Provident Fund (Terminal Benefits) – Handout
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Objectives
Voice-over Text
Let us now look at what we aim to achieve through this course on Provident Fund.
By the end of this course, you should be able to:
Define Contributory Provident Fund (PF) Scheme by SBI.
Differentiate the PF eligibility criteria for different employee group Identify the steps to apply and track PF application form.
Calculate the PF Benefits.
Describe the various processes, such as refund, recovery, advance and liens, and withdrawal of funds.
By the end of this course, you should be able to:
¾ Define Contributory Provident Fund (PF) Scheme by SBI.
¾ Differentiate the PF eligibility criteria for different employee group
¾ Identify the steps to apply and track PF application form.
¾ Calculate the PF Benefits.
¾ Describe the various processes, such as refund, recovery, advance and liens, and withdrawal of funds.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Overview
Voice-over Text The State Bank of India Employees' Provident Fund came into effect from 1st July 1955. State Bank of India Employees Provident Fund Rules was framed in terms of the Provident Fund Act XIX of 1925.
Overview
• State Bank of India provides a Scheme of Contributory Provident Fund for its employees
• This scheme is in pursuance of clause (0) of sub-section 50 of the State Bank of India Act. 1955.
• The SBI Employees' Provident Fund came into effect from 1st July 1955.
• The SBI Employees Provident Fund Rules was framed in terms of the Provident Fund Act XIX of 1925.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Membership Eligibility
Voice-over Text The following types of employees are eligible for PF on the fulfillment of certain conditions.
The following types of employees are eligible for PF on the fulfillment of certain conditions.
Full time permanent employees
Eligible to become member of the fund on the date of confirmation (i.e. after 6 months from the date of joining in the Bank).
Part-time employees
Eligible to become member of the fund if serving the Bank for more than 6 hours a week. This is applicable with effect from 01.09.1978 or (Or the date of confirmation whichever is later.)
Probationary Officers, Rural Development Officers, Liaison Officers and other specialist Officers (direct recruits)
Eligible to become member of the fund from the date of their joining the Bank.
Bank Medical Officers
Eligible to become member of the fund w.e.f. 01.01.1983 or the date of their joining whichever is later provided that they are not members of
Provident Fund of any other organisation.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen
title Membership Application
Voice-over Text Once a person is eligible for PF, s/he has to apply for membership to the Trustees of the fund, through the forms mentioned below. This application has to be routed through her/his Controlling Authority.
Once a person is eligible for PF, s/he has to apply for membership to the Trustees of the fund, through the forms mentioned below. This application has to be routed through her/his Controlling Authority.
COS 433 - Provident Fund Application COS 548 - Pension Fund Application
COS 435 - P.F. Nomination on Form “B” if the member has no family COS 434 - P.F. Nomination on Form “A” if the member has family NOTE
(a) All the above forms will be filled in duplicate, duly completed and verified from the original data available, service sheet, etc.
(b) The applicant should not verify the data as verifying officer.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Change of Name
Voice-over Text What’s in a name, they say. But apparently, a lot! It definitely changes the way you approach PF documentation.
Documents required in case of change in the NAME of an employee are:
A photocopy of the affidavit
A copy of the Court Order
A photocopy of paper cutting of advertisement in this regard, duly verified by the Branch Manager and
COS 433
PF Nomination on Form "A" or "B“(COS 435 or COS 434) as the case may be
COS 548
These should be sent to the PPG Department for making necessary changes in their records.
NOTE:
Similarly, in the case of lady members whose name changes after marriage, they should submit an application to the PPG department through their controlling authority for change of name along with marriage certificate (if any) and nomination on Form "A".
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen
title Index Number
Voice-over Text Mr. Gupta has been wondering what happens to the forms people fill and send? How are the Index numbers allotted? Here are the answers to these questions.
Allotment of Index Number
So forms have been filled and sent. What happens now? How are the Index numbers allotted?
Here are the answers to these questions.
On receiving the required PF documents at PPG Department, an Index Number is allotted to the member and is advised to the concerned DGMs, who will advise the member.
Thereafter, all sets of documents are sent to Central Accounts Office, Kolkata for registration. After due registration, Central Accounts Office returns one set for record at the PPG Department at the Local Head Office.
In respect of the employees working in Corporate Centre and its establishments, the Index Number is allotted to the members by the Central Accounts Office, Kolkata.
Modulus character of Index Number
The Index Number allotted to the member is not only a serial number. Every circle has been allotted a different series of specially formulated numbers. It consists of seven digits. The Index Number may begin with ZERO but there should not be more than one zero in the beginning of left hand side of the Index Number.
Note:
For any correspondence regarding Provident Fund, employee's INDEX NUMBER has to be mentioned.
Checking of Index Number
There is a method to check the correctness of each Index Number. This method is known as the 11 test. Here is how to use this:
Write the Index Number
Now write 1 to 7 below the Index Number from right hand side EXAMPLE
INDEX NUMBER 0 8 2 0849
POSITION 7 6 5 4 3 2 1
ii) Multiply each digit of index number with corresponding position number, except the digit on the extreme right. Now add the products.
7x0= 0 6x8 = 48 5x2= 10 4x0= 0 3 x8 = 24
2x4= 8
Total = 90
iii) Divide the total by 11 i.e. 90 divided by 11 90 /11 = 8 and the remainder is 2 iv) Subtract the remainder( “2”) from 11, and the result will be 9
i .e. number at the extreme right.
