Compensation you get for poor services offered by insurers, banks, mutual funds, tax department

Did you know that financial services providers like banks, insurers and fund houses have to pay a penalty to you if they don't meet deadlines? Even the tax department is not free from this. Here is the compensation you can claim for poor services.

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A penalty of Rs 100 per day will be paid if ATM failed transaction is not reversed within 6 days.
Financial service providers have to pay penalty to customers if they fail to adhere to deadlines when fulfilling commitments.

Failure to pay death claims on time
  • Deadline for raising queries after claim filed 15 days
  • Claim approvals or rejections: Within 30 days from date of receipt of relevant documents and clarifications
  • Penalty Interest @ 2% above bank rate (currently 5.4%) on claim payable from date of receipt of last necessary document

If investigations required

  • Probe to be completed in 90 days
  • Claim to be paid or rejected within 30 days of investigations
  • Penalty Interest @ 2% above bank rate on claim payable from date of receipt of last necessary document

Delay in settling maturity, survival benefit and annuity claims
  • Life insurer should intimate policyholders ahead of due date, send post-dated cheque or credit proceeds to the registered account on due date
  • Penalty: Interest @ 2% above bank rate payable from the date of receipt of last necessary document

Refund delay after free-look cancellation, surrender, withdrawal, request for return of proposal deposit
  • Deadline for disbursing refunds: Within 15 days of receipt of request or last necessary document
  • Penalty: Interest of 2% over bank rate from the date of request or receipt of last necessary document, whichever is later

Delay in paying redemption proceeds or dividend
  • Deadline: 10 days from date of request or 30 days of dividend declaration
  • Penalty: 15% interest for period of delay

  • General insurance
Failure to settle claim on time
  • Deadline for rejecting or approving claim: 30 days of receiving final survey report and relevant information
  • Penalty: Interest @ 2% above bank rate from date of receipt of last relevant document till date of claim payment

  • Health insurance
Delay in claim settlement
  • Deadline: Within 30 days of receipt of last necessary documents (regular cases)
  • If investigation needed: Has to be completed within 30 days from date of receipt of last necessary document. Claim to be settled within 45 days after receiving all documents.
  • Penalty: Interest @ 2% above bank rate from date of receipt of last relevant document till date of claim payment

  • Banks
Customer’s account debited but cash not dispensed at ATM
  • Deadline for reversing transaction: 6 days (date of transaction plus 5 days)
  • Penalty: Rs 100 per day of delay beyond T + 5 days

Card account debited but beneficiary card account not credited
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  • Deadline for reversing transaction: T+1 day
  • Penalty: Rs 100 per day of delay beyond deadline

In POS, account debited but charge slip not generated
  • Deadline for reversing transaction: T+5 days
  • Penalty: Rs 100 per day

Card debited but e-commerce transaction not through
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  • Deadline for reversing transaction: T+5 days
  • Penalty: Rs 100 per day

Account debited but beneficiary account not credited in case of IMPS transfer
Failed UPI transfer
  • Failure of fund transfer, online purchase while using prepaid wallet proprietary payment system
  • Deadline for reversing transaction: T+1 day
  • Penalty: Rs 100 per day

*Note: In case of transaction on prepaid wallet platforms using cards, UPI or IMPS, the respective service’s reversal and compensation rules will apply Source: IRDAI, SEBI and RBI

  • Taxation
Refunds not paid on time

Refund if excess amount paid as advance tax or TDS
  • Deadline: If returns filed before 31 July, interest will be paid from 1 April of assessment year to date of payout. If filed later, the period will start from then.
  • Penalty: Interest on refund due at the rate of 0.5% per month; if the refund due is less than 10% of tax liability, no interest will be paid

Refund if excess self-assessment tax paid
  • Deadline: Relevant period for interest payment will start from date of tax payment or return submission, whichever is later
  • Penalty: Interest on refund due at rate of 0.5% per month; if refund due is less than 10% of tax liability, no interest will be paid
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