Shut up and bounce

ICICI Bank tried to make ECS transfers on days nationalised banks were shut on strike. At one branch of Canara Bank in Delhi, ECS of 126 customers failed. But ICICI Charged them Rs 221 each. Experts say customers were 'not at fault.'

ICICI Bank tried to make ECS transfers on days nationalised banks were shut on strike. At one branch of Canara Bank in Delhi, ECS of 126 customers failed. But ICICI Charged them Rs 221 each. Experts say customers were 'not at fault.'

If you are an ICICI Bank customer and your monthly account statement shows a fine of Rs 221 charged for a 'bounced ECS transfer' made on August 6 or 7, chances are you will dismiss it as a petty issue.

But consider this.

On those two days, when all nationalised banks in the country were shut on strike, ICICI Bank reportedly processesed payment of monthly installments against loans on the bank through ECS (Electronic Clearance System). At one branch of the Canara Bank, which was participating in the strike and was therefore closed, ECS transfers of 126 customers 'failed.' ICICI charged each of them a fine of Rs 221 for the 'bounced' ECS. From this branch alone, ICICI collected around Rs 62,000.u00a0

Apart from this, they were charged three per cent premium charges as well. MiD DAY has the list of 126 customers of Canara Bank, Munirka, who had to pay the 'fine'.

The country has 30 nationalised and public sector banks approximately with around 40,000 branches across India.



'Rules not followed'

Experts say the bank flouted guidelines set by the Reserve Bank of India (RBI) by forwarding ECS transfers of customers to banks that were not working on that day.

Explaining the rules, a senior official from the State Bank of India, wishing anonymity, said, "The Reserve Bank of India says that on days when banks are closed because of holidays, strikes and other similar instances, ECS transfers shouldn't be forwarded. In this particular case too, employees of nationalised banks had given prior notice to the government about the strike. So ICICI should not have processed the ECS with any of these banks. And if it was done, ICICI should not have charged customers for the bounced ECS."

Traumatised customers

The customers are crying foul. "Despite knowing that nationalised banks were on strike, the ICICI Bank lodged the ECS with Canara Bank on August 6. I had Rs 81,000 in my Canara Bank account on that day from which the ECS had to be cleared. How did the ECS in favour of my account bounce? I have taken loans for three vehicles from ICICI and had to pay around Rs 900 for a mistake I did not commit. I have a report from the Canara Bank that says 126 people faced a similar problem. I wonder how many people all over the country, who are paying loan EMIs to ICICI through ECS, had to pay extra charges?" said Sunil Kumar, a placement service owner from Delhi.

Traumatised: Sunil Kumar, a customer who was fined by ICICI pic/Imtiyaz Khan

Interestingly, the Canara Bank branch denied having received the ECS requests from ICICI during the period (August 6 and 7, the two days of strike) and hence did not deduct 'return charges' from customers' account. According to RBI rules, if a cheque or ECS payment is dishonoured because of insufficient funds, the customer has to pay a penalty to both the bank to which the payment has to be made, and 'return charges' to the bank where he holds the account.

"Canara Bank officials said they had not received our cases from the ICICI Bank. Had they received, they too would have deducted return charges," said Sunil.

A Canara Bank official, wishing anonymity, said the ICICI Bank should not have imposed the ECS bounce charges. "They should not have done this as state-owned banks were on strike," the official said.

Future trouble

While most customers are fretting about the fine, experts say a bounced ECS payment against a loan can harm the customer's chances when he applies for another one in future.

"All banks in the country are linked through the centralised CIBIl network (Credit Information Bureau India Limited) that contains the credit history of commercial and consumer borrowers. The moment a customer defaults on a credit payment, it reflects in his CIBIL statement. And that can ruin his chances of getting further credit," said Amit Kumar, an executive with HDFC Bank's personal loan division.

For the customer, it means, extensive hassles.

Akash Sehgal, an engineer working for a private firm, said he was traumatised after his loan installment payment cheque bounced two years ago. "I was out of the country when it happened but I had a major problem when I applied for loans later. Most banks were not willing to give me a loan," said Akash Sehgal.

Where did the money go?
In case of ECS default and cheque bounce, the customer has to pay a fine to both the banks to which the payment has to be made and the one where he holds the account. In this case, ICICI charged Rs 221 for the ECS default and 3 per cent as premium charges. (The three per cent interest is charged on the EMI amount per loan account for the total number of days till the time of payment to the ICICI Bank). In the case of Sunil's loan account, the sum was Rs 80 per account.

From one Canara Bank branch, ICICI collected around Rs 62,000. The return charges levied by the other bank is apart from the above mentioned amount. However, in this case, Canara Bank has not levied the charges.

What the RBI says
The Reserve Bank of India says that on days when banks are closed because of strikes, holidays and other similar instances, ECS transfers shouldn't be forwarded.

The Other Side
In an email reply, the ICICI said, "ICICI Bank has various dates in a month to present ECS mandates to recover EMI payments of its customers. These are presented to other banks through a clearing house. The dates of presentment are also called cycles.

For the cycles dated 5th and 7th of August, the ECS mandates were ready at our end to be presented.

However, August 5th was a holiday in Delhi for Raksha Bandhan. Also, 6th and 7th August were bank strike days all over the country where most Public Sector Banks did not work.

u00a0Hence, ECS mandates from 5th to 7th August were presented together on 8th August by the bank (ICICI). Subsequently, we received the bounce report from the clearing house. (This report, called R7, contains details of customers where the EMI could not be honored because of various reasons, the primary reason being exceeds arrangement / insufficient funds).

As a result of this communication received by us, we levied bounce charges on the customers."