If the result of the calculations is the number on the extreme right, the Index Number is correct.
Further, if the remainder is 0 then the last digit of the Index Number should be 0, and if the remainder is 1 then the Index Number is wrong.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Types of Contributions
Voice-over Text Let us look at how the contribution amount applicable per employee is calculated and what processes are being followed to ensure processing accuracy and efficiency.
Monthly Contribution List
Let us look at how the contribution amount applicable per employee is calculated and what processes are being followed to ensure processing accuracy and efficiency.
A pre-printed list for monthly contributions of the staff of the branch is being sent from the PPG Department / Zonal Office through the respective modules well in advance so that the lists are received back at PPG Department by the 5th of the following month.
Previously the branch had to prepare monthly statements by writing Index Number, Name and contributions thereof and again difference i.e. increase / decrease in the summary page. Before describing each column of the contribution lists it will be necessary to describe the special features of the new format.
As all particulars are punched at DPC at Local Head Office / ZOCC each month, chances of human error cannot be ruled out. Now the monthly contribution of each employee has increased substantially and every member is careful about correctness of his statement.
It is observed that the monthly contributions of about 75% to 80% of the members remain constant, which will normally undergo change once a year only either due to increment or otherwise. If any increase or decrease as compared to latest data available (reference month) only is purchased at ZOCC and remaining data are simply repealed, the workload as well as chances of mistakes will be minimized.
The pre-printed lists also reduce the work load at the branches for preparation of contribution lists every month. Noting / cancellation of liens, information of disbursement of loans or withdrawals etc. will be reported in the separate columns provided therefore, hence preparation of separate letters to PPG Department is not required. There is also a checklist for the verification of the balances of retired employees whether the employee is paid less or excess.
Contribution of Transferred Employees
If any arrears are paid to a staff member and any amount is credited in the Trustees' Account alter his transfer from the branch, the amount is to be remitted to the branch where the employee b presently posted.
The amount of contribution so received will be included in the current month's contribution list of the present branch. This will avoid delay in processing due to reporting of contributions by two branches against same index number or creation of dormant account in the Circle Balance Hook and transfer the balance by Inter circle Transfer as the case may be.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Process checks
Voice-over Text Here are the details of how the monthly contributions of each member are checked and processed.
Check list for monthly P.P. contribution list
The pre-printed contribution list supplied by the PPG Department / ZOCC has certain columns, which can be checked for correctness using certain methods.
Checking of page total
Each page total should be checked properly.
Month's subscription for page = Total of reference month (given at the bottom) + Total increase column - Total of decrease column
Summary page
In summary page the under noted figures are to be incorporated in the column provided for the purpose only.
(i) Columns 7, 11, 14, 15, 16, 17 will be total of each column of all pages and the total of column to 17 (7+11 + 14-H 5+16 H 7) will agree with the balance for the month
(ii) Column 19: Total number of staff needed is to be mentioned in this column.
(iii) Column 20: Total of substantive salary is to be mentioned here.
(iv) Column 21: Amount mentioned here should agree with the sum credited in the Trustee's account during the month.
(v) Column 24: This figure should tally with the result of adding columns 7,11,14,15,16,17 & 21.
Miscellaneous information
Miscellaneous information like disbursement of advance, withdrawals during the month and liens to be noted or cancelled should be mentioned at the appropriate columns in summary page.
After properly filling the pre-printed list, it should be sent to the Zonal office before 5th of the following month positively. When the data processing centre at Zonal Office is fully equipped, the computerized branches may contact the concerned Zonal Office for structure format for incorporating data on a floppy to be sent to the Zonal Office. The Computer output (hard copy) will be generated at Zonal Office and will be sent to branches concerned for confirmation and record.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Error Instances
Voice-over Text
We have seen what a tough job it is to accurately process these massive statements.
But given the sheer volume and the human element involved in processing, some errors are bound to crop up.
We have seen what a tough job it is to accurately process these massive statements.
But given the sheer volume and the human element involved in processing, some errors are bound to crop up.
Wrong index number reported by branches ii) Contribution reported without index number iii) Short name reported in the list
iv) Same index numbers reported by two or more branches
v) Transfer particulars of the members who are transferred to and from other Circles as well as within Circle, not reported properly to the PPG Department separately or in the contribution list.
While correcting member's account it is observed that at the end of correction 5,6 or even more accounts are tagged. All this work is being done manually at PPG Department. Due to lack of information the work of correction is held up till correct information from the concerned branch is received.
So while sending applications for correction of P.F. Statement, the on screen information /particulars should be furnished.
Correct Index Number should be given in the application.
Place of posting with date from the beginning of P. F. deduction (for old corrections).
Certificate from Branch Manager that the contributions are wrongly reported against such Index Number, which should be corrected in correct Index Number us such.
Contribution list with actual deductions made from the member and duly verified by the Branch Manager should be sent.
Photocopy of old P.F. Statements.
Date of birth, date of joining, date of confirmation and name of nominee should be given in the application.
Chapter/ Module Provident Fund (Terminal Benefits)
Lesson/ Screen title Delayed remittance and Value dating of contribution Voice-over Text
What happens when there is a delay in remittance of P.F. contribution?
