Money & Banking
Banks cannot insist on ID proof to cash bearer cheque
Overturning an order of the Maharashtra State Consumer Disputes Redressal Commission, the National Consumer Disputes Redressal Commission (NCDRC) last week termed the refusal of HDFC Bank to hand over cash to a bearer of a cheque, after verifying his credentials through the account holder, as “a clear case of deficiency in service”.
 
The order from NCDRC, issued on 15 March 2017, states, “No doubt the complainant had not furnished his ID, but the fact remains that admittedly not only the cashier but also the Bank Manager separately rang up the account holder on his mobile number, who verified having issued the subject cheque and gave clearance for encashment. The bank officials, however, declined to encash the cheque. This, in our view, is a clear deficiency in service.”
 
The order relates to a consumer complaint filed by Mumbai resident Prakash Sheth against HDFC Bank. Sheth required Rs3 lakh to be deposited in the hospital for treatment of his ailing mother, in 2010. He requested his nephew, Chirag, for the money. Chirag gave a bearer cheque to Sheth, who then presented the bearer cheque on 7 May 2010 at HDFC Bank. The cashier in the bank asked him to come back at 4pm because of insufficiency of funds. When he returned at 4pm, the cashier asked for his photo ID, which Sheth was not carrying. The cashier then called up Chirag to seek verification of issuance of the bearer cheque. Chirag confirmed it, but the cashier refused to honour the cheque and Sheth was asked to meet the branch manager. The branch manager too checked with Chirag to confirm that he indeed had issued the cheque. Despite that, the manger insisted that Chirag should personally come to the bank, which the latter was unable to. The branch manager then refused to honour the cheque. 
 
Claiming this to be deficiency in customer service, Sheth filed a complaint in the Consumer Forum at South Mumbai District, seeking compensation to the tune of Rs1 lakh towards mental agony and physical harassment. Sheth also appealed for a directive to the bank to stop this practice. The bank was served a notice, but it claimed that it had rightly not honoured the cheque as per guidelines from the Reserve Bank of India (RBI). The District Forum therefore dismissed the complaint. Subsequently, the Maharashtra State Commission too dismissed Sheth’s petition, stating that the bank had rightfully adhered to RBI guidelines.
 
As per RBI guidelines, banks have been advised that “in case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction is equal to or exceeds Rs50,000, whether conducted as a single transaction or several transactions that appear to be connected, the customer’s identity and address should be verified”.
 
However, Sheth’s contention was that two officials of HDFC Bank had personally cross-checked with the account holder, which proved that it was a clear case of harassment. 
 
In this case, while the State Commission dismissed Sheth’s petition, it upheld that although Sheth was not an account holder of HDFC Bank, he still was a consumer. The Commission observed “…the consumer is not only the person who hires or avails the services of the service provider but the beneficiary also. It is argued that once the account holder had issued a cheque in favour of someone, he automatically becomes the beneficiary and therefore he is a consumer”.
 
Sheth then approached the National Commission. In its order on 15 March 2017, the Commission stated “…from the affidavits of Chirag Natvarlal Sheth and Prakash Sheth (the complainant), it is amply proved that the bank telephonically contacted Chirag Sheth twice to verify whether or not he has given bearer cheque to the complainant and the account holder Chirag Sheth confirmed the said fact. From the above, it is clear that the bank officials were categorically informed by the account holder that he had issued the cheque and given it to Prakash Sheth. Therefore, he, in our view, was the beneficiary of the cheque and as such he is covered under the definition of consumer, which includes the beneficiary of the service hired or availed. Thus, the complaint is maintained.”
 
The NCDRC also pointed out that in response to an application under Right to Information (RTI) filed by the bank, a part of the response clearly states that, “the bank should not ordinarily insist on the presence of account holder for making cash withdrawals in case of ‘self’ or ‘bearer’ cheques unless the circumstances so warrant. The banks should pay self or bearer cheques taking usual precautions.”
 
“From this it is evident that Reserve Bank has cautioned banks in the country to be careful while encashing the bearer cheques if the amount exceeds Rs50,000 and insist on the verification of ID, as also the address. No doubt, the complainant had not furnished his ID, but the fact remains that admittedly not only the cashier but also the bank manager separately rang up the account holder on his mobile number, who verified having issued the subject cheque and gave clearance for encashment. The bank officials, however, declined to encash the cheque. This, in our view, is a clear deficiency in service.”
 
Another rule from RBI states, “In the event the individual tendering the instrument is not carrying the identity, and there is urgency to pay, the transaction to be referred to the branch manager. The branch manager shall make appropriate enquiries as deemed fit and shall use his discretion to allow the transaction. Such discretion to be used judiciously as strict one- off cases, only upon satisfactory confirmation of the bonafides of the transactions.”
 
