remittances sent by SMS or email.
• Remitter can initiate the remittances from his home / place of work using the
internet banking also.
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• Near real time transfer of the funds to the beneficiary account in a secure
manner.
6. Compensation for the customers, if the credit is delayed to beneficiary

account or if there is any delay is returning the transaction to the originator /
sender / remitter : If the NEFT transaction is not credited or returned within the
stipulated time, then the banks are liable to pay penal interest to the affected
customers. Banks are required to pay penal interest at the current RBI LAF Repo Rate
plus two percent for the period of delay / till the date of refund as the case may be to
the affected customers’ account without waiting for a specific claim to be lodged by
the customer in this regard.
7. NEFT ORIGINATING MESSAGE MAKER SCREEN IN CBS
NEFT ORIGINATING MESSAGE MAKER SCREEN IN CBS
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NEFT ORIGINATING MESSAGE CHECKER SCREEN IN CBS
8. Service Charges
RBI vide their notification dated 11.06.2019 has reviewed various charges levied by
them on the member banks for transactions processed in the RTGS and NEFT
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systems. In order to provide an impetus to digital funds movement, the processing
charges and time varying charges levied on banks by RBI for outward transactions
undertaken using the RTGS system, as also the processing charges levied by RBI for
transactions processed in NEFT system waived by the RBI w.e.f. 01.07.2019. In view
of the above, SBI has revised charges for NEFT/RTGS transactions w.e.f. 01.07.2019
as under:
Outward transactions:
NEFT-
➢ Up to Rs. 10,000: Rs. 2/- + GST
➢ Above Rs. 10,000 up to Rs. 1 lac: Rs. 4/- + GST
➢ Above Rs. 1 lac up to Rs. 2 lacs: Rs. 12/- + GST
➢ Above Rs. 2 lacs: Rs. 20/- + GST
RTGS-
➢ Rs. 2,00,000 to Rs. 5,00,000: Not exceeding Rs.20/- + GST
➢ Above Rs. 5,00,000: Not exceeding Rs. 40/- + GST
NEFT/ RTGS done through INB/MB Channel (Including YONO): NIL
(eCircular Sl No. 389, Circular No.: R&DB/BOD-SC/40/2019-20 dated 26 Jun 2019)
Recovering Wrong Credit

In view of increased use of Alternate Channels by customers for fund transfer through
RTGS / NEFT channel and due to wrong feeding of account number of beneficiaries
by customers, instances of transfer of funds to an unintended beneficiary has
increased. In order to take care of the complaints received from customers Bank has
issued guidelines that in case of wrong account number of beneficiaries is mentioned
by customer, Home Branch of customer will initiate follow up processes with other
Bank(s) without any pecuniary liabilities.
9. Inward Transactions: Matching of Beneficiary Name with Account name in

CBS for Transactions of Rs. 5 crores and above
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As per RBI Notification dated 14th Oct 2010, banks are required to rely only on the
beneficiary account number for the purpose of affording credit. However, the
destination banks may verify the beneficiary’s name details based on risk perception,
value of transfer, nature of transaction, post-credit checking, etc.
To comply with the above guidelines and to strengthen the inward remittance process,
a risk-based, post-credit checking of the name field for inward RTGS/NEFT
transactions of Rs.5.00 crores and above has been rolled out as per the process
detailed below.
Step 1: Inward NEFT and RTGS will be credited to customer account as per the
existing transaction flow which is a Straight Through Process (STP).
Step 2: After crediting the beneficiary account, name matching will be done for
transactions of Rs. 5.00 Crore and above, using the following process:
➢ Name of the beneficiary mentioned in the remittance details will be matched