Delayed remittance of P.F. Contributions
It is observed that the interest is calculated for delayed remittance of Provident Fund contribution by the Branches and being paid by debit to the Local Head Office. However, if for any reason, there is delay in remitting the monthly Provident Fund contributions recovered from members, the matter may be put up for approval of the appropriate authority i.e. General Manage at the Local Head Office, after examining the staff accountability. The overdue interest so approved for the period involved may be calculated and debited to the Branch Charges Account and the amount will have to be included in the monthly contribution list sent to PPG Department at Local Head Office.
Value dating of Contribution
Previously there was no system of value dating of monthly contributions but from 1995-1996 value dating facility is provided in the new software. If the contribution list of the Branch is prior to the month of reporting (total contribution of the Branch and not a single entry of a member of any month) will be value dated. In other words, if the contribution list of whole branch is delayed it can be value dated but if the past contribution of one or more members only is clubbed during the month it will not have a value dating effect.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Calculation
Voice-over Text
Mr.Gupta is has seen how his PF statement gets processed. He now wants to know how the PF amount is calculated. Let us proceed to see how it is calculated in different cases. Click on the circles to know more.
Calculation of Interest on P.F. balance
Mr.Gupta has a balance of Rs.2,72,673 in his PF account, as on 31st March 97. Let us seen how the Bank’s and Mr.Gupta’s own contribution gets added to this month on month.
FOR BANK'S CONTRIBUTION Rate of interest assumed as 12%
Interest Balance Month Contribution
2,72,673 April 1020
2,73,693 May 1020
2,74,713 June 1020
2,75,733 July 1020
2,76,753 Aug 1020
16,514 2,77,773 Sept 1020
2,95,307
FOR MEMBER'S CONTRIBUTION Rate of interest assumed as 12%
Interest Product Month Contribution Recoveries 1,75,627
April 1020 500
1,77,147
May 1020 500
1,78,667
Jun 1020 500
10,766 1,80,187 Jul 1020 500
1,81,707
Aug 1020 500
1,83,227
Sept 1020 500
1,95,513
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Payment
Voice-over Text
Interest on Bank's and Member's contribution is payable by the Trustees up to the date a member ceases to be in the Bank's service due to retirement, dismissal, voluntary retirement, compulsory retirement, or the day on which lie dies, whichever occurs first.
Some times an excess amount is erroneously credited to a member's account.
However, the Trustees Account may be debited only after thorough scrutiny of the individual transaction and due verification that the excess remittance is only on account of accounting error and the money does not actually belong to the Trust.
When a member is dismissed from service, for any fault justifying dismissal, he shall not receive the sums contributed to his provident fund by the bank. He may receive these only on being permitted to do so by the Trustees.
When a member resigns or retires from the service of the Bank, he shall, if he has served the Bank for a period of five years or more, be entitled to receive the balance at his credit in the fund.
If any member shall cease to be in the service of the .Bank before completion of a service of five years with the Bank, he shall be entitled to receive only the amount of this own subscriptions to the Fund with interest credited thereon to the date of his severing his connection with the Bank
If any member ceases to be in the service of the Bank before completion of a service of five years with the Bank, the Trustees may in their absolute discretion authorise such payment if a member is compelled to retire before completing five year's service owing to any cause beyond his control.
Payment of interest
Interest on Bank's and Member's contribution is payable by the Trustees up to the date a member ceases to be in the Bank's service due to retirement, dismissal, voluntary retirement, compulsory retirement, or the day on which lie dies, whichever occurs first.
Refund of excess credit to Provident Fund Account
The excess credit to the account may be due to accounting/calculation error at the branch level or wrong responding of entry at the Local Head Office level. However, the amount when remitted to the Central Accounts Office, Kolkata will be placed to the credit of the main Trustees and if it is only an accounting error, the amount can be recovered from the Trustees Account without the approval of the Trustees and Bank can reverse such erroneous credit by debiting the Trustees Account.
The Authority structure for authorizing such debits to the Trustees account to reverse the erroneous credit is as under:
Sl.
No. Office / establishments for the
employees / officers working in Authority
1 Circle Chief General Manager of the Circle 2 Corporate Centre at State Bank Bhavan,
Mumbai and for Officers on deputation to other offices, like SBI Capital Market, SBI Life etc.
General Manager (Corporate Services)
3 Other Corporate Centre Establishments /
Departments An Authority not below the rank of (Chief General Manager. Where no Chief (General Manager is posted, then the (Chief General Manager who is the Con-trolling Authority of such establishment.
The entire debit authorised by the appropriate authority at Circles / Establishment; shall be reported to PPG Department at Corporate Centre at quarterly intervals who shall put up to the same to MD & GE (NB) for control.
Payment of P.P. balance (Dismissed Employee) - Rule 24
If any member is dismissed from the service of the Bank for any fault or other cause justifying dismissal, he shall not be entitled to receive, unless permitted to do so by the Trustees, the sums contributed by the Bank to his Provident Fund account, or any interest credited to that account on the sums so contributed. Provided that when any member is so dismissed, any amount due under a liability incurred by the member to the Bank (not exceeding in any case the sums so contributed by the Bank and interest thereon) shall be paid by the Trustees to the Bank out of the sum standing to the credit of the member's account.
Liability to the Bank by the employee - Rule 26
When a member resigns or retires from the service of the Bank, he shall, if he has served the Bank for a period of five years or more, be entitled to receive the balance at his credit in the fund. Provided that when any member resigning or retiring from the service of the Bank is under a liability incurred by him to the Bank, the Trustees shall, irrespective of the duration of his service, pay to the Bank out of the balance at his credit in the fund any amount due by him to the Bank (not exceeding in any case the sums contributed by .the Bank to his account in the fund and any interest credited to his account on the sums so contributed).
