7/29/2019 Decoding Bank Statements

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DIPTA JOSHI

Even though they areimportant docu-ments that land inthe mailbox of ac-count holders at the

end of each month or quar-

ter, bank account statementshardly ever get a second look.Unless, of course, it is time tosubmit them to the charteredaccountant for the annual in-come tax computation.

Most, unfortunately, give thedocument a cursory glance. Andthat, too, to check the balance.The fact is that it contains manymore details.

Transactions like deposits,withdrawals, debit card pur-

chases, cheques written andother monthly deductions fromthe account for paying otherbusinesses along with bankcharges or fees are includedin the statement.

A bank account statementreveals the small charges thatyou 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 givesthe basics opening balance,amount credited, amount deb-ited and closing balance. Butthats not all.

Start with the basics (the topof the account statement):

Customer ID and account number:These are unique numbers thatbelong to you. A single ID is as-signed to you even if you hold

more than one account with thebank. However, each account

will have a different accountnumber.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 sixmonths makes them dormant.To re-activate or make a trans-action, the branch has to becontacted.Overdraft facility: Based on thetype of the account (current) or

as against a fixed deposit, theoverdraft amount is mentioned.Nomination: The beneficiar-ies of your account, especial-ly if held by a single person,are mentioned at the start ofthe statement. It is importantto have a beneficiary as it isdifficult to make claims in caseof a mishap or the accountholders death.

Reading the detailsLook at the particulars or thenarration part. This gives de-tails of transactions, along withdates, withdrawals, depositsand the closing balance. Iftransactions are throughcheques, cheque numbers arealso given.

While describing a particu-lar transaction, the nomen-clature can be different for eachbank. Some banks are more

customer-friendly and explainabbreviations at the end. Oth-ers test your knowledge of cryp-tology (see table).

CHQ DEP-MICR CLG-

CLEARI is one way to describea cheque deposited in your ac-count. Some might even givedetails of the cheque issuer andthe bank. For instance, the nar-ration would read as, XYZ IN-DIA 55555 HDFC. And yourchartered accountant will bequite thankful for these details.In cases they do not give thesedetails, you may have to keepa record to avoid confusionat the end of the year.

There are two morecolumns: The Autosweep andthe Reverse sweep. The Au-tosweep facility allows a bankto convert funds from your

account into a fixed deposit(FD). However, if there areinsufficient funds for acheque payment, the ReverseAuto sweep is initiated. Fundsfrom FD are transferred tothe account to make the pay-ment. The interest on FD iscalculated depending on thetenure chosen by you andhow much and how soon(prematurely) the funds arewithdrawn.

DECODING BANK STATEMENTSReading them can be quite confusing. Heres some help...

IB, INF, NEFT, TPT: For internet fund transfers to linkedaccounts, banks could use the terms 'IB' (internet banking) fundtransfer 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 facilityused for transacting cash over Rs 1 lakh

INW CLG: Indicates inward clearing done by the bank (whenwe 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' standsfor 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. Whenwithdrawals occur at another banks ATM, a few moreabbreviations are added (as shown in the bracket)

STATEMENT SIGNS

ILLUSTRATION: AJAY MOHANTY