CERS makes Oriental Insurance reimburse mediclaim worth Rs1.17 lakh

Claims rejection is common in health insurance. Here is another example of CERS coming to rescue of a mediclaim policyholder and ensuring that the insurance company pays the claim

Mediclaim products now include several day-care procedures, but it still remains synonymous of reimbursement only if there is hospitalization. Chirag Sanghavi, with the help of Consumer Education and Research Society (CERS), had to fight his way to ensure justice by proving that hospitalization was indeed necessary and hence Oriental Insurance Company should pay the claim.


The Consumer Disputes Redressal Forum, Ahmedabad (Additional), has directed Oriental Insurance to pay its valid health insurance policyholder Chirag Sanghavi Rs1.17 lakh, part of it with interest, for the expenses incurred by him on his medical treatment. The amount includes compensation of Rs10,000 for his mental agony and Rs2,000 towards the litigation cost. CERS, a co-litigant with Sanghavi, was also awarded Rs2,000 towards cost.


Sanghavi had been suffering from Crohn's disease and, on 22-23 September 2005, had been treated at the local Dr Jivraj Mehta Hospital. Only the previous month he had purchased a medical insurance policy from Oriental Insurance. But he did not make any claim since, as per the conditions, the company was not liable to pay any cost for treatment taken during the first six months of the policy.


On 5 August 2006 Sanghavi renewed the policy for another year. On 2-3 September 2006, he had to undergo treatment once again. This time, he was given Remicade-IV injection and was hospitalised for one day. On release, he claimed reimbursement of the total cost of Rs1,50,299. The insurance company settled only part of the claim, i.e. Rs44,826, saying the treatment did not require hospitalisation and so the entire cost was not payable.


Sanghavi made a representation to the company that in the opinion of the doctor who had treated him, hospitalisation was required as the dose of the injection might lead to certain side effects. But the company declined to agree. Sanghavi approached CERS, which filed a complaint in the consumer forum seeking reimbursement of the deducted amount along with interest, compensation for the mental agony faced by the complainant and the cost.


The insurer cited the opinion of a doctor from a third party administrator (TPA) that since no side effects had been noticed when Sanghavi had been treated for the first time, hospitalisation was not required during the second time. CERS quoted the doctor who had actually treated the patient that no-reaction during the first course of treatment did not necessarily eliminate the risk involved when the procedure was repeated a second time and, therefore, hospitalisation was absolutely necessary in this particular case.


The forum observed that the opinion of the doctor treating the patient was more important than that of the doctor serving a TPA. The forum ordered the insurance company to pay Rs1,05,473 from 29 June 2007 at 4% interest. It also directed the company to pay Sanghavi Rs10,000 for mental agony faced by him and Rs2,000 each to him and CERS towards the litigation cost.




5 years ago

any excuse is good excuse for the insurer to toss the insured.
representation is ignored to shy away from responsibility
hon.courts become TPA in deciding the claim.
no objection by fora so far.
public money is wasted by legal fees 7 interest payment over & above penalty + claim amount.
MOU between TPA & Co has a BONUS CLAUSE IN FAVOR OF TPA for REDUCTION OF CLAIM PAYMENT .payment in hon.court is one of the reasons for raised premium over & above inefficiency

Economy & Nation Exclusive
Cheque truncation system: What is it, how will it benefit you?

If you receive any cheques which are non-CTS compliant, you should encash them before 31 December 2012. If they are post-dated and payable after 1 January 2013, you may get these exchanged with new CTS 2010 cheques as the old cheques will not be cleared thereafter

Of late you would have seen notices in newspapers issued by banks asking their customers to exchange their existing cheque books for new cheque books issued under the CTS2010 standards prescribed by Reserve Bank of India (RBI). What is CTS 2010 and how does it benefit you as a bank customer? First, a bit of history on how CTS has come about.

