COLLECTION OF USD DENOMINATED CLEAN INSTRUMENTS
Clean instruments denominated in currencies other than Indian Rupees such as Euro, Pound Sterling, US Dollar, Yen, etc., are called foreign currency cheques/clean instruments. Since such instruments are not payable in India they are, therefore, required to be sent to the country concerned for realization of proceeds. The time norms for collection and return of the instruments vary from country to country and place to place within a country.
Clean instruments / Cheques payable at foreign centers where our bank has branch operations (or banking operations through a subsidiary, etc.) will be collected generally through that office/branch. The services of correspondent banks will be utilized in country/centres where the correspondent has a presence. Cheques drawn on foreign banks at centres where the bank or its correspondents do not have direct presence will be sent direct to the drawee bank with instructions to credit proceeds to the Nostro Account of the bank maintained with one of the correspondent banks.
The clean instruments denominated in USD and payable in USA are generally known as USD denominated cheques/instruments.
2. TYPE OF INSTRUMENTs:
Clean instruments like personal cheques, Travelers cheques, Demand Drafts, Cashier orders, Pay Orders, Bankers' cheques, International Money Orders or any other such instruments, payable abroad may be submitted for collecting the proceeds of the instrument.
3. RISK PERCEIVED IN COLLECTION OF USD DENOMINATED INSTRUMENTS:
As per US Laws materially altered cheques, where the beneficiary's name has been changed and/or the amount of the cheques raised, the drawee bank is obliged to reimburse the drawer within 12 months for wrongfully paying the cheque.
In such cases the correspondent bank mandatorily claim the amount from us and debit nostro account. Hence, the proceeds of the clean instruments credited to customer's account are subject to right to debit in case of return of instruments.
4. Products offered by us for USD denominated instruments:
a. Secured Collections Service:
- Under this facility the risks mentioned above can be mitigated.
- Under this facility, our correspondent bank provides guaranteed final credit without recourse within a confirmed time period.
- For such facility our correspondent bank, charges additional service charges for giving credit without recourse.
- Time period for collection of the proceeds are as under:
- Amount of the cheque should not exceed USD300, 000.
- Travellor Cheques/Treasury cheques/postal money order is not covered under this facility.
- Our bank's charges for the above are as under
- All the clean instruments/cheques lodged by customers for amounts USD 5000 and above, have to be necessarily collected under this facility.
- It takes approximately between 10 to 18 days for affording the credit to the customer's account.
b. Cash Letter Service
- It is recommended that all the clean instruments drawn in USD & payable in USA be collected under 'Secured Collections Service', to enable the customers to get a final credit instead of a conditional credit.
- For USD denominated clean instruments for amounts up to USD 5000, the customers have the option of collecting the proceeds under Cash Letter Service.
- As per this facility our correspondent gives credit to our Nostro account on sending the cheques in clearing system. However, the conditional credit is given to the customer's account only after the expiry of the cooling period.
- Approximate time period for collecting the proceeds of the cheque
- Our bank's charges for collecting the above clean instrument /cheques are as under
- It approximately takes around 15 days for affording the credit to the customer's account.
c. Instant Credit
- Subject to the satisfactory track record of the customer etc, the credit may be given to the customer's account, with out completion of the cooling period, on citing the pass sheet credit for clean instruments denominated in USD up to USD 5000, sent under the facility of Cash Letter Service.
- Customers would be compensated for delay in crediting the proceeds of foreign currency instruments payable abroad / in India and sent on collection basis.
- Such compensation would be paid at the rate of interest applicable to NRE SB accounts in respect of NRI-clients and domestic SB account in the case of resident-customers, for the delays beyond prescribed period for various transactions which are as under:
a. Personal cheques/drafts payable in the country of currency – if proceeds are not credited within 21 days.
b. Personal cheques / drafts payable in the country other than in the currency of the country – If proceeds are not credited within 45 days.