with the name of the account holder in CBS, into whose account the remittance
is credited.
➢ If the name does not match 100%, based on the exception rules configured into
the Integrated Payment Hub (IPH) application, an SMS alert will be generated
and sent to the registered mobile number of Branch Head of the destination
branch.
➢ In such cases, an e-mail alert will also be sent to the respective branch mail
address with details of the remittance such as UTR number, date, amount, etc.,
along with percentage of mismatch observed. The name of the account holder
in CBS and the name of the beneficiary in the remittance will be mentioned in
the e-mail so that the Branch Manager/concerned official can take a decision
regarding whether the beneficiary is the intended one.
➢ Based on the percentage of mismatch reported in the SMS/Email alerts, Branch
will have the option to accept or reject the transaction. Acceptance or rejection
of the transaction will be done by a CBS user with capability level of 7 or above.
➢ In case the Branch decides to accept the transaction, no further action will be
required. If, however, the Branch decides to reject the transaction, a hold will
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immediately be placed in the account for the remitted amount regardless of the
balance in the account. Branch will initiate appropriate action for timely disposal
of the held amount.
( R&DB/DB&NB/DP-INB/2/2019 - 20 dated 30th Oct 2019 )
5.3 Indo-Nepal Remittance Facility Scheme

➢ Indo-Nepal Remittance Facility is a cross-border remittance scheme to transfer
funds from India to Nepal, enabled under the NEFT Scheme.
➢ The scheme was launched to provide a safe and cost-efficient avenue to
migrant Nepalese workers in India to remit money back to their families in
Nepal.
➢ A remitter can transfer funds up to Indian Rupees 50,000 (maximum
permissible amount) from any of the NEFT-enabled branches in India.
➢ The beneficiary would receive funds in Nepalese Rupees.
➢ Details of the NEFT-enabled branches are available on the website of Reserve
Bank of India at http://www.rbi.org.in/scripts/neft.aspx.
➢ An originator in India is allowed to remit a maximum of 12 remittances in a year.
1. Account of Remitter/ Beneficiary : It is not mandatory for the remitter to maintain

an account with a bank branch in India. Even a walk-in customer can transfer funds
up to Rs 50,000 by depositing the cash at the remitting bank branch. Even it is not
mandatory for the beneficiary to maintain an account with a bank branch in Nepal. It
would, however, be ideal if the beneficiary maintains an account with a bank branch
in Nepal to which the credit could be afforded. In Nepal, the Indo-Nepal Remittance
Facility Scheme is handled by Nepal SBI Ltd. (NSBL). If the beneficiary does not have
a bank account with NSBL or resides in a locality/ area in Nepal not serviced by a
NSBL bank branch, an arrangement has been entered into by NSBL with a money
transfer company in Nepal (called Prabhu Money Transfer) who would make
arrangements for delivery of cash (in Nepalese Rupees) to the beneficiary.
2. Documents needed to be presented by the remitter : If the remitting customer

maintains an account with a bank branch in India, there is no need for any additional
information, documents or identification. Else, the remitter has to submit documents
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for proof of identification such as Passport / Permanent Account Number / Driving
License / Telephone Bill / Certificate of Identification issued by his employer with
photograph and other details. The information will be captured in the NEFT system as
part of compliance with the Know Your Customer (KYC) requirements. Complete
address and telephone / mobile number of the beneficiary in Nepal will also be
required.
3. Flow of transactions from India to Nepal and timelines for completion of the
transactions: Remittances under the scheme for transfer of funds from India to Nepal
can be originated from any of the NEFT-enabled branches in India. List of bank-wise
branches participating in the NEFT system is available on the website of Reserve Bank
of India at http://www.rbi.org.in/scripts/neft.aspx.
The bank branches originating the Indo-Nepal remittance transactions under the NEFT
will process it like any other NEFT transaction, the only difference being that these
transactions will subsequently be pooled / collected at the designated branch of State
Bank of India (SBI) in India. At the end of the day, the remittance information is
conveyed electronically by SBI in a secured mode to Nepal SBI Bank Ltd. (NSBL).
NSBL makes arrangements for credit to the bank account of the beneficiary if the
beneficiary is an account holder of NSBL. Else, NSBL disburses funds in cash to the
beneficiary through the authorised money transfer company (Prabhu Money Transfer).
The beneficiary has to approach the local branch of the money transfer company,
furnish the UTR number, and produce a photo identity document (generally Nepal
Citizenship Certificate) to prove his identity. If the beneficiary does not approach the
money transfer company within a week from the date of the transaction, the money
transfer company would make arrangements for return of the remittance to the
originator.
The amount of remittance will flow back to the originating bank branch in India through
the NEFT system and the bank branch would then communicate to the remitter about
return of the remittance. If the remittance was originated by debit to an account, the
returned amount will be credited to that account. If the remittance was made by a walk-
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in customer through a cash deposit, the remitter has to produce evidence of proof of
remittance (counterfoil of the remittance application form) for getting refund.
4. Information about branches of NSBL and the outlets of Prabhu Money

