High value cheque was returned by bank service branch?

Question

Bank rejected a high value transaction cheque without any proper information to customer I.e with a reason refer to drawer.they dont even informed the customer about it.upon inquiry we found that due to insufficient kyc they have returned the cheque.how can a general public will know about this kyc process of banks.now The beneficiary to whom the cheque was issued is going to claim interest amount for delay in payment.the same cheque was cleared bybank after 2 days.we knew that the cheque was passed at bank server end and the cheque was returned mamually by both bank and second bank.please guide us accordingly.

Answer 1

Hi Sweta,

At the outset, let me clarify that this site is designed by a group of senior Banking Professionals to assist Bank Customers at large to provide guidance for resolution of any complain/query/grievance in respect of financial services. This site does not belong to any Bank or a regulator, which may please be noted.

Your bank ought to have honoured the cheque drawn on your account if the same was otherwise in order and the account had sufficient balance to honour the same. If the cheque was returned for reason of  non-compliance of KYC requirements, the bank was not in order. 

Can service be suspended for failing to comply with the subsequent demands for KYC? This issue has been decided by the Gujarat high court in the case of State Bank of India, Chandkheda Branch & Anr v/s Ashvin Chaturbhai Parmar & Ors in Criminal Misc Appl No 5100 of 2012 decided on April 30 2012.

While reviewing the matter, the court observed that the bank would not have the right to freeze an account in the absence of any express statutory provision authorizing it to do so. Also, freezing of the account cannot be considered less prejudicial as it can make a customer liable for proceedings for dishonour of a cheque despite money being available in his account. Freezing the bank account would thus deprive a customer of utilizing his own money.

In the light of the above, you may lodge a protest with your bank for dishonour of your cheque if it was for reason for pending KYC updation. If you have to really suffer any financial loss on account of return of the cheque, you can seek compensation. If the bank fails to respond  you may approach the Banking Ombudsman for resolution of your grievance.

For address of the Office of the Banking Ombudsman, Area of Operation of the BO (jurisdiction) and the procedure for lodging complaint you may visit https://bankingombudsman.rbi.org.in

Regards

 

J R Mohandas