The National Commission declared HDFC Bank’s stance in not honouring Sheth’s cheque as ‘deficiency of service’ and asked it to pay compensation of Rs10,000 to him for harassment and humiliation.
 
Prakash Sheth says, “Most banks harass such non-account holders who come with bearer cheques. Mine was perhaps the first challenge before a legal forum. This case will spread literacy amongst consumers or bearer cheque holders, and will hopefully be a lesson to similar banks who adopt this malpractice.”
 
Here is the order issued by NCDRC…
 
 
(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting, which she won twice in 1998 and 2005, and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book, “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte”, with Vinita Kamte, and is the author of “The Mighty Fall”.)
 

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COMMENTS

Suketu Shah

1 month ago

The fact is HDFC Bank was harassing the customer as they didnot have 3 lakhs with various nonsense excuses.HDFC Bank is the expert is such things and no bank in India can compete with them when it comes to harassing customers.

REPLY

Suketu Shah

In Reply to Suketu Shah 1 month ago

HDFC Banks's thinking is so myopic that after melting out the harassment they still expect you to do business with them and not leave and blacklist them!!!!!!!!!!!!!!

R Balakrishnan

1 month ago

This is not a good thing. As a bank cashier, I can ask for a separate money receipt from whoever collects the money from the counter. A mere signature on the reverse is a meaningless scribble. So as a bank, I can ask for a proper, stamped receipt for having received the money against the cheque. This order needs to be overturned. Anyone collecting cash against a bearer cheque should be made to produce an ID.

B. Yerram Raju

1 month ago

Bearer is always a bearer and bearer will become the 'holder in due course.' Bank shall pay the bearer the amount mentioned in the cheque without demur and bank will not run any legal risk. There is no instruction to my knowledge from the RBI that the bearer instruments shall have the evidence of the third party payee. Further, NI Act and various judgments on the issue have been very clear absolving the banker who pays the bearer from any risk. Unfortunately, banks; counters are handled by tech-savvy persons with least domain knowledge and the controlling officers go by what the system ordains. System is tuned to paying order instruments that require Id proof for every payee of the instrument. Banks started issuing 'Order' cheque leaves on savings bank accounts that earlier used to be issued only bearer cheque leaves only. It is time that the RBI has to revisit the NI Act and brings to bear on the banks the essentials for compliance because the Banks understand only the RBI instructions and not the banking laws of the country in the present day.

B. Yerram Raju

1 month ago

Bearer is always a bearer and bearer will become the 'holder in due course.' Bank shall pay the bearer the amount mentioned in the cheque without demur and bank will not run any legal risk. There is no instruction to my knowledge from the RBI that the bearer instruments shall have the evidence of the third party payee. Further, NI Act and various judgments on the issue have been very clear absolving the banker who pays the bearer from any risk. Unfortunately, banks; counters are handled by tech-savvy persons with least domain knowledge and the controlling officers go by what the system ordains. System is tuned to paying order instruments that require Id proof for every payee of the instrument. Banks started issuing 'Order' cheque leaves on savings bank accounts that earlier used to be issued only bearer cheque leaves only. It is time that the RBI has to revisit the NI Act and brings to bear on the banks the essentials for compliance because the Banks understand only the RBI instructions and not the banking laws of the country in the present day.

Meenal Mamdani

1 month ago

When I read the headline of this article, I thought that the bearer had not provided any identification. But it is obvious that the writer of the cheque was guaranteeing that it was OK to disburse money as he assured both the teller and the manager on the phone.
The only reason to insist on the letter of the law rather than the spirit of the law is the mindset of Indian officials. They get drunk with power and use every opportunity to be unhelpful to customers. They want the customers to pay respect to them rather than recognizing that this is not license-raj any more and ordinary people are going to demand their rights.
If I was the supervisor of the manager of this bank branch, I would send him to a reeducation camp. He is not fit to work in a branch where consumers know their rights.

SuchindranathAiyerS

1 month ago

Banking acts on law, accounts, economics and customer relations. India's bankers have IAS/IPS incompetence instead

REPLY

B. Yerram Raju

In Reply to SuchindranathAiyerS 1 month ago

Why identify incompetence only with only civil services? They are there every where. There are efficient persons in every sector and 80 to 20 principle is holding the country still. in tact.

Arun

1 month ago

Why does RBI require that banks verify the address of the bearer of a cheque? Isn't it sufficient to verify just the bearer's identity? Also, what do banks verify the address against - does the cheque specify the address of the bearer?

SRINIVAS SHENOY

1 month ago

When making cash payments of any bearer cheque, payments should be made in good faith and without negligence then only the paying banker is protected under the NI Act.