Members with less than 5 years service – Member's contribution - Rule 27
If any member shall cease to be in the service of the .Bank before completion of a service of five years with the Bank, he shall be entitled to receive only the amount of this own subscriptions to the Fund with interest credited thereon to the date of his severing his connection with the Bank.
Members with less than 5 years service – Bank's contribution - Rule 28
If any member ceases to be in the service of the Bank before completion of a service of five years with the Bank, he will not be entitled to receive the amount of the Bank's contribution standing at the credit of his Provident Fund account, but the Trustees may in their absolute discretion authorise such payment if a member is compelled to retire before completing five year's service owing to any cause beyond his control.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Transfer
Voice-over Text Let us know see what happens in case of transfer of employees.
Transfer of P.F. balance to and from other employer i) Rule 12B (2)
In the case of an employee leaving his service in any other establishment/institution and
joining the service of the Bank and who is permitted or required to become a member of the Provident Fund maintained by the Bank, the Trustees shall at the request of the employee and if the Rules in relation to Provident Fund maintained by his former employer so permit.
Rule 12 B (3)
The service rendered by the member admitted to the member admitted to the fund under rule 12 (B) (1) and (B) (2) in the earlier establishment or institution shall for the purpose of rule 16 and for no other purpose be deemed as service in the Bank.
Rule 12B (4)
In the case where an employee of the bank leaves the service of the bank and joins the service of any other establishment or institution the trustee shall at the request of the employee made in writing and if the rules in relation to the provident fund maintained by his new employer so permit transfer the amount due to the employee from the fund maintained by his new employer, but such transfer shall be subject to the provisions of the rule 26.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Liens and Advances
Voice-over Text
Having sorted out in mind, the details of nominations and assuring himself that things would be ok in case of any eventuality, Mr.Gupta now wants to take some advance to start the initial formalities for his small scale business.
For which, he must go through the policy on liens and advances.
No advance shall be granted unless the Trustees are satisfied that member's pecuniary circumstances justify the advance and it will be expended for the specified purpose.
An advance shall not, except for special reasons exceed three month's basic pay
Here are the points to be verified while submitting the proposal for advance.
A lien noted against the Provident Fund balance of a member is applicable against the Bank's contribution only as the Member's contribution cannot be appropriated unless the member specifically authorizes to do so.
No Lien can be noted against the Provident Fund Balance for any other loan / advance including loan a\ died by the members from the Co-operative Societies.
Advance against Member's own contribution to Provident Fund Service Criteria
There is no service criteria but the Trustees may, at their absolute discretion and at the written request of a member, make advance to member against his own contribution plus interest thereon standing to his credit in the Fund, subject to the following conditions:
Conditions-Rule 15(1) (a)
i) To pay expenses incurred in connection with the serious or prolonged illness of the member or any person actually dependent on him ;
ii) To pay obligatory expenses on a scale appropriate to the member's status which by customary usage the member has to incur in connection with marriages, funerals or other ceremonies;
iii) To meet any other expenditure or liability which, in the opinion of the Trustees, is extraordinary and beyond the ordinary capacity of the member to meet.
Amount of advance Rulel5(l)(b)
An advance shall not, except for special reasons exceed three month's basic pay or halt the amount of the member's own subscriptions and interest thereon standing to his credit in the fund whichever is less. For the purpose of advance basic pay means basic pay + other eligible allowances which are reckoned for Provident Fund contribution.
Note
The under noted points should be verified while submitting the proposal for advance:
i) Recommendation for advance as special case should be made by the Branch Manager and Deputy General Manager after satisfying that the pecuniary circumstances of the member so warrant.
ii) Instead of total emoluments, basic pay and other eligible allowances should be written separately in the application.
iii) Statement showing member's own contribution with interest up to the month of submission of application should be submitted along with photocopy of latest Provident Fund statement.
iv) Details of advance and withdrawals taken by the employee should be clearly mentioned in the certificate.
v) Advance / withdrawal will not be sanctioned before three months prior to the month of marriage of son / daughter of the employee.
vi) Amount of advance recommended should be divisible by the number of installments it is proposed to be paid. If necessary the amount of advance may be either raised or reduced to admit fixation of such installments.
vii) More than one advance can be sanctioned to a member but both should be for different purposes. In case a member desires to avail an advance for the purpose he has already-availed, he will have to wait for a period of 12 months alter the date on which he has repaid the earlier advance with interest.
Noting and Cancellation of liens
A lien noted against the Provident Fund balance of a member is applicable against the Bank's contribution only as the Member's contribution cannot be appropriated unless the member specifically authorizes to do so.
The particulars of all loans / advances sanctioned to a member where a lien on the Provident Fund Balance is required to be marked, should be advised to the PPG Department at the Local Head Office for members working at Circles and to Central Accounts Office, Kolkata for members working at Corporate Centre and its establishments on the format as our Annexure V.
Similarly, when the loan is liquidated in full, a letter of cancellation of lien (Annexure VI) should be addressed to the PPG Department at Local Head Office / Central Accounts Office, Kolkata as the case may be.
No Lien can be noted against the Provident Fund Balance for any other loan / advance including loan a\ died by the members from the Co-operative Societies.
