Of the myriad
CTS Return Codes, two return reason codes cause the most distress.
Return Code
55 - Account blocked (situation covered in 21-25)
Return Code 84 - Other reason- connectivity failure
Connectivity
Failure – Account holders fail to understand as to where the connectivity
failure is. Is it the Presenting/Collecting Bank fault or the Drawee Bank fault?
This
explanation by Punjab and Sindh Bank underlines the meaning of Cheque Return
Reason – Connectivity Failure
2.
RETURN OF CHEQUES BY BANK BRANCHES CITING “LINK FAILURE” AS A REASON
Link
failure is an operational disruption and such instances are mostly observed in
remote locations where the cheque volumes are not significant. In situations of
link / network /connectivity issues, branches are advised to proceed as under:
-
Branch
should explore other alternatives before returning the cheques viz. processing
at the service /drawee / nearby branch as feasible.
After
exhausting all avenues if it is necessary to return the cheque due to link
failure, it may be returned under Reason Code 84 (Other reasons-Connectivity
Failure), with no charges to be debited to the payee’s account.
No
charges shall be recovered from the payee for return of the cheque in such
cases. Such cheques should be re-presented in the next clearing without waiting
for a request from the payee.
But
the most perplexing Cheque Return Reason is :::-
Return Code 55 - Account blocked (situation covered
in 21-25)
Customers
scratch their head, when they see this Return Reason in their Account Statement.
Customers frantically call up their bank for the exact return reason, and the
Presenting/Collecting Bank is also
clueless!!
What
are the situations’ covered under Return Code 21-25?
Return Code 21 -- Payment stopped by attachment
order
Return Code 22 -- Payment stopped by court order
Return Code 23 --
Withdrawal stopped owing to death of account holder
Return Code 24 -- Withdrawal stopped owing to lunacy
of account holder
Return Code 25
-- Withdrawal stopped owing to insolvency of account holder
It would be great for all the stake
holders and also reduce stress levels, if NPCI issues a circular stating that “Return
Code 55”, is removed and instead Banks are to mention the Return Codes 21-25,
as applicable.
For a more detailed article on various
Cheque Return Reasons, please refer to my earlier article “LIST OF CHEQUE
RETURN REASONS – BOTH FOR INSTRUMENT AND IMAGE-BASED CHEQUE CLEARING”
Well, not much has changed from 2013
to 2017.
Clear return codes will encourage more
businesses to migrate from cash based transactions to cheque based
transactions.
No, the cheque volumes under CTS are
not on the decrease. In fact they are on the increase. The decision to
demonetise old Rs. 500/1,000 notes, has led to a sharp jump in Cheque
transactions.
Also under the revised Section 44AD of
the Income-Tax Act, 1961, in case of certain assessees (an individual, HUF or a
partnership firm other than LLP) carrying on any business having a turnover of
Rs. 2 crore or less, the profit is deemed to be 8 per cent of the total
turnover for taxation.
However if digital mode of payments are
used, the eligible assesses income will now be presumed to be 6 per cent of the
turnover and not 8 per cent. Cheque transactions are part of the digital mode
of payments.
This table reflects the growth of cheque
volumes under CTS-South Grid
Illustrative
but not exhaustive list of objections where customers are not at fault
(Applicable
for instrument and image-based Cheque Clearing as detailed in Annexure D to
Uniform Regulations and Rules for Bankers' Clearing Houses)
Code
No. Reason for Return
33
Instrument mutilated; requires
bank's guarantee
35 Clearing House stamp/date required
36 Wrongly delivered/ not drawn on us
37 Present in proper zone
38 Instrument contains extraneous matter
39 Image not clear ; present again with
paper
40 Present with document
41 Item listed twice
42 Paper not received
60 Crossed to two banks
61 Crossing stamp not cancelled
62 Clearing stamp not cancelled
67 Payee's endorsement irregular/ requires
collecting bank's confirmation
70 Advice not received
71 Amount/ Name differs on advice
72 Drawee bank's fund with sponsor bank
insufficient(applicable to sub-members)
73 Payee's separate discharge to bank
required
74 Not payable till 1st proximo
75 Pay order/cheque requires counter
signature
76 Required information not legible/correct
80 Bank's certificate ambiguous/
incomplete/required
81 Draft lost by issuing office;
confirmation required from issuing office
82 Bank/ Branch blocked
83 Digital Certificate validation failure
84 Other reasons-connectivity failure
87 ‘Payee's a/c Credited'-Stamp required
92 Bank excluded