Transfer: The location and addresses of NSBL and Prabhu Money Transfer are
available in the Procedural Guidelines for Indo-Nepal Remittance Facility Scheme as
also with the NEFT-enabled branches in India. The Procedural Guidelines for Indo-
Nepal Remittance Facility Scheme are available on the website of Reserve Bank of
India.
5. Charges for availing the remittance facility: As the facility is targeted at the
migrant Nepali workers in India, concessional charges are envisaged for transfer of
funds under the scheme. The charges are as under–
a. Originating bank branch in India – Maximum Rs. 5 per transaction.
b. State Bank of India in India – Rs. 20 per transaction if the beneficiary maintains
an account with Nepal SBI Ltd. (NSBL). State Bank of India shares this amount
equally with NSBL. NSBL would not charge any additional amount for crediting
the account of the beneficiary.
c. In case the beneficiary does not maintain an account with NSBL, an additional
amount of Rs.50 would be charged for remittances up to Rs. 5,000 and Rs.
75 for remittances above Rs. 5,000.
The charges would, thus, be a minimum of Rs. 25 or a maximum of Rs. 100 depending
on the value of transaction and the manner in which credit is afforded to the
beneficiary.
Originating bank branches have to recover the entire charges from the remitter, as per
the structure detailed above, and pass on the appropriate amount to SBI after retaining
their share (of Rs. 5).
6. Redressal of grievances under the Scheme : In case of complaints relating to

non-credit or delay in credit to the beneficiary account or for complaints of any other
nature, the NEFT Customer Facilitation Centre (CFC) of the respective bank (the
originating bank and/or SBI) can be contacted. Details of NEFT Customer Facilitation
Centres of banks are available on the websites of the respective banks. The details
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are also available on the website of Reserve Bank of India
at http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2070.
If the issue is not resolved satisfactorily, the NEFT Help Desk (or Customer Facilitation
Centre of Reserve Bank of India) at National Clearing Cell, Reserve Bank of India,
Mumbai may be contacted through e-mail or by addressing correspondence to the
General Manager, Reserve Bank of India, National Clearing Centre, First Floor, Free
Press House, Nariman Point, Mumbai – 400 021.
7(i) INDO NEPAL SCHEME OUTGOING MESSAGE MAKER SCREEN IN CBS
7(ii) INDO NEPAL SCHEME OUTGOING MESSAGE CHECKER SCREEN IN CBS
Page 206 of 225

5.4. US Dollar Cheque Collection
One of the services rendered by banks as part of their normal banking operations is
collection of cheques deposited by their customers, some of which, could also be
drawn or payable on banks that are outside the country. Such cheques are called
foreign currency cheques and, presently, a significant part of these cheques is US-
Dollar denominated payable by banks in the USA.
Cheques denominated in currencies other than Indian Rupees such as Euro (€),
Pound Sterling (£), US Dollar ($), Yen (¥), etc., are called foreign currency cheques.
Foreign currency cheques include demand drafts, personal cheques, banker’s
cheques, cashier’s cheques, traveller’s cheques, etc. Since such cheques are not
payable in India they are, therefore, required to be sent to the country concerned for
realization of proceeds.
Cheques denominated in US Dollars (USD cheques) constitute a major share of