As per the Negotiable Instruments Act, every cheque is required to be presented to the drawee (paying) bank for payment. In the good old days, cheques deposited by customers used to be presented by the collecting bank to the paying bank over the counter of the latter and thus collect the amount due from each bank. Over a period of time, with the growing use of cheques by the trading community, banks devised a system of meeting in a central place and exchange the cheques drawn on one another and thus settle the net amount due to each bank through the institution called a “clearing house”. A number of clearing houses were set up in different cities for clearing of cheques through the manual operations for a number of years.

Introduction of Magnetic Ink Character Recognition (MICR):

As the number of cheques in use grew substantially, banks introduced the Magnetic Ink Character Recognition (MICR) format for sorting of cheques. These are machine-readable codes added at the bottom of every cheque leaf which helped in bank and branch-wise sorting of cheques for smooth delivery to the respective banks on whom they are drawn. This no doubt helped in speeding up the clearing process, but physical delivery of cheques continued even under this partial automaton.

Birth of Cheque Truncation System (CTS 2010):

CTS 2010 is the standard prescribed by the RBI recently for cheques issued by all banks in the country. CTS stands for Cheque Truncation System and essentially means that instead of sending the cheque in physical form by the collecting bank to the paying bank, an electronic image of the cheque is transmitted to the drawee branch for payment through the clearing house, thereby eliminating the cumbersome physical presentation of the cheque to the paying bank, thus saving in time and costs involved in traditional clearing system.

This was introduced as a pilot project in the National Capital Region in 2008 and in Chennai from September 2011. Based on the experience gained and the benefits that will accrue to both banks and customers, it is decided to operationalise CTS across the country.  It is proposed that the cheque clearing would be centralized into four grids, in four centres, North, South, East and West, and all the existing clearing houses across the country will be linked to these CTS grids in course of time.

The RBI has confirmed that with amendments to Sections 6 and 1(4) and with the addition of Section 81A to the Negotiable Instruments Act, 1881, the truncation of cheques has since been legalized.

What are the benefits of CTS to bank customers?*

  1. The main feature of the CTS 2010 cheque is that the physical movement of the cheque is stopped and the images of cheques are transmitted electronically thereby speeding up the process of cheque clearance and settlement between banks. This obviously means quicker clearance, shorter clearing cycle and speedier credit of the amount to your account.
  2. With the movement of cheques from one bank to another having been stopped, there is no fear of loss of cheques in transit and chances of cheques being lost due to mishandling, etc are totally avoided.
  3. At present clearing is restricted to banks operating within a city or within a restricted geographical area. Under the CTS, it is proposed to integrate multiple clearing locations managed by different banks in different centres so that cheques drawn on upcountry banks too can be cleared electronically without any geographical restrictions. Eventually, this will result in integration of clearing houses into a nation-wide standard clearing system, thereby making clearance of cheques drawn on any bank in India within 24 hours possible.
  4. The cheques in transit are most susceptible to frauds and customers of banks are the worst sufferers in the present system of physical movement of cheques from one place to another.  Under the CTS system moving of physical cheques at different points is obviated as only electronic images are transmitted between banks, and this will considerably reduce the scope for perpetuation of frauds inherent in paper instruments.
  5. With the introduction of homogeneity in security features under CTS standards 2010 such as embedded verifiable features like bar codes, encrypted codes, logos, watermarks, holograms, etc in every cheque leaf, it is now possible to detect frauds easily through interception of altered and forged instruments while passing through the electronic imaging system. This is expected to considerably reduce operational risks and risks associated with paper clearing for the benefit of all bank customers.
  6. The CTS is expected to improve operational efficiency of the entire banking system, resulting in better customer service, improved liquidity position for banks’ customers and safe and secure banking for the entire banking public.

In the words of RBI, CTS brings elegance to the entire activity of cheque processing and clearing and offers several benefits to banks in terms of cost and time savings, including human resource rationalization, cost effectiveness, business process re-engineering and better customer service.

