Spokespersons and promoters of MLM companies repeatedly refer to a letter from the ministry of consumer affairs (MCA) granting legitimacy and legal basis to the operations of their ‘business’. However, facts are rather different. The effect of the letter has been since nullified
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.
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?*
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.
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(The author is a banking analyst and he writes for Moneylife under the pen-name ‘Gurpur’)