Skip to main content

Decoding Bank Statements

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.

The account summary gives the basics — opening balance, amount credited, amount debited 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 assigned 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 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 holder's death.

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 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 Auto sweep and the Reverse sweep. The Auto sweep 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 them can be quite confusing. Here's some help...

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 )

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

10 year NSC launched, all set to give 8.7 per cent

Invest in Mutual Funds Online Download Mutual Fund Application Forms THE government introduced a 10-year National Savings Certificate ( NSC ), which will earn an interest rate of 8.7 per cent per annum. The notification for the launch of the new savings instrument, 10-year National Savings Certificate (IX-Issue), 2011, has been issued, an official statement said. The scheme will come into effect from December 1, it added. Investments in NSC will earn interest at the rate of 8.7 per cent compounded semi-annually, it said, adding that on an investment of Rs 100, the depositor will get Rs 234.35 on maturity of the NSC. There is no upper limit for investment in the certificate, it added. The new scheme will give better returns along with tax benefit to savers. At present, the maturity period of NSC is six years and it qualifies for tax relief for investment up to Rs 1,00,000 under Section 80C. The decision to raise the maturity period of NSC has been taken on the b...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now