What is expected of bank customers under CTS 2010?  

Every bank customer is expected to obtain new cheque books from their respective banks as early as possible preferably before the end of December 2012. All bank customers should use only “CTS 2010” cheques, which have more security features with effect from 1 January 2013. To identify that the new cheque book is CTS-2010 compliant, please look for the letters “CTS-2010” printed vertically on the cheque leaf, near the perforation on the left side of the cheque as under:


If the letters “CTS-2010” are present here, your cheque book is CTS-2010 compliant.   

To ensure fraud-free cheque clearance, RBI has advised that customers should preferably use dark coloured ink while writing cheques and you should avoid any alterations or corrections thereon. For any change in the payee’s name, amount in figures or in words, fresh cheque leaves should be used by customers, as this will facilitate smooth passage through image based clearing system.

If you receive any cheques which are non CTS compliant, you should encash them before 31 December 2012. If they are post-dated and payable after 1 January 2013, you may get these exchanged with new CTS 2010 cheques as the old cheques will not be cleared thereafter. Similarly, if you have given any post dated cheques in the old format to any finance company, etc you may replace them with new cheques to avoid old cheques being returned by your bank without payment.

What more requires to be done to improve customer service?

Though the RBI has given clear instructions to all banks to issue only multi-city payable at par CTS 2010 standard cheques , many banks are still issuing cheque books with CTS 2010 standard, but without specifying the fact that they are payable at par all branches. RBI should strictly enforce this basic requirement in the interest of making available this facility to all bank customers as a part of the up gradation of the clearing system in the country.

At present a number of banks levy charges for use of cheques beyond a certain number of cheque leaves per month. The RBI should stipulate that the new cheque books issued under CTS 2010 in lieu of the old cheque books should not be charged for, if customers have already been charged for the old cheque books, as this change over is at the instance of RBI and the banks.|

Currently, there is no standardization of account numbers across all banks. Each bank follows a different method of maintaining account numbers, ranging from 10 digits to16 digits causing confusion to bank customers. The RBI should devise a system on the lines of mobile phone numbers, to have uniformity in the number of digits in account numbers, so that mistakes do not occur while conveying account numbers when using remittance service etc. from banks.

Besides, there is no uniformity in respect of routing codes presently used by banks. For instance, the MICR code is used for electronic clearing services (ECS), Indian Financial System Code (IFSC) is used for National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement Systems (RTGS), and Basic Statistical Return codes are used for identification of a branch of a bank. These multiple codes may be harmonized as having uniform code for all types of bank transactions will go a long way in improving customer convenience and error free electronic and on-line transactions.


Read other articles by Gurpur-click here.

(The author is a banking analyst and he writes for Moneylife under the pen-name ‘Gurpur’)



Tara Asrani

2 years ago

As physical cheque will nt be available if any post dated is cheque is passed what should be done to rectify


4 years ago

To get MICR code of any banks in india visit also get here the details and list of banks in India


5 years ago

as Banks are already under CTS, and account number is uniue within the bank, branch wise IFSC codes codes can be dispenssed with a single IFSC code for all the branches of a Bank as NEFT, RTGS etc enter the Bank thro the service branch of any bank located at Mumbai. Similarly 9 digit MICR codes can replaced by 000XXX000 as appearing in DDs of Banks where xxx represents the Bank code only.

Even though Centralised processing of inward CTS clearing is being done by a good number of Banks ,a few Banks like IOB,CBI etc are still carrying with branch level of inward clearing where by branches are still continuing with unhealty practice of favoured account holders arranging funds only on presentation of inward clearing. in these Banks the paid instruments are not credited by 4.00PM on the day of payment itself and rather amaking available funds the following day only. the very purpose of cutting short the clearing cycle from 3 days to 2 days is defeated by Banks like CBI.

the CTS clearing which is already operational under RBI Delhi and Chennai ( even covering branches in Bangalore, Trivandrum, Chandigarg etc)the one Dept which is creating problem is Govt Departments who still ask the collecting Banks to tender Govt instruments under instrument type 29 to be delivered to the paying Bank . RBI should discourage this demand of Govt Departments.

arun adalja

5 years ago

some psu banks are not aware of new cheques namely bank of india and indian bank i personally visited them but not aware of these cheques.rbi must penalise them as they have not read the circulars.


