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Here's how much bank has to pay you for delay in transaction - RBI

All of us have to deal with delayed or failed transactions at some point. With online fund transfer becoming convenient, such incidents have increased. However, are you aware of the number of days within which your bank is supposed to reverse debits
for failed transactions from your account?

Not many people are aware the banks are also required to pay compensation for delay beyond certain timelines for such debits. The Reserve Bank of India (RBI) has issued a circular last month, on the harmonisation of Turn Around Time (TAT) and customer compensation in case of failed transactions. This means that if the bank does not reverse the money debited from your bank account due to a failed transaction within a specified time period, then they would have to pay a penalty to the customer. 

The RBI circular stated, "It has been observed that a large number of customer complaints emanate on account of unsuccessful or ‘failed’ transactions. Failure could be on account of various factors not directly attributable to the customer such as disruption of communication links, non-availability of cash in ATMs, time-out of sessions, non-credit to beneficiary’s account due to various causes, etc. Rectification/Compensation paid to the customer for these ‘failed’ transactions is not uniform."

"After consultation with various stakeholders, the framework for TAT for failed transactions and compensation therefor has been finalised which will result in customer confidence and bring in uniformity in the processing of the failed transactions", the central bank added.

As per the norms in the circular, the penalty has to be paid on a per-day basis for delaying the credit of money into the customer's account. This means that your bank has to pay a penalty to you if it delays reversing debits of failed financial transfers from your account. Therefore, knowing the time allowed for reversal beyond which you can get compensation for failed cash withdrawals from ATMs, failed e-commerce payments etc is important.

These RBI guidelines tell you the maximum time a bank can take to credit your money back in your bank account before the penalties kick in. As per the RBI circular, the penalty will be paid to you if the bank does not reverse the payment within the specified time period and failure of a transaction has happened due to reasons beyond your control.

The apex bank in its circular directed that wherever financial compensation is involved, the same shall be effected to the customer’s account suo moto, without waiting for a complaint or claim from the customer. Customers who do not get the benefit of redress of the failure as defined in the TAT, can register a complaint to the Banking Ombudsman of Reserve Bank of India.

Here are the charges to paid by banks as compensation for delay:

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

Reversal should be effected at the issuer/originator end on the same day when the funds are received from the beneficiary end.

It is to be mentioned that this directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect from October 15, 2019. If the transaction is a ‘credit-push’ funds transfer and the beneficiary account is not credited while the debit to originator has been effected, then credit is to be effected within the prescribed time period failing which the penalty has to be paid to the beneficiary.

Also, if there is a delay in initiation of a transaction at the originator bank’s end beyond the TAT, then penalty has to be paid to the originator. Domestic transactions i.e., those where both the originator and beneficiary are within India are covered under this framework.

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