No lien should be noted against the Provident Fund Balance even an employee undertakes to guarantee a loan availed by his family members / near relatives.
Several cases have come to our notice where lien of more than one vehicle remain noted. As another vehicle loan can be granted only when earlier vehicle loan has been liquidated, the member should request the Branch, where the earlier loan was liquidated, to advi.se PPG Department through Controller for cancellation of lien at the time of liquidation of an advance against which lien was noted earlier.
The purpose of a Provident Fund is to make financial provisions of the future of an employee particularly when he will retire or will no longer be in service or for his dependents in case of his death. With this objective, the Provident Fund Act 1925 as well as Employees' Provident Funds arid Miscellaneous Provisions Act, 1952, have made protective provisions that the amount standing to the credit of any member in the fund shall not in
any way be capable of being assigned or charged and shall not be liable to attachment. In view of this, any lien from outside parties like Co-operative Society etc., cannot be entertained.
Since the State Bank of India Provident Fund Rules are framed under Section 50 of State Bank of India Act and Rules 24.26 and 32 of State Bank of India Employees' Provident Fund Rules provide for adjustment of the member's liability to the Bank from the Bank's contributions, noting of liens on account of liability to the Bank against the Bank's contributions will be in order. Such liens can also be noted against the own contributions of the members, if there is specific letter of authority from the member to adjust his own contributions as well in satisfaction of liability to the Bank.
However, any request from the Co-operative Credit Society etc. to pay to it the member's dues can be acceded to if a member has executed a specific irrevocable and undisputed letter of authority to Trustees.
Such letter of authority, i fit so provides, can cover both the Bank's as well as Member's own contributions.
Further it is clarified that in case of death of the member, the employee's authority to adjust the dues of the Society from the Provident Fund amount payable to his / her legal heirs / nominees will not be operative, because, with the death of the employee the authority given by him becomes inoperative or non-existent.
According to Provident Fund Rules after the death of the employee. Provident Fund balance gets vested with the nominee / legal heirs. As such, in case of death of an employee any adjustment to Cooperative Society should not be made.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Recovery
Voice-over Text
Having applied for the advance, it is also important for Mr.Gupta to know how this money will be recovered from him. This will enable him to plan accordingly.
The advance will be recovered in equal installments in not less than 12 months unless the member so opts and not more than 24 months. Where the amount of advance exceeds 3 month's basic pay plus eligible allowances, it shall be open to the Trustees to permit recovery in 36 equal monthly installments.
Recovery - Rule 15 (2) (A) (Screen 34)
Interest is charged at the rate of V5 % of total amount and recovered in ore installment, after the last installment is repaid, if the advance is repayable in 121 24 months. If he advance is repayable in 36 installments interest can be recovered in two equal monthly installments immediately after repayment of the principal amount.
Recovery of the first installment shall commence when the member draws his salary for the full month for the first time after the advance is made. A member may, at his option, repay more than one installment in one month.
Thumb Rule
Px ( N + 1 ) Here P : Amount of Advance 500 N = No. of installments
Example
i) Interest calculation on the advance of Rs. 30,000.00 repayable in 24 installments 30,000.00 X (24+1) / 500 = 30.000.00 X 25/500 = Rs. 1,500.00
ii) Interest on advance of Rs. 22.000.00 refundable in 36 installments 22.000.00 X (36+1)7500 = 22.000.00 X 37/500-Rs. 1628.00
Note
As the advance against Provident Fund balance is not like other advances given by the Bank but it is an advance out of member's own contribution with interest and repayable in specific number of monthly
installments, the interest will be payable on the remaining balance only. However, installments recovered every month will be added to the member's balance as shown in the calculation of interest on Provident Fund
balance. After full repayment of loan amount, interest («)'/,."' percent is recovered in maximum two monthly installments ( as detailed above ) and credited to the member's balance. If more than one advance has been sanctioned to -i member, each advance shall be treated separately for the purpose of recovery and should be reported separately in monthly contribution list.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Withdrawal
Voice-over Text
In case the requirement arises for withdrawal of some amount, the following rules will apply.
Withdrawal against member's own contribution to P.P. Rule 16 Service criteria
No withdrawal shall be allowed for any of the purposes mentioned below except (e) unless the member has completed 25 years of service or has attained the age of 50 years.
Purpose
Building or acquiring a suitable house for his residence including the cost of the site or repaying an outstanding amount on account of loan expressly taken for the purpose.
Meeting the cost of higher education, including whenever necessary the cost of passage, of any child of the member in the following cases, namely:
i) For education outside India for an academic, technical, professional or vocational course beyond the High School stage, and
ii) For any Medical. Engineering or other technical or specialized course in India beyond the High School stage, provided that the course of study is for not less than three
years.
Meeting expends in connection with the marriage of his / her daughter or daughters or, if the member has no daughter, any other female relative, dependent on him.
Meeting expenses in connection with the marriage of his son or sons.
Building or acquiring, as a member of Co-operative Housing Society approved by the Bank or under any other scheme approved by the Bank for the purpose, a suitable house for his residence including the cost of the site. (Here age limit and or service criteria are not applicable).
Amount of withdrawal for Building or acquiring a house Rule 16 (a)
i) Up to one half of the amount of his own subscriptions 'with interest thereon standing to his credit in the fund,
ii) The actual cost of the house including the cost of site or the amount required for repayment of the loan taken for this purpose, whichever is less. To become eligible to avail a
withdraw d under Rule 16 (a) of the Fund, the member will have to satisfy all the provisions of Rule 21 (1) of the Fund.