foreign currency cheques deposited by customers for realisation. In order to make the
USD cheque collection process more efficient and transparent, RBI has advised banks
to refine their USD cheque collection procedures and frame their own USD Cheque
Collection Policy covering aspects like mode of collection, collection period, charges
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for collection, etc. This policy shall be made part of their regular Cheque Collection
Policy.
1. Modes of collecting USD cheques payable in USA : There are various ways of
collecting (realising) USD denominated cheques. The collection process followed by
banks (presenting banks) varies depending on the institutional arrangements put in
place by them. There are different types of arrangements adopted by banks:
i. Cash Letter Arrangement (CLA): Cheques are sent by the presenting banks in
India to their correspondent banks (CBs) in USA for clearing. Funds are collected
(realised) by the CBs and credited to the NOSTRO account of the presenting bank
maintained in US. For cheques sent under CLA the CB gives provisional credit to
the bank on a pre-determined date (which varies from 7 to 9 days after tendering of
cheque to the CB). However, the provisional credit will be subjected to a cooling
period. After the cooling period, the customer’s account with the presenting bank in
India is credited. In case of secured collection facility, the CB provides a guaranteed
credit but at an additional cost.
Cooling period is the time up to which banks wait after receiving provisional credit
for the amount of cheque in their Nostro account for possible return of the cheque
under provisions of the laws of USA by the drawee bank, before giving credit to the
customers.
Under Secured Collection facility extended by the CBs, the CBs provide guaranteed
final credit without recourse within a confirmed time period unlike normal collection
service. Hence the collection time period is better under this facility. CBs normally
fix a cap on the amount of individual cheques collected under the arrangement. The
CBs absorb any subsequent recall of payment by the drawee bank as per US laws.
The bank offering such service charge an additional amount for giving credit without
recourse.
ii. Direct Collection Arrangement (DCA): Cheques are sent by the banks in India
directly to the drawee banks in USA for collection. Usually, collection services
ensure receipts of clear funds i.e., risk of return is almost eliminated. Therefore,
high value cheques are generally sent under collection though the time taken may
be more.
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iii. Final Credit Services (FCS): These services are offered by some Correspondent
Banks (CBs). The CB offering the service guarantees confirmed credit against the
instrument. Under this arrangement banks receive final credit in their NOSTRO
accounts without any recourse. This service normally does not have any cooling
period as the cooling period is factored by the CBs before releasing the clear funds.
2. Check-21 Facility: The System has been facilitated under Check-21 Legislation. It
works like CTS. When using check 21 facility, dealings are cleared utilizing the
exchange of check images from bank to bank. It saves time in transit.
Banks have been advised by RBI to make their USD Cheque Collection process
transparent. Various modes of collection along with the timeframe and charges for
collection shall be covered therein. Customers could request for any of the collection
modes specified in the USD Cheque Collection Policy based on need, convenience
and cost involved.
The customer can approach the bank to discount or purchase the cheque in case of
urgent need of funds. It is the commercial decision to extend this facility to customers
based on customer profile. However, the charges for purchase / discount will be
significantly higher.
3. Charges for the collection of USD denominated cheques:

The charges levied by banks for collection of such USD denominated cheques are
dependent on the type of collection arrangement chosen by customers and the
number of intermediaries (correspondent banks) involved in the collection process.
Each of the CBs will levy their own charges for facilitating the process of collection. All
these charges will be in turn levied by the collecting banks in India from the customers.
The customer’s account is credited net of collection charges (proceeds minus
collection charges).
4. Applicability of US regulations to USD cheque collection

The basic legal framework for determining rights, responsibilities and liabilities of the
parties in connection with collection of USD denominated cheques drawn on US banks
are governed by the legal framework as laid down under the US federal and state laws
like Uniform Commercial Code (UCC) etc.
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In the event of return of a counterfeit cheque handled through this process, the drawee
bank in the US has the right to recover the proceeds from presenting banks within the
period stipulated under US Clearing House guidelines.
5. Timeframe for collection of USD cheques

RBI has not stipulated any timeframe for collection of USD cheques like collection of
Rupee Cheques. Timeframe for collection of USD cheques will vary depending on the
collection mode. The date of credit to the account of the customer will be reckoned
based on the date of credit (value date) to the NOSTRO Account of collecting banks
and the cooling period.
The time taken by banks for collection of USD cheques normally ranges from 15 to 30
days and may go up to 45 days depending upon the collection arrangement and place
at which the instrument is payable. The diversity in the banking and payment systems
in USA and laws governing cheque transactions have a significant bearing on the
collection time. Based on the mode of collection, banks have to indicate the period for
collection of USD cheques in their USD Cheque Collection Policy.
Credit of the proceeds of the USD cheque is given in the NOSTRO accounts of the
collecting banks. The collecting banks credit the customer’s account only after expiry
of the cooling period as such funds are subject to recall under US laws. Some banks
may permit selective withdrawal of funds before the cooling period lapses depending
on the customer’s credit worthiness, relationship with the bank, KYC compliance,
value of the cheque, etc.
Banks have to pay interest on the amount of cheque on a value-date concept from the
date of sighting of credit in their NOSTRO accounts till such time the credit is actually
afforded to customers’ accounts. Interest shall be paid minimum at the Savings Bank
rate calculated on the amount of proceeds credited to the customers’ accounts.
6. Compensation for delay in collection

