Customer Compensation Policy

Introduction

Shivalik Small Finance Bank offers high levels of service to its customers. In the event, for some reason beyond the control of the bank or inadvertently, the bank is unable to meet the service levels committed in the dealings with individual customer, this compensation policy will be applicable. The policy is based on the principles of transparency and fairness in the treatment of customers.

Objective

The objective of this policy is to establish a system whereby the bank compensates a customer for any financial loss he/she may incur due to deficiency of service on the part of bank or any omission or commission directly attributable to bank. It is reiterated that the policy covers only compensation for financial losses in real terms for specific value which the customer might incur due to deficiency of the services offered by the bank which can be measured directly and as such the commitments under this policy are without prejudice to any right the bank will have in defending its position before any forum duly constituted to adjudicate the banker customer disputes. The policy does not cover and is not applicable in respect of claims made by customer on account of opportunity losses or damages or claims for reputational loss. The Compensation Policy is therefore, designed to cover areas relating to unauthorized debiting of account, payment of interest to customer for delayed collection of cheques/instruments, payment of cheques after acknowledgment of stop payment instructions, remittances within India, foreign exchange services etc.

Areas covered in the compensation policy of the Bank

Un-authorized/Erroneous Debit

If the bank has raised an un-authorized/Erroneous direct debit to an account, the below mentioned steps will be followed by the bank.

• If the bank has raised an erroneous direct debit to an account, upon being informed of the erroneous debit, the entry will be reversed after due verification.
• In the event the erroneous debit has resulted in a financial loss to the customer by way of reduction in minimum balance applicable for payment of interest on savings bank deposit or payment of additional interest to the Bank in a loan account or any changes levied for balance falling below the minimum balance requirement or any charges levied for return of cheques due to the shortfall, the bank will compensate the customer to the extent of direct financial loss upon producing an advice as evidence.
• The customer should approach the bank to register their complaint for erroneous debit or any other related concern within a maximum period of one month from the date of the erroneous debit.
• In case the verification of the entry reported to be erroneous by the customer does not involve a third party, the bank shall complete the verification within a maximum period of 7 working days from the date of reporting of the erroneous debit.
• In case the verification of the entry involves a third party, the bank shall complete the verification within a maximum period of one month from the date of reporting by the customer.
• The Bank reserves its right to debit the customer’s account for reversing the amount in case a wrong credit is posted to the account without payment of any compensation.

Debit Towards Service Charges

The bank would debit the customer’s account with any applicable service charge as per the General Schedule of Features and Charges (GSFC) notified by it. In the event, the bank levies any charges in violation of the arrangement, it will reverse the same when pointed out by the customer subject to verification of the agreed terms and conditions. Any consequential financial loss to the customer will be compensated as per Para “3.1” above.

Payment of Cheques After Acknowledgment of Stop Payment Instructions

In case a cheque is paid after stop payment instruction is received and acknowledged by the Bank and there are no subsequent and contradictory instructions received by the bank, the Bank shall reverse the transaction and give value-dated credit to protect the interest of the customer. Any consequential financial loss to the customer will be provided to the customer under Para a above. Such debits will be reversed after ascertaining the facts within 7 working days of the customer intimating the Bank.

Remittances

In terms of the RBI guidelines on payment of interest/penalties for instances of delay in affording credits/returns of RTGS/NEFT/NECS/ECS/ACH/IMPS transactions, Bank undertakes to afford the credits to destination account holders or return the instruction to the remitting bank within the prescribed timeline. In cases where it is not possible to afford the credits to the beneficiary account within the prescribed timeline without any valid reasons, the customer will be compensated for the delayed period of credit at the rate of RBI LAF repo rate + 2% .