Rule 21 (1)
No withdrawal shall be permitted for any purpose specified in clause (a) of the Rule 16 unless the Trustees are satisfied -
a) That the member does not already own a house at the place of his duty or at the place where he intends to reside after retirement and that only one house will be built, acquired, or redeemed by the member at such place
b) That the sum, which he proposes to withdraw, is actually required for the purpose
c) That such sum together with the private savings, if any, of the member would be sufficient for that purpose d) That in the case of withdrawal for the construction of house
i) The member possesses or intends to acquire forthwith the right to build it on the site therefore ii) The member has an approved plan.
e) That in the case of withdrawal for the acquisition of a house the vendor has an indefeasible and clear title to the land and house which he agrees to sell to the member
f) That in the case of withdrawal for the purpose of repayment of loan, the member has produced necessary deeds and papers before the Trustees proving his undisputed title to the land and the house thereon.
Amount of withdrawal for Building or acquiring a house under Bank’s housing scheme Rule 16 (a) Up to one half of the amount of his own subscriptions with interest thereon standing to his credit in the Fund or shortfall of the housing project to be constructed / acquired out of Bank's finance, whichever is lower. Salary for the purpose of withdrawal under Rule 16 means basic pay plus admissible allowances only.
a) Withdrawal by a member under clause (c) or (d • above shall I not be permitted before three months proceeding the month in which (he marriage is proposed to take place.
a) The member shall furnish a certificate to the Trustees within a period of one month from the date of marriage or if he is on leave, within one month of return from leave, that the money withdrawn has actually been utilized for the purpose for which it was intended.
a) More than one simultaneous withdrawals can also be permitted to a member under Rule 16 (c) and (d) in case marriages of two children are celebrated simultaneously.
a) Withdrawal under Rule 16 (e) will be permitted once during the service.
a) Advance and withdrawals sanctioned during the month by Local Head Office / Central
Accounts Office, Kolkata shall be reported to Corporate Centre for control who shall put up to the Committee of the Trustees for control.
Amount of withdrawal for Daughter's marriage Rule 16 (c) i) Six month's salary, or
ii) Half the amount of his own subscriptions with interest thereon standing to his credit in the Fund, whichever is less.
Amount of withdrawal for Son’s marriage Rule 16 (d)
i) Three month's salary, or
ii) Half the amounts of his own subscriptions with interest thereon standing to his credit in the Fund, whichever is less.
Provided that in special cases, the Trustees may relax the limit but in no case the amount exceed six months salary.
Amount of withdrawal for Cost of Higher Education Rule 16 (b)
i) Half the amount of his own subscriptions and interest thereon standing to his credit in the Fund or three months salary, whichever is less.
ii) The withdrawal by a member from the Fund shall be permitted once in every six months.
iii) A member, who has been permitted to withdraw money from the Fund, shall satisfy the Trustees within a period of six months from the date of withdrawal that the money has been utilised for the purpose for which it was withdrawn.
Clean Demand Loan against Bank's contribution
The Executive Committee of the Central Board at its meeting held on 6th February 1988 has approved a scheme for granting Clean Demand Loan against Bank's contributions to the Provident Fund.
(Corporate Centre Circular PA/CIR/1dt 15-02-1993)
1. Clean Demand Loan may be granted to the member of the staff, who avails housing loan under the Bank's Housing Loan Scheme [Rule 16(e)], for the purpose of meeting shortfall/margin money or the employee's own investment required for the project.
2. The amount of Clean Demand Loan shall be restricted to 6 month's basic pay of the employee or the employee's own investment in the housing project over and above the finance available from the Bank against the employee's own contributions. The amount will, however, not exceed the Bank's contributions to the Provident Fund together with interest thereon.
3. The Clean Demand Loan v ill be repayable by the employee in equal monthly installments not exceeding 60 plus interest by way of recovery from salary.
4. Interest and the periodicity of application of interest will be the same as applicable to the Demand Loan against Go! i ornaments to the staff.
5. A lien against the balance of the Bank's Contributions to Provident Fund will be noted.
6. The Circle Development Officer is empowered to sanction such loans to all the staff including the departments under network heads. For the employees working in Corporate Centre and its establishments the Deputy General Manager, Central Accounts Office, Kolkata is empowered to sanction the loan.
7 . A second Clean Demand Loan will be sanctioned to the employees, only when the earlier clean Demand Loan against Bank's contribution to the Provident Fund has been
liquidated in full. (Corporate Centre Circular P4/C1R/16 dt. 15.02.1993)
8. All the Clean Demand Loans sanctioned by the Circle Development Officer will be reported to the Local Boa d for control (ANNEXURE 7)
The employee will apply on the revised application form (ANNEXURE 8) in triplicate. One copy of the application may be retained at the Branch and other copies will be forwarded to the Provident Fund Department through their Controlling Authority. One copy of the application with the sanction recorded thereon by the PPG Department will be sent to the concerned Branch wherefrom the loan will be availed. Clean Demand Loan against Bank's contribution
can be availed by a member from the Branch where from he has availed the Individual Housing Loan.