Compensation by way of additional interest will be paid to the customer for delay in
collection beyond the declared collection period as per the bank’s USD Cheque
Collection policy and such interest shall be on “step-up basis” for the period of delay.
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The compensation shall be paid automatically without the customer requesting for the
same.
7. Facilitating customer awareness and redressing customer complaints

Banks are required to make their USD Cheque Collection Policy transparent covering
all the relevant aspects. Banks are also required to widely disseminate the policy by
displaying at their branches, on their website, etc. A copy of the policy will be available
with the Branch for the customers to go through. Banks have to look into and redress
customer complaints like delay in collection/ receipt of proceeds, etc. Customers may
resort to the redressal mechanism put in place by RBI under the Banking Ombudsman
Scheme, 2006 for any complaints.
8. Instructions for reducing the timeframe for collection of USD cheques

RBI has recommended the following steps to banks for reducing the timeframe for
collection of USD cheques –
➢ Review the collection policy on an on-going basis so as to explore faster

methods of realisation.
➢ Reduce the transit period for movement of cheques from the collecting
branches to the centralised pooling branch and from the centralised pooling
branch to CBs.
➢ Explore feasibility of forming / pooling cheques of various collecting banks
to a common service bureau to avail benefits arising out of increased
volumes, reduced infrastructure costs, etc.
➢ Explore the possibility of leveraging on Check-21 facility.
➢ Use of efficient and reliable courier / postal service.
9. Posting of Foreign Currency Cheques in GLS
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1. Login to GLS support site from SBI Times>> Useful Links2
2. Login using GLS ID-Password
3. Go to Cheque Collection and proceed
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4. Fill the instrument details.
5. Submit the details.
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6. Click on Cash Letter Generation, select the entry and verify.
7. Print two copies of cash letter, one for records and the other one to be
sent to GLS Mumbai Address along with the instrument. Keep the copy
of instrument and letter for branch record.
Page 214 of 225

5.5 Committee on Payments and Market Infrastructures (CPMI)
The Committee on Payments and Market Infrastructures (CPMI) promotes the safety
and efficiency of payment, clearing, settlement and related arrangements, thereby
supporting financial stability and the wider economy.
The CPMI monitors and analyses developments in these arrangements, both within
and across jurisdictions. It also serves as a forum for central bank cooperation in
related oversight, policy and operational matters, including the provision of central
bank services. It aims at strengthening regulation, policy and practices regarding such
arrangements worldwide.
----------
KEY LEARNINGS
➢ Oversight of the payment and settlement systems is a central bank function

whereby the objectives of safety and efficiency are promoted by monitoring
existing and planned systems, assessing them against these objectives and,
where necessary, inducing change.
➢ In India RBI has permitted different modes of remittances namely RTGS, NEFT,
Indo-Nepal Remittance Facility and US Dollar Cheque Collection.
➢ In NEFT, remittances are settled in batches after netting off the amount to be
remitted to different Banks
➢ RTGS is based on real time transfer of funds in which amount is transferred
between banks on one-to-one basis. A minimum of Rs.2 lacs can only be
remitted through RTGS, however there is no upper limit of amount of funds to
be transferred in NEFT and RTGS.
➢ Under Indo-Nepal Remittance Facility the workers coming from Nepal may
remit maximum Rs. 50,000 to Nepal.
➢ Bank has evolved user-friendly processes for making remittances under RTGS,
NEFT, US Dollar Cheque Collection and Indo-Nepal Remittance Facility
through NEFT.
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➢ The Committee on Payments and Market Infrastructures (CPMI) is a global
standard setter in this area. It aims at strengthening regulation, policy and
practices regarding such arrangements worldwide.
CHECK YOUR PROGRESS
1. In how many batches remittances are sent through NEFT per day?
(a) 46 (b) 23
(c) 48 (d) 24
2. The charges for incoming remittances under NEFT is decided by