Gurudutt Mundkur

1 month ago

With both the Officer and the Manager having verified from the drawer of the cheque, it certainly was not necessary for further identity. In the absence of such verification, it would be in order for the payee/bearer to provide his identity.

From water consumers to conservers (March 22 is World Water Day)
Somewhere in a mountain village in the Himalayas, a woman folds a taro leaf into a cone, fills it with soil, and sows a seed. She waters her little cone with waste water from the kitchen, creating an enabling environment for the seed to germinate in, says a woman researcher of an international institute.
 
She hopes in time the seed will add a bit of greenery to her kitchen. For her, water flows down in the river where it is not easy to access, and the nearby springs are all drying up as the climate changes, Kathmandu-based International Centre for Integrated Mountain Development (ICIMOD) researcher Pranita Bhushan Udas said ahead of World Water Day on March 22.
 
She has no option but to maximise the use of available water. She has to reuse and recycle. The taro leaf prevents seepage, holds water for more days, and turns into manure over time. By the simple act of planting a seed the woman is utilising holistic knowledge and combining various resources to maximise benefit.
 
This is just one instance showing how resourceful mountain women have been in actively engaging in managing water resources, said Udas, who is gender, water and adaptation specialist in the livelihoods theme with ICIMOD.
 
According to her, traditional knowledge of the skills necessary for surviving in harsh mountain terrains, passed on from one generation to another, gives mountain people a unique, holistic understanding of how a single resource can be put to multiple uses.
 
"The principle of reuse and recycle is at the core of resource management for women and men living in challenging environments today, as it was in the past. It is unfortunate that such age-old practices are forgotten as communities rush to modernisation and the availability of water starts to get determined by the ability to pay for water," she said.
 
"Whether it is a village along the Ganges, Kosi or the Indus rivers, it is women who are solely responsible for managing water resources for the family. The men are absent, having ventured off their farms in search of employment. For the women left behind, problems arising from water scarcity and water-induced disaster, and the associated conflicts and insecurities make them more vulnerable."
 
Udas said the situation in cities is no different for women among the urban poor.
 
She said with increase in migration in cities and competition for aesthetic and industrial water use, women among the urban poor struggle to manage water and compromise their water need for the sake of their family members.
 
By 2015, 663 million people in the world still lacked safe and improved drinking water sources, and 2.4 billion lacked improved sanitation, for which women and girls bore the brunt.
 
The researcher said increasing global threat to water scarcity in the face of both climatic and socio-economic changes demands urgent action for the reuse and recycle of available water resources, at both individual and institutional levels.
 
"Changing our habits to make sure we reuse and recycle water will not only help us meet our water need, but also help reduce gender water poverty by reducing water conflicts and water grabbing, and promoting sensitivity to water sharing," she added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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TVS Motor starts export of BMW bikes, plans capex of Rs 350 crore FY18
Two and three wheeler major TVS Motor Company Ltd's agreement to make high powered motorcycles for Germany's BMW has come to fruition with the Indian company starting to ship out BMW branded 310cc bikes, said a senior company official.
 
He also said TVS Motor Company would invest around Rs 350 crore next fiscal towards expansion of capacity, launch one new model each of scooter and motorcycle are some of the targets for 2017-18.
 
In 2013, TVS Motor and BMW signed an agreement to jointly develop motorcycles in the 250-500cc range to be sold through their respective distribution network.
 
The 310cc motorcycle and its engine were developed jointly with the German automobile giant BMW on a common platform/architecture.
 
Not revealing any numbers about the number of units made or shipped out for BMW President and CEO K.N. Radhakrishnan said it is up to the German auto major to talk about the numbers.
 
Speaking to a group of journalists who visited the company's Hosur plant on Tuesday, Radhakrishnan said TVS Motor is yet to decide on the distribution model-separate network or sold through existing dealership - for its own 310cc bike Akula that would be launched next fiscal.
 
Radhakrishnan said the company has budgeted a capital expenditure of around Rs 350 crore next fiscal towards capacity expansion and other aspects.
 
"The investment will be funded out of internal accrual," he said.
 
According to him, the company has started rolling out BS-IV emission norms compliant vehicles.
 
Radhakrishnan said the company will close the fiscal 2016-17 with a market share of around 14 per cent as the sales scooters and motorcycles picking up.
 
He said the company's current market share in scooters is around 17 per cent (Q3 2016-17), motorcycles eight per cent (Q3 2016-17).
 
He said the company's revenue from spare parts sales is around 10 per cent.
 
Queried about the three wheeler market, Radhakrishnan said sales has dipped owing to various market factors, saying nearly 65 per cent of the three wheeler produced are exported where the market has gone down.
 
On the company's Indonesian venture, Radhakrishnan said the business is expected to breakeven next fiscal with losses halved this year to $3 million from around $6 million.
 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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