Note
i) The scheme will not be applicable in those cases where the project is already completed and the Housing 1oan has been disbursed in full. This facility is also not permissible to repay outside borrowings undertaken for margin purpose or otherwise'.
ii) The Clean Demand Loan against Bank's contributions to Provident Fund may be granted to staff members for the second time also while availing additional housing loan under the Bank's Housing Loan Scheme for the purpose of meeting the margin money required by the employee for a availing the additional housing loan and no. for any other purpose.
(Corporate Centre CircularPA/CIR/16dt 15-02-1993)
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Summary
Voice-over Text
Define Contributory Provident Fund (PF) Scheme by SBI. Differentiate the PF eligibility criteria for different employee group. Identify the steps to apply and track PF application form. Calculate the PF Benefits. Describe the various processes, such as refund, recovery, advance and liens, and withdrawal of funds.
Let us see what you have learnt at the end of this course. You have been able to:
¾ Define Contributory Provident Fund (PF) Scheme by SBI.
¾ Differentiate the PF eligibility criteria for different employee group
¾ Identify the steps to apply and track PF application form.
¾ Calculate the PF Benefits.
¾ Describe the various processes, such as refund, recovery, advance and liens, and withdrawal of funds.
Chapter/ Module Provident Fund (Terminal Benefits)
Lesson/ Screen title CDR and Non-CDR Mechanism > RBI’s Approach
Voice-over Text
RBI’s Approach on Reliefs and Concessions
Extension of RBI norms on reliefs and concessions to weak/sick SSI units to potentially viable units in other sectors:
• RBI has laid down broad norms for reliefs and concessions which can be extended by Banks/Financial Institutions to potentially viable sick units.
• RBI also clarified that Banks will also have the freedom to extend reliefs and concessions beyond parameters in deserving cases.
• The same approach may be extended across the bank to various categories of advances.
Essentials involved in RBI’s Approach
The approach to restructuring under CDR mechanism is significantly different from the conventional approach of concessionary funding of existing dues. In addition to reliefs and concessions, such an approach would also involve the following:
• Arriving at the quantum of outstanding debt that can be retained
• Investment in equity as an alternative to sacrifices
• Induction of strategic investor(s)/co-promoter(s)
• Broad basing of Board appointment of independent Chairman, appointment of professional CEO, etc.
• Appointment of whole-time Finance Director
• Setting up of Asset Sale Committee
• Appointment of Special Concurrent Auditor
• Change of Statutory Auditors
• Appointment of Lenders' Engineer/Monitoring Agency
• Right to accelerate repayment/revoke package
• Right of recompense
• Co-ordination issues between lenders - sharing of security, escrow account, etc.
RBI’s Approach on Reliefs and Concessions
Extension of RBI norms on reliefs and concessions to weak/sick SSI units to potentially viable units in other sectors:
• RBI has laid down broad norms for reliefs and concessions which can be extended by Banks/Financial Institutions to potentially viable sick units.
• RBI also clarified that Banks will also have the freedom to extend reliefs and concessions beyond parameters in deserving cases.
• The same approach may be extended across the bank to various categories of advances.
Essentials involved in RBI’s Approach
The approach to restructuring under CDR mechanism is significantly different from the conventional approach of concessionary funding of existing dues. In addition to reliefs and concessions, such an approach would also involve the following:
• Arriving at the quantum of outstanding debt that can be retained
• Investment in equity as an alternative to sacrifices
• Induction of strategic investor(s)/co-promoter(s)
• Broad basing of Board appointment of independent Chairman, appointment of professional CEO, etc.
• Appointment of whole-time Finance Director
• Setting up of Asset Sale Committee
• Appointment of Special Concurrent Auditor
• Change of Statutory Auditors
• Appointment of Lenders' Engineer/Monitoring Agency
• Right to accelerate repayment/revoke package
• Right of recompense
• Co-ordination issues between lenders - sharing of security, escrow account, etc.
Note
SBI has adopted a fully flexible a p p r o a c h t o reliefs and sacrifices under the Scheme to enable the Bank to arrive at realistic solutions on a case to case basis under this approach. It has been clearly laid down that there cannot be any uniform prescription for restructuring as each case will be unique.
Chapter/ Module Provident Fund (Terminal Benefits)
Lesson/ Screen title CDR and Non-CDR Mechanism > Eligibility Criteria
Voice-over Text The units are selected for extending reliefs and concessions under CDR mechanism based on certain eligibility criteria. Here you have the eligibility aspects.
Eligibility Criteria
Presently, the eligibility criteria for considering restructuring and extending reliefs and concessions under CDR mechanism are as under:
• The Scheme will cover only multiple banking accounts/syndication/consortium accounts with outstanding exposure of Rs.20 crore and above by banks and Financial Institutions (FIs).
• The Scheme will not apply to accounts involving only one FI or one bank.
• The Scheme will be applicable to Standard and Sub-standard accounts, and also selectively to doubtful accounts.
• There would be no requirement of the account/company being sick NPA or being in default for a specified period.
• Potentially viable cases of NPAs will get priority.
• Following BIFR cases, where aggregate outstanding exposure from banks and FIs is Rs.25 crore and above, also would be eligible:
i.Cases registered with BIFR which have not come up for hearing as yet
ii.Cases declared sick and where BIFR has ordered work out of Draft Rehabilitation Scheme (DRS)
iii.Companies which have no major issues in respect of statutory authorities and State or Central Government agencies (here is possibility of them being addressed within a reasonable time frame of 3 months).
