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.
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.