(a) RBI (b) Individual Banks
(c) NPCI (d) Incoming remittances are free
3. The remitter under Indo-Nepal Remittance Facility must maintain account with
(a) Any PSU Bank in India (b) Nepal SBI Bank Limited
(c) No need to maintain account (d) State Bank of India
4. The RTGS and NEFT function on the principle of

(a) Debit-pull (b) Credit-push
(c) None is correct (d) RTGS- Debit-pull, NEFT-Credit Push
5. As per RBI guidelines any complaint in case of non-credit or delay in credit to

the beneficiary account under RTGS may be lodged with
(a) CVC
(b) Banking Ombudsman
(c) Chief General Manager, Customer Education and Protection Department, RBI
(d) Either of the three
6. Charges for cheques sent under US Dollar Collection depend upon....

(a) number of intermediaries (Correspondent Banks) involved in the collection process
(b) the type of collection arrangement chosen by customers
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(c) on the amount
(d) Both (1) and (2) above
7. Minimum ...... may be remitted through NEFT in India.

(a) Rs. 50,000
(b) Rs. 1.00 lac
(c) Rs. 2.00 lacs
(d) There is no limit
8. Remittance under Indo-Nepal Remittance facility may be sent through

(a) Any Branch
(b) Any Public Sector Bank Branch
(c) NEFT enabled branches only
(d) RTGS enabled branches only
9. The beneficiary can expect to get credit for the NEFT transactions within
………. from the batch in which the transaction was settled.
(a) one business hour
(b) two business hours
(c) three business hours
(d) four business hours
10. Please check whether the statements are true or false

(a) In Final Credit Services (FCS) offered by some Correspondent Banks (CBs) for
collection of USD cheques, funds are released after lapse of cooling period.
(b) A remitter under Indo-Nepal Remittance facility may not maintain an account in the
bank in India, but the beneficiary must have a bank account in Nepal.
(c) In case of non-credit or delay in credit to the beneficiary account, it is desired that
the remitter can contact NEFT Customer Facilitation Centre (CFC) of the beneficiary’s
bank.
Page 217 of 225

(d) In RTGS, if it is not possible to credit the funds to the beneficiary customer’s
account for any reason with one hour of the remittance sent, the original debit entry in
the customer's account should immediately be reversed.
Key-
Que 1. 2. 3. 4. 5.
Ans (c) (d) (c) (b) (c)
Que 6. 7. 8. 9. 10.
Ans (d) (d) (c) (b) True: (c) & (d)
CASE STUDY
One of our branches is located in the Industrial Area having many manufacturing units.
In these units, a lot of migrant labourers including those from Nepal are working. The
units are paying their wages in cash on weekly/ fortnightly basis. Some of the labourers
are having account in different banks but most of them do not have any account. The
branch is receiving lot of queries from Nepalese labour regarding remittance facility to
Nepal.
1. Which facility is available for remitting the fund to Nepal?

(i) Indo-Nepal Remittance Facility
(ii) SWIFT
(iii) RTGS
(iv) IMPS
2. In National Electronic Funds Transfer (NEFT) maximum amount per transaction is

limited to………. for remittances to Nepal under the Indo-Nepal Remittance Facility
Scheme.
(i) Rs.75000
(ii) Rs.50000
(iii) Rs.80000
(iv) Rs.90000
3. Remittances under Indo-Nepal Remittance facility can be originated from …..

Page 218 of 225
(i) Only SBI branches in India
(ii) Any bank branches in India
(iii) NEFT enabled branches in India
(iv) All the metro and urban branches in India
4. The NEFT system facilitates ____cross-border transfer of funds from India to Nepal
which is known as the Indo-Nepal Remittance Facility Scheme.
(i) One Way
(ii) Two Way
(iii) Multi way
(iv) None of the Above
5. In Indo-Nepal Remittance Facility Scheme, what is the restriction on the number of

remittances?
(i) No such limit
(ii) 24 Remittances in a year
(iii) 12 Remittances in a month
(iv) 12 Remittances in a year
Key-
Que 1. 2. 3. 4. 5.
Ans (i) (ii) (iii) (i) (iv)
Relevant Circulars
1 Circular No.: R&DB/BOD-SC/40/2019 - 20 dated 26th Jun 2019