No eligibility for certain BIFR cases
Following BIFR cases will not be eligible:
• Special Investigative Audit (SIA) has been recommended by BIFR
• Sickness is being contested by way of appeal to AAIFR
Chapter/ Module Provident Fund (Terminal Benefits)
Lesson/ Screen title CDR and Non-CDR Mechanism > Non-CDR cases Voice-over Text
The CDR mechanism excludes a large number of potentially viable units.
Therefore, the potentially viable units, which are not eligible for restructuring under CDR mechanism, may be selectively considered under Non-CDR mechanism. However, to avoid over-crowding, this approach would be
restricted to some non-CDR accounts.
Reliefs and Concessions for Non-CDR cases
• The CDR mechanism has made significant progress in restructuring large rate corporate accounts. However, the above eligibility enteric excludes a large number of potentially viable units.
• Therefore, the desirability of extending the flexible approach to reliefs and concessions under CDR mechanism to non-CDR cases also were considered.
• The potentially viable units, which are not eligible for restructuring under CDR mechanism may be selectively considered for packages/covenants as envisaged under CDR mechanism.
However, to avoid over-crowding, initially, this approach would be restricted to certain non-CDR accounts:
Non-CDR Accounts
Sole banker eases in C&l/SSI/AGL segments with indebtedness of Rs. 1 crore and above.
Multiple banking/consortium cases in C&l/SSI/AGL segments with outstanding exposure below Rs.20 crore from the banking system, (In the absence of a structured mechanism such as CDR, the approach to sacrifices and sorting out inter-creditor issues would be subject to a general consensus amongst various creditors.)
Chapter/ Module Provident Fund (Terminal Benefits)
Lesson/ Screen title CDR and Non-CDR Mechanism > Other Parameters for Non-CDR cases
Voice-over Text Non-CDR cases which are being considered for restructuring under the CDR approach would need to satisfy the viability benchmarks as applicable under CDR mechanism. Here are some of the parameters.
Other Parameters for Non-CDR cases
Non-CDR cases which are being considered for restructuring under the CDR approach would need to satisfy the viability benchmarks as applicable under CDR mechanism.
Some of these parameters are given below:
Minimum Return on Capital Employed (ROCE) of 5 year G- Sec rate plus 3%.
Average DSCR of more than 1.25 and more than 1 in any year.
Gap between post-tax internal rate of return and average cost of funds should be at least 1%.
Operating and cash Break-even points to be comparable with industry parameters.
Gross profit margin should be comparable with industry average.
Note: The above parameters are only indicative. The sanctioning authority may take a flexible view, depending on the facts and circumstances of each case.
Chapter/ Module Provident Fund (Terminal Benefits)
Lesson/ Screen title CDR and Non-CDR Mechanism > Concessionary Interest Rate Structure
Voice-over Text
Any concession within the RBI guidelines may be approved by the appropriate sanctioning authority. The applicable concessionary interest rate structure fated by State Bank of India as per the RBI guidelines is as shown in the table.
Concessionary Interest Rate Structure for Sick SSI Unit
• In SSI sector, units falling within the RBI's definition of a sick SSI unit would continue to be eligible for reliefs and concessions as per RBI guidelines.
• Any concession within the RBI guidelines may be approved by the appropriate sanctioning authority.
• The applicable concessionary interest rate structure fated by State Bank of India as per the RBI guidelines are as under:
(1) (2) (3)
Relief measure Standard rate of interest for sanctions
Minimum rates of interest (subject to AC by CCC-I &
above)
Period of concession
Funding of interest dues on cash credit one term loan.
No interest No interest Not exceeding 3 years
Conversion of irregular portion of cash credit
account into WCTL
1.5% below
SBAR 3% below
SBAR Not exceeding 5 years
Funding oi cash losses till break- even level
1.5% below
SBAR 3% below
SBAR Up to the period \ of break-even level Existing
working capital 1.5% below
SBAR 3% below
SBAR Not exceeding 3 years
Additional
working capital SBAR 1.5%
below SBAR Not exceeding 3 years
Contingency loan assistance- of up to 15% of
estimated cost of rehabilitation
SBAR 1.57o
below SBAR Not exceeding 3 years
Margin money for working capital and funds for startup expenses.
1.5% below SBAR
*
3% below
SBAR Not exceeding 3 years
• Extension of the flexible approach to reliefs and concessions under Corporate Debt Restructuring (CDR) mechanism to other potentially viable units not eligible under CDR
• Any reliefs and concessions within the parameters given in columns (1) and (2) above would be approved by the appropriate sanctioning authority.
• Any concession, over and above the parameters given in columns (1) and (2) but subject to the minimum rates given in column (3), would be subject to Administrative Clearance (AC) by CCC-I in respect of proposals tailing within the powers of CC.C-II & below.
Chapter/ Module Provident Fund (Terminal Benefits) Lesson/ Screen title Summary
Voice-over Text
In this course you have learned about the basic tenets of NPA Management Policy, the process to identify the potential NPAs and important functions of NPA review. You have also learned about the approach to rehabilitation of NPAs, and time norms for management of NPAs. You have even learned about the procedure involved in compromising settlements, and the reliefs and concessions under CDR and Non-CDR Mechanism.
In this course, you have learned about:
• The basic tenets of NPA Management Policy
• The process to identify potential NPAs
• Important functions of NPA review
• The approach to rehabilitation of NPAs
• Time norms for management of NPAs
• The procedure involved in compromising settlements
• The reliefs and concessions under CDR and Non-CDR Mechanism
