PPF: How Banks Delay Credit of PPF Cheques To Cheat Customers of Interest
Dr Nita Mukherjee 09 April 2022
Small amounts clearly add up to a lot for the banking system leading to a policy of denying part of the interest benefit of investors. While investor organisations advise people to make it a point to deposit their public provident fund (PPF) contribution before the 5th of April, in order to be eligible for interest for the entire year, banks are quietly working to deny people their legitmate, tax-free interest, in what appears to be a clear policy to delay crediting cheques.
 
As an investor or consumer of financial services, one has to be constantly vigilant about not being sold a toxic product or being short-changed. I want to share my story of how watchful one has to be on what ought to be a routine annual investment. 
 
Every year, I have been diligently ensuring that my annual PPF contribution is done so that the credit is effective by 5th April. I also follow up to see that the value date of the credit in the bank’s statement is before 5th April. I have started this second check since 2017, when I first noticed that there was a gap of as much as six days between the debit from my savings account and the credit into my PPF account. This would have resulted in a loss of about Rs1,000 (at the then prevailing rates of interest on PPF) in interest paid to me.
 
 
I took up the matter with the manager of Vijaya Bank, who was quite taken aback at my knowledge as well as my willingness to fight for my rights. As expected, his response was to credit the interest for the month as a pay-in to my savings account. I was given some roundabout technical reasons for why he could not credit it to my PPF account.
 
But the lesson learnt by Vijaya Bank must have evaporated when it got merged with Bank of Baroda three years ago. Three years after the bank merger, software integration is still not done and I cannot transfer money through internet banking. A physical cheque has to be deposited. 
 
This year, I made a special effort to have the cheque deposited in time for it to get cleared on 4th April so that it is credited to the PPF account by the 5th to be eligible for interest. It needed this effort since 1st April was the year-end closing bank holiday; banks were closed on the 2nd for Gudi Padva (fortunately not in Rajasthan) and 3rd April was a Sunday. 
 
At 8am on 4th April, I heaved a sigh of relief on receiving an SMS from my bank that the PPF cheque had come for clearing. So imagine my irritation on discovering that  Bank of Baroda had put the date of credit as 6th April, to push it beyond the day for paying interest for the year.
 
 
I asked my assistant to immediately go to the branch and have the entry corrected. As expected, he was told it could not be done. But he got the lady at the counter to speak to me. By then, I had sent my savings bank statement, which showed the value date of the debit as 4th April. 
 
 
On asking the reason for the 48-hour delay in credit, the officer had no answer. But my assistant was called the next day with an assurance that the entry will be rectified, only because I had said I would be publicising the delay. 
 
I am documenting my experience with a request to all PPF investors who read this report and are aware of the need to deposit your cheque before the 5th of April (https://www.zeebiz.com/hindi/personal-finance/public-provident-fund-ppf-interest-rate-calculation-monthly-investment-up-to-5th-day-small-saving-scheme-hindi-news-78366 ) to check your accounts. Have you also been denied credit? If so, we need to put together our experiences and take it up with the regulator through Moneylife Foundation.
 
The denial of interest per individual may seem tiny, but when you multiply it with lakhs of PPF investors, it is a lot of legitimate money denied to people who are already reeling from the sharp cut in term deposit rates. 
 
Do write to [email protected] with details if you have faced a similar issue. 
 
Comments
G. Ravishankar
5 months ago
I agree banks do such delays especially 1st week of April. I have experienced it many times with HDFC Bank.
sur.abhishek
6 months ago
I was under the impression it is the date of receipt of the cheque, rather than the date the funds are credited that is relevant.
Anyhow, my experience was similar. On Saturday after the monies were debited from my savings account , Sbi called to inform me that my PPF was irregular. I rushed to my PPF branch ( what use is CBS anyway? ) with the passbook to enquire why only to meet a stonewall - and shell out the penal amount for regularisation. Then I rushed to the clearing branch where I was informed the concerned staff had left for the day.... The credit to my PPF only happened 5 days later!
ksatyana1
6 months ago
Use Neft, initiate on 1st April, I don't see issue since long time may be around 2008
pranaysharma191
6 months ago
I have forwaded my case att [email protected] along with relevant email exchanged with SBI. Please let me know if I can recover this money.
pranaysharma191
6 months ago
I had same experience in October 2018. 1.5 lacs were debited on 3rd October from my saving account and got credited in ppf account only on 6th October 2018. This resulted in a loss ofrs. 1000/- I took up this issue with sbi, sent several mails also, but no result. Eventually I lost rs. 1000/ interest. I still have those emails with me. Can I take up at higher level and ask sbi to reimburse?
ppk53s
6 months ago
Most bank are digital enable. So use it!!
akhilbansal363
6 months ago
Ppf interested is paid by GOI not by individual bank weather govt or private. First do some research before maligning and using words like cheating . Internet sensation se pehle kuch research kar liya karo
sn_sinha
6 months ago
My question is as to why do you continue to patronize this bank which doesn't allow PPF deposit through internet banking?
pawan7jha
6 months ago
Never had such problem as I always deposited Rs. 150000/- on 1st April from past five years through NEFT/IMPS. Both accounts savings and PPF are with SBI and mapped in Yono. Only one thing is important transfer of fund for the date 1 st April is accepted from 10:00 AM onwards not from 00:00 AM. One should always transfer after 10:00 AM
ppk53s
Replied to pawan7jha comment 6 months ago
???? correct. Transfer got rejected when done at 8/30 am!!
ppk53s
Replied to ppk53s comment 6 months ago
Correct.
sathyatnarayan
6 months ago
PPF interest is payable by Govt. and not by banks. You fool.
sathyatnarayan
6 months ago
Nonsense. This post must have been created by a useless reporter who has no brains
prashanttimothy
6 months ago
It should be top Prerogative for Government to rectify the time lag as the complainant clearly suggests the Term Deposits lower interest rate
prashant.bgp2
6 months ago
Why you are not using digital mode?
sanjiv1064
6 months ago
This story is perfectly correct. I deposited 1.0 lac rs through internet banking by transfer from savings account to PPF account on 5/04/2021.
I have checked the interest credited on 31/03/2022. Interest for 11 months @ 7.1% has been credited. For 4/2021 interest not credited though transfer of fund was on 5/4/2021.by internet banking which is instant.
I will visit bank branch SBI sector 10 Panchkula to register complaint
sajjanisaac
6 months ago
An excellent "how to assert your rights" article. My way of ensuring a timely credit to my PPF Account is to set up an NEFT instruction sometime in March, scheduled for April 1. Even then, it sometimes gets credited on April 2 or 3...
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