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DECODINGBANKSTATEMENTS

Reading them can be quite confusing. Here’s some help

ILLUSTRATION: AJAY MOHANTY DIPTA JOSHI important docu- ments that land in the mailbox of ac-
ILLUSTRATION: AJAY MOHANTY
DIPTA JOSHI
important docu-
ments that land in
the mailbox of ac-

E ven though they are

count holders at the

end of each month or quar- ter, bank account statements hardly ever get a second look. Unless, of course, it is time to submit them to the chartered accountant for the annual in- come tax computation. Most, unfortunately, give the document a cursory glance. And that, too, to check the balance. The fact is that it contains many more details. Transactions like deposits, withdrawals, debit card pur- chases, cheques written and other monthly deductions from the account for paying other businesses — along with bank charges or fees — are included in the statement. “A bank account statement reveals the small charges that you pay as a customer for dif- ferent transactions. Sometimes, they may add up to a substan- tial sum,” says Vidya Patel, a fi- nancial advisor. The account summary gives the basics — opening balance, amount credited, amount deb- ited and closing balance. But that’s not all. Start with the basics (the top of the account statement):

Customer ID and account number:

These are unique numbers that belong to you. A single ID is as- signed to you even if you hold

more than one account with the bank. However, each account will have a different account number. Account type: Whether it is a sav- ings or a current account. Account status: Actively-oper- ated accounts are marked ‘Reg- ular’. No transaction for six months makes them dormant. To re-activate or make a trans- action, the branch has to be contacted. Overdraft facility: Based on the type of the account (current) or as against a fixed deposit, the overdraft amount is mentioned. Nomination: The beneficiar- ies of your account, especial- ly if held by a single person, are mentioned at the start of the statement. It is important to have a beneficiary as it is difficult to make claims in case of a mishap or the account holder’s death.

Reading the details

Look at the particulars or the narration part. This gives de- tails of transactions, along with dates, withdrawals, deposits and the closing balance. If transactions are through cheques, cheque numbers are also given. While describing a particu- lar transaction, the nomen- clature can be different for each bank. Some banks are more

STATEMENT SIGNS

IB, INF, NEFT, TPT: For internet fund transfers to linked accounts, banks could use the terms 'IB' (internet banking) fund transfer and 'INF' (internet fund transfer). 'NEFT' (National Electronic Funds Transfer) to transfer between two banks and 'TPT' in case of a third party transfer

RTGS (Real Time Gross Settlement): An electronic facility used for transacting cash over Rs 1 lakh

INW CLG: Indicates inward clearing done by the bank (when we issue a cheque)

EBA: For trading-related transactions by some banks

BIL: Bill payments through the internet

FI, SP: Bounced cheques due to insufficient funds. 'SP' stands for stop payment

TIPS: Tips made at a restaurant, when paying through the credit card of the same bank, are deducted separately

INT: Your cash in the account (daily from April 1) earns interest

ATW (NWB/ATS or VAT/MAT/NFS): ATM withdrawals. When withdrawals occur at another bank’s ATM, a few more abbreviations are added (as shown in the bracket)

customer-friendly and explain abbreviations at the end. Oth-

ers test your knowledge of cryp- tology (see table). ‘CHQ DEP-MICR CLG- CLEARI’ is one way to describe

a cheque deposited in your ac-

count. Some might even give details of the cheque issuer and the bank. For instance, the nar- ration would read as, ‘XYZ IN-

DIA 55555 HDFC’. And your chartered accountant will be quite thankful for these details. In cases they do not give these details, you may have to keep

a record to avoid confusion at the end of the year.

There are two more columns: The Autosweep and the Reverse sweep. The Au- tosweep facility allows a bank to convert funds from your account into a fixed deposit

(FD). However, if there are insufficient funds for a cheque payment, the Reverse Auto sweep is initiated. Funds from FD are transferred to the account to make the pay- ment. The interest on FD is calculated depending on the tenure chosen by you and how much and how soon

(prematurely) the funds are withdrawn.