Faliure to Execute Direct Debit/ECS Debit/Standing Instruction/ACH

The Bank undertakes to carry out Direct Debits/ECS/ACH Debits/Standing Instructions of customers in time subject to the following:

• Customer having provided valid and complete mandate to accept any debit received through ECS/ACH.
• Customer having already submitted a mandate for Standing Instructions.
• Direct Debits/ECS/ACH received is complete and correct.
• Customer has sufficient balance in the account at the time of executing direct debits/ECS/ACH/Standing Instructions.

In case of failure to carry out the instructions subject to the aforesaid clauses and for reasons directly attributable to Bank, the Bank will compensate the customer as per Para a above.

Erroneous Debits Arising On Account Of Unauthorized Banking Transactions (Fraudulent Transaction)

The following is laid down for all fraud cases:

• If a fraud in account of customer has been committed by a member of staff, and has been so established, Bank will restore the amount of direct financial loss to the customer.
• In case the fraud in account of the customer is committed in the form of electronic banking transaction the compensation will be provided as per clause 3.11 of the Customer Compensation Policy of the Bank.

Violation of The Codes By Bank’s Agent

In the event of receipt of any complaint from the customer that the Bank’s representative/BCA/courier or DSA has engaged in any improper conduct or acted in violation of the Code of Bank’s Commitment to Customers, which the Bank has adopted voluntarily, the Bank will take appropriate steps to investigate and to handle the complaint and to compensate the customer for direct financial loss (if any), subject to the customer providing proper supporting document for having incurred the loss. This is also applicable to sale of Third-Party Products by Bank staff.

Delay in release of Securities/Documents/Title Deeds

The original security documents of the title should be returned to the borrower within 30 days of full repayment/settlement of loan account. The bank will release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan outstanding/loan obligations. In case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the RE shall communicate to the borrower reasons for such delay. In case where the delay is attributable to the RE, it shall compensate the borrower at the rate of ₹5,000/- for each day of delay. In case of loss/damage to original movable / immovable property documents, either in part or in full, the bank will assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and will bear the associated costs, in addition to paying compensation as indicated above. However, in such cases, bank will complete the required procedures with an additional time of 30 days and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days). The compensation provided under these directions shall be without prejudice to the rights of a borrower to get any other compensation as per any applicable law. However, in case of Force Majeure events, the Bank at its own cost would endeavor to retrieve/recreate the title documents and no compensation would be paid in such cases.

Foreign Exchange Services

Payment of Interest for delayed credits (Foreign Inward Remittances and Not Foreign Currency Cheques) - Compensation will be paid as per FEDAI Rules 10th edition published on March 11th, 2019. As per rule 4.5, in case foreign inward remittance, Bank shall make payment or send intimation, as the case may be, to the beneficiary in two working days from the date of receipt of credit advice/nostro statement. In case of delay, the bank shall pay the beneficiary interest @ 2% above the savings account interest rate. The bank shall also pay compensation for adverse movement of exchange rate, if any, as per the compensation policy.

Compensation in case of unauthorized electronic banking transactions

(A) Zero liability of a customer

A customer’s entitlement to zero liability shall arise where the unauthorized transactions in the following cases:

• Contributory fraud/negligence/deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).
• Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the authorized transaction.

(B) Limited liability of a customer

A customer shall be liable for the loss occurring due to unauthorized transactions in the following cases:

• In cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorized transaction to the bank. Any loss occurring after the reporting of the unauthorized transaction shall be borne by the bank.
• In cases where the responsibility for the unauthorized electronic banking transaction lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank of such a transaction within four to seven working days of receiving a communication of the transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned in below table, whichever is lower.

• Further, if the delay in reporting is beyond seven working days, the customer liability shall be determined as per the bank’s Board approved policy. Bank shall provide the details of their policy regarding customers’ liability formulated in pursuance of these directions at the time of opening the accounts. Bank shall also display their approved policy in public domain for wider dissemination. The existing customers must also be individually informed about the bank’s policy.
• Overall liability of the customer in third party breaches, as detailed in paragraph a(ii) and paragraph b(ii) above, where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, is summarized in the below mentioned table:

(C) Reversal Timeline for Zero Liability/Limited Liability

On being notified by the customer, the bank shall credit (shadow reversal) the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days from the date of such notification by the customer (without waiting for settlement of insurance claim, if any). The credit shall be value dated to be as of the date of the unauthorized transaction.

