BANK’S POLICY ON OUTWARD BILLS FOR COLLECTION
Head Office has been issuing several circulars/Guidelines, from time to time on different points of Outward Bills for Collections. Now the Reserve Bank of India has directed to formulate bank wise policy / procedures relating to collection of cheques and also provide due disclosure to the customers on the bank’s obligations and the customers’ rights. Wide publicity has to be given to the policy, as formulated hereunder, by placing it on the web-site and also displaying the same on the notice board in the branches. However, it may be noted that the Reserve Bank of India and the Banking Ombudsman would continue to exercise the prerogative to examine any dispute which may arise between the bank and any of its customer, vis-à-vis published policies and procedures. While adopting this policy, the bank reiterates its commitments to individual customers outlined in Bankers’ Fair Practice Code of Indian Banks’ Association. The document recognizes the rights of small depositors & benefit of customers. This document is a broad framework. The detailed operational guidelines on different aspects will be issued from time to time. A.1 (i) (ii) GENERAL : The legal relationship between a banker and its customer, so far as bills are concerned is that of an agent and principal respectively. A Bill of Exchange is an instrument in writing, containing an unconditional order, signed by the maker (drawer), directing a certain person (drawee) to pay a certain sum of money only to a certain person (Payee) or to his order or bearer. Further, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. As per the above description, cheques and hundies will be treated as bills of exchange. A bill of exchange involves three parties, viz. the drawer, drawee and payee. Banks act as collecting