Please wait while your page is loading...
5 stars based on
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 are US-Dollar denominated payable by banks in the United States of America.
In the interest of better public awareness, the following FAQs hdfc bank nostro account number been prepared for cheques denominated in US-Dollars. I have received a cheque denominated in US Dollars. How does such a cheque differ from the usual Rupee cheques as an instrument of payment?
Since such cheques are not payable in India they are, therefore, required to be sent to the country concerned for realization of proceeds. RBI has advised banks to frame their own Cheque Collection Policy covering various aspects relating to collection of Rupee cheques. Are there similar guidelines for collection of foreign currency cheques as well? 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 for collection, etc.
This policy shall be made part of their regular Cheque Collection Policy. But are there different modes of collecting such cheques? There are various ways of collecting realising USD denominated cheques. The collection process followed by banks presenting banks varies hdfc bank nostro account number on the institutional arrangements put in place by them.
There are basically hdfc bank nostro account number types of arrangements adopted by banks—. Funds are collected realised by the CBs and credited to the account of the presenting bank maintained in US.
For cheques sent under CLA the CB gives provisional credit to the bank hdfc bank nostro account number 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. In case of secured collection facility, the CB provides a hdfc bank nostro account number credit but at an additional cost.
Cooling period is the time up to which banks wait after receiving provisional hdfc bank nostro account number 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.
More details are available under Question 9. Secured Collection is a facility extended by the CBs. Under this facility, 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 offering this facility normally fix a cap for 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. 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. Therefore, high value cheques are generally sent under collection though the time taken may be more. These services are offered by some 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 hdfc bank nostro account number releasing the clear funds.
The System has been facilitated under Check Legislation. It works more or less 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. A Nostro account is a bank account established in a foreign hdfc bank nostro account number usually in the currency of that country for the purpose of carrying out transactions there. For example most commercial banks maintain US dollar accounts with their correspondent banks in USA in order to facilitate settlement of interbank and customer transactions in US dollar.
What are the charges levied for the collection of these 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 hdfc bank nostro account number 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 basic legal framework for determining rights, responsibilities and liabilities of the parties in connection with collection of USD denominated cheques drawn hdfc bank nostro account number US banks are governed by the legal framework as laid down under the US federal and state laws like Uniform Commercial Code Hdfc bank nostro account number etc.
However, 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. 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.
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. The transit time may be reduced by 2 to 3 days by sending the cheques the same day from branches to centralised pooling hdfc bank nostro account number and centralised pooling branch to Correspondent Banks.
However, banks have also been advised to explore using faster methods of realisation such as leveraging on Check facility in the US for saving in transit time. Cooling period is the time up to which banks wait after receiving provisional credit for the amount of cheque hdfc bank nostro account number their Nostro account for possible return of the cheque by the drawee bank under the provisions of the US laws, before giving credit to the customers. Cooling period is dependent on the mode and area of collection and varies from days for cheques in New York area and days for other cities collected under CLA mode.
However, under the FCS mode, banks receive final credit in their Nostro account without any recourse to recall.
It does not involve cooling period as this is already factored into by the CBs before releasing the final credit. Are customers given credit and allowed to use the funds after sight of credit in the Nostro accounts of banks? It is a commercial decision hdfc bank nostro account number the bank. Banks have been advised to formulate their hdfc bank nostro account number on instant credit for small value cheques as part of the USD Cheque Collection Policy. Is there any compensation for customers?
Will the customer be compensated for delay in collection hdfc bank nostro account number the collection period indicated in the Cheque Collection Policy of the bank? The compensation shall be paid automatically without the customer requesting for the same. What are the instructions for facilitating customer awareness and redressing customer complaints? Banks are required to make their USD Cheque Collection Policy transparent covering all the relevant aspects detailed above.
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. Customers may resort to the redressal mechanism put in place by RBI under the Banking Ombudsman Scheme, for any complaints. RBI has recommended the following steps to banks for reducing the timeframe for collection of USD cheques.
Review the collection policy on an hdfc bank nostro account number 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. Do I have recourse to any other arrangement for collection realisation of USD cheques if I am in urgent need of proceeds? Skip to main content.
Search the Website Search. There are basically three types of arrangements adopted by banks— i. What is a Nostro Account? Can the customer choose the mode for collecting USD cheques? It appears that the cooling period has a major impact on collection time? The compensation shall be paid automatically without the customer requesting for the same Are there any other instructions to banks in this regard? 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.
Explore the possibility of leveraging on Check facility. The customer can approach the bank to discount or purchase the cheque. It is the commercial decision to extend this facility to customers based on customer profile.