Further, bank ensures that:

• A complaint is resolved and liability of the customer, if any, established and the customer is compensated as per provisions (as stated in above paragraphs), within such time as may be specified in the bank’s Board approved policy, but not exceeding 90 days from the date of receipt of the complaint.
• Where it is unable to resolve the complaint or determine the customer liability, if any, within 90 days, the compensation as prescribed (in the above paragraphs) is paid immediately to the customer; and
• In case of debit card/bank account, the customer does not suffer loss of interest, and in case of credit card, the customer does not bear any additional burden of interest.

Harmonisation of Turn Around Time (TAT) and customer compensation for failed transactions using authorised Payment Systems

A ‘failed transaction’ is a transaction which has not been fully completed due to any reason not attributable to the customer such as failure in communication links, non-availability of cash in an ATM, time-out of sessions, etc. Failed transactions shall also include the credits which could not be effected to the beneficiary account on account of lack of full information or lack of proper information and delay in initiating a reversal transaction. Reversal timelines of such type of transactions along with compensation, if not done within prescribed timelines, may be referred as per appended sheet:

Note: T is the day of transaction and refers to the calendar date.R is the day on which the reversal is concluded and the funds are received by the issuer / originator

Updation/Rectification of credit information

As per compensation framework for delayed updation / rectification of credit information, a complainant shall be entitled to a compensation of ₹100 per calendar day in case their complaint is not resolved within a period of thirty (30) calendar days from the date of the initial filing of the complaint by the complainant with a bank/ credit information company(CIC). Bank shall be liable to pay ₹100/- per day in case failed to send updated credit information to Credit Information Companies or complainant by making appropriate correction or addition or otherwise within 21 working days of intimation by complainant or Credit Information Companies.

In effect, this would mean that a bank would get twenty-one (21) days and CICs would effectively get the remainder of nine (9) days for complete resolution of the complaint. Compensation to be provided by the CICs/ Banks to the complainant shall be apportioned among the Bank/ CICs concerned proportionately. This compensation framework should be effective from date of implementation of RBI circular on framework for compensation to customers for delayed updation/ rectification of credit information.

Force Majeure

The Bank shall not be liable to compensate customers for delayed credit if some unforeseen event (including but not limited to civil commotion, sabotage, lockout, accident, fires, natural disasters or other “Acts of God”, war, damage to the Bank’s facilities or of its correspondent bank(s), etc., beyond the control of the Bank, which prevents it from performing its obligations within the specified service delivery parameters.

Customer’s Responsibility

• Bank will not be responsible for the loss to the customers due to customer's carelessness in keeping the Cheque book, passbook, cards, PIN, or other security information and not following the guidelines issued by the Bank, until the Bank has been notified by the customer.
• Customer acts fraudulently and/or acts without reasonable care which has resulted in loss to him/her. Bank will also not be responsible for the losses arising out of misuse of lost PIN, compromise of passwords or confidential information, until the time the Bank has been notified of such loss/compromise and has taken steps to prevent its misuse.

Disclaimer Clause

Notwithstanding anything contained here above, the Bank shall not pay any compensation in the following cases: -

• Dishonor of at par payment agreement with other banks, due to non- funding and security compliance.
• Delays on account of non-functioning of business due to factors beyond the control of the bank the period covered by such events shall be omitted for calculation of delay etc.
• Where the issues are sub-judice and pending before Courts, Ombudsman, arbitrator, Government, and matter put on hold due to stay.

Amendment/Modification of the Policy

Any changes to the policy will be approved internally through the relevant Board approved committee. The policy as a rule will be reviewed at the Board level once a year. If there is a major change made, it will be ratified by the Board in the next meeting