5 years ago

Since the signatures are stored in Image format by Banks, it is possible, for an employee, after obtaining a customer's cheque leaf, to prepare a cheque with "genuine" signature, through a "cut-and paste" process and include it in clearing.

The Post Office Savings Bank is NOT changing its cheque formats. They say this is only for "core banking" banks??? But, the cheques are being processed through clearing as of now.



In Reply to SuchindranathAiyerS 5 years ago

detection of tampering of instruments by indulging in cut and paste is to be sorted by vigilant collecting bank staff as journey of instrument stops at collecting point itself and any tampering indulged by the collecting Bank staff is to be borne by the collecting Bank only as paying banker pays by viewing the image only.

nagesh kini

5 years ago

A very timely and lucid write-up by a veteran banker.
Instead of bland ads RBI and all commercial banks ought to have come out with them much earlier. Most banks have neither issued new cheque books nor informed their customers of the impending change.
The cheque books issued by my Bankers - Union Bank already bear this markings. Who says PSB are slow?
Instead of discarding the old cheque leaves, the bank should encourage customers to make use of them for cash withdrawals, inter-account transfers within the branch like utility payments/yourselves and to customer within the same branch.
The RBI should simplify ECS, NEFT, RTGS, IFSC by merging them with the account number so as to enable the customer to direct transfers to the account instead of having to repeat IFSC etc. for ECS and NEFT remittances. It can make life easy both for the customers and the banks. Can the RBI consider this and come out with appropriate Directions?

Aravinda Baliga B

5 years ago

In fact Canara Bank Bangalore branches are still issuing non CTS cheques till Nov end.

Millions in UK 'struggling' financially: study

Some 32% of people surveyed by the consumer organisation Which? say they are finding it difficult to cope on their current level of income and nearly 10% of households have defaulted on a loan, bill or housing payment

London: Millions of British households are struggling to make both ends meet, a consumer organisation has claimed, reports PTI.


The research, based on a poll of 2,100 people in October, suggests nearly 10% of households have defaulted on a loan, bill or housing payment.


Some 32% of people surveyed by the consumer organisation Which? say they are finding it difficult to cope on their current level of income.


It comes as Chancellor George Osborne concludes work on the Autumn Statement, to be delivered on 5th December.


It found that 2.3 million households had defaulted on a loan, bill or housing payment. And 1.5 million households had taken out one or more unauthorised overdrafts or payday loans just to make ends meet, the BBC reported.


The Executive Director of Which?, Richard Lloyd, argues that people can become trapped in a vicious spiral.


"There are huge knock-on effects for people if they are not paying their loans, paying their bills, their housing costs on time. They often have to pay extra charges, pay extra interest where they are defaulting on debts, and they are unable to get access to credit," Lloyd said.


"People are having to turn to increasingly expensive ways to meet their costs. It's a real worry for many, many people getting in to debt."


Lloyd says the government "has a job on its hands to convince people that everything possible is being done to keep unavoidable costs like energy and food bills under control".


"We're looking for further progress in reforming the energy market, an end to misleading food price promotions, and more competition in banking to take some of the pressure off hard-pressed consumers," he said.


The study comes as the chancellor Osborne acknowledged that deficit reduction may take longer than he had planned.


He has called for people to "have the courage to stay the course" amid suggestions that the better-off could be required to contribute more.


However, Labour's shadow chancellor, Ed Balls, said it was time to "change the medicine - or change the doctor".


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