2 Circular No.: R&DB/DB&NB/DP-INB/2/2019 - 20 dated 30th Oct 2019
3 Circular No.: IT/GLOBALIT-ITRSNC/25/2019 - 20 dated Wed 18th Dec
2019
Page 219 of 225

Important Links
http://www.rbi.org.in/scripts/neft.aspx
http://rbi.org.in/scripts/FAQView.aspx?Id=67
http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2070
Page 220 of 225

NOTES
Page 221 of 225

DISCLAIMER
This booklet is to be used as ready reference for the Role

Owners. The Primary Objective of this booklet is to provide hand
holding and guidance in day-to-day effective working. For
Detailed instructions and further clarifications, if any, reference
may please be made to the related circulars issued by the Bank.
All efforts have been made to ensure correctness of the facts

and figures mentioned in the booklet as per Bank’s instructions
issued till 31/03/2023.
In case of any suggestions, the same may please be sent to the

Email id: sbfi.admin@sbi.co.in
Page 222 of 225

Page 223 of 225
Page 224 of 225
VISION
Be The Bank Of Choice For
A Transforming India
MISSION
Committed To Providing Simple, Responsive And
Innovative Financial Solutions
STU Vision : To Make The Bank Future Ready
RBC MANUAL _CCPC_FY24

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FY 2023-24

With Best Wishes,

1 Evolution & Overview of Centralised CPC 09

1.1 Clearing House 09

1.2 Payments without use of Cheque and Cash 09

1.3 Objective & Scope of CCPC 11

1.4 Activities beyond Scope 12

1.5 Overview of CCPC 13

1.6 Linkages of the Branch to CCPC 13

2.1 Organizational Structure 18

2.2 Role Holders in CCPC 20

2.3 ORM Areas 43

2.4 External Compliances & Self-Audit 51

3A Cheque Truncation System 58

3.1 CTS implementation 58

3.2 Benefits of Grid Based CTS 59

3.3 Image specifications in CTS / Uniqueness of Images 61

3.4 Cheque Standardisation and CTS 2010 Standard 61

3.5 Fraud Prevention Measures 63

3.6 Image Quality Assessment (IQA) Failures 66

3.7 Cheque Deposit Kiosk 67

3.8 Positive Pay System (PPS) for Cheque Payments 68

3.9 NCR WEB CTS Software 71

3.10 Inward Process 84

3.11 OLRR (Online Rejection Referral & Return) Process 88

3.13 National Automated Clearing House (NACH) 91

3.14 Aadhar Payment Bridge System (APBS) 93

3.15 NACH Credit/ Debit 156 94

3.16 Overview of NACH Credit 95

3.17 Overview of NACH Debit 99

3.18 Mandate Management System (MMS) 101

3.19 Dispute Management System (DMS) 110

3.20 CRM Tracker 115

3.21 Operational Risk Management 128

3.22 Irregularities Pointed Out in RFIA 132

4.1 Negotiable Instruments Act 1881 143

4.2 Payment and Settlement Systems Act 2007 153

4.3 Indian Contract Act 159

4.4 The Banking Ombudsman Scheme 162

4.5 Integrated Ombudsman Scheme (IOS) 2021 170

4.6 Consumer Protection Act (COPRA) 2019 177

4.7 Banking Codes and Standards Board of India (BCSBI) 186

5 Payment Systems in India 192

5.1 Real Time Gross Settlement (RTGS) 192

5.2 National Electronic Funds Transfer (NEFT) 194

5.3 Indo-Nepal Remittance Facility Scheme 203

5.4 US Dollar Cheque Collection 207

5.5 Committee on Payments and Market Infrastructures 215

1.1. A clearing house is an association of banks that facilitates payments through

1.2. Payments without use of Cheque and Cash:

1. Electronic Fund Transfer: Electronic Fund Transfer (EFT) is a system whereby

➢ EFT is a faster mode of transfer of funds which facilitate transference of funds

2. Electronic Clearing Service (ECS): Electronic Clearing Service is a retail payment

5. Cheque Truncation: Cheque truncation is a system of cheque clearing and

6. Speed Clearing: Speed Clearing refers to collection of outstation cheques (a

1.3. Objective & Scope of CCPC:

2. Outward clearing Instruments:

3. Electronic Clearing System:

4. Outstation Collection (SC Cheques):