DECODING BANK STATEMENTS

Reading them can be quite confusing. Heres some help...

ILLUSTRATION: AJAY MOHANTY

DIPTA JOSHI

ven though they are important documents that land in the mailbox of account holders at the end of each month or quarter, 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 income 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 purchases, 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 different transactions. Sometimes, they may add up to a substantial sum, says Vidya Patel, a financial advisor. The account summary gives the basics opening balance, amount credited, amount debited and closing balance. But thats 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 assigned to you even if you hold

STATEMENT SIGNS
more than one account with the bank. However, each account will have a different account number. Account type: Whether it is a savings or a current account. Account status: Actively-operated accounts are marked Regular. No transaction for six months makes them dormant. To re-activate or make a transaction, 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 beneficiaries of your account, especially 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 holders death.

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 banks ATM, a few more abbreviations are added (as shown in the bracket)
customer-friendly and explain abbreviations at the end. Others test your knowledge of cryptology (see table). CHQ DEP-MICR CLGCLEARI is one way to describe a cheque deposited in your account. Some might even give details of the cheque issuer and the bank. For instance, the narration would read as, XYZ INDIA 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 Autosweep 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 payment. The interest on FD is calculated depending on the tenure chosen by you and how much and how soon (prematurely) the funds are withdrawn.

Reading the details

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