New rules for ATM usage in India from November/2014

Many people have a habit of withdrawing small amounts of money from the ATM to curb spending tendencies, but often end up with a high frequency of withdrawals. There are some others who are reluctant to use net banking or mobile banking facilities and depend on ATMs for checking account balance. If you happen to fall into any of these categories, it’s time to change your habit for good as RBI has issued new rules and guidelines limiting the number of times you use your ATM in a month. The new ATM transaction rules issued by the Reserve Bank of India is applicable to all ATM transactions including withdrawing cash, checking account balance or getting a mini account statement.

New RBI ATM Transaction Rules: 

According to the new RBI guidelines that come into effect from 1st November 2014, savings bank account holders in metropolitan cities would be allowed only three transactions from ATMs of other banks and five from the same bank in a month. For any ATM transaction above the stipulated limit, a transaction fee of Rs. 20 would be charged to the account holder. The new transaction fee is applicable only for people living in six metropolitan cities including Mumbai, Delhi, Bengaluru, Chennai, Hyderabad and Kolkata. People living in smaller towns and other centers would continue to enjoy five free monthly transactions per month from the ATM of other banks and the charges for them include Rs. 20 for each cash withdrawal and Rs 9 for non-cash transactions. Account holders of zero balance and other no-frills accounts in non metros are exempted from such transaction charges as of now.

What new Rules Mean for Bank Customers: 

The transaction fee has been increased from the earlier limit of Rs. 15 and the number of free transactions decreased from five to three for ATMs of other banks. Another important change in the new RBI guideline policy for ATM transaction fee is the fact that all ATM transactions including cash withdrawal, balance enquiry and changing of PIN number etc would be considered as an ATM transaction unlike in the past when balance enquiry was not considered a transaction as such!

A Case for Capping ATM Transaction Limit: 

While capping the charges for ATM usage may be an unpopular decision taken by the Reserve Bank of India, the limit in free transactions is justified by the apex body considering high expenses for managing ATMs across the country. With an increasing number of robbery attempts on various ATMs especially in isolated areas and in semi urban and rural areas, the banks have been forced to shell out funds to install a security mechanism apart from using CCTVs and manual security guards wherever possible.

With the Reserve Bank of India laying down strict security guidelines not to leave any ATM unmanned or without security cameras and other measures, banks are facing higher overheads to manage the ATMs.

The inter banking fee charged by various banks through ATM services will also increase since banks are using the fee as an incentive to install more number of ATM machines. While all the above reasons have played their role in the decision to some extent the game clincher has been Reserve Bank of India’s long term plan to promote the use of e-transfers and cashless transactions as much as possible to avoid the use of any black money in the system. The rise in ATM transaction fee is largely seen by financial experts as a sum culmination of all of the above factors.

Tips to bypass ATM Usage Limit: 

Since the new RBI rules on ATM transaction limits are likely to affect a vast majority of people, here are some tips individual account holders can use to avoid the fee hike.
1. Avoid cash transactions whenever possible:  If you are one of those individuals using cash transactions for every purchase and other financial transactions, it is time to explore other ways. The use of electronic funds transfer, credit and debit cards, cheques and demand drafts must be explored for financial transactions than using cash all the time.
2. Change the habit of withdrawing smaller amounts:  With an increase in the ATM transaction fee make sure you avoid withdrawing small multiple amounts.
3. Visit bank branch for cash withdrawals: If withdrawing large amount of cash, you are better off visiting the bank branch rather than the ATM. Visiting the bank branch may be slightly inconvenient,  but it is a good idea to visit the bank branch to avoid the ATM transaction fee. Having said that, if this type of transaction happens once in a while, no harm in paying the charge versus waiting for your turn at the bank, if that is indeed the case.
4.Use online banking for statement: A lot of people use ATMs for checking their account statement or to get a print of recent transactions or mini statement.  Since ATM transactions count the number of visits even if it was for checking of account statement and not cash withdrawal, it is a good idea to use the internet banking facility for checking of account statement rather than the ATM machine.

A comparison of ATM usage charges: 

For people living in metropolitan cities including Mumbai, Delhi, Bengaluru, Chennai, Hyderabad and Kolkata:

Bank	Transaction Type	Transaction Limit
Same Bank	• Cash Withdrawal	5 free transactions per month. Additional transaction will be charged at Rs. 20 per transaction.
	• Balance Enquiry
	• Change of PIN
	• Mini Statement
Different Bank	• Cash Withdrawal	3 free transactions per month. Additional transaction will be charged at Rs. 20 per transaction.
	• Balance Enquiry
	• Change of PIN
	• Mini Statement

For people living in non metropolitan cities, smaller towns and holders of zero balance and other no-frills accounts:

Bank	Transaction Type	Transaction Limit
Same Bank	• Cash Withdrawal	5 free transactions per month.Rs. 20 is applicable for each cash withdrawal and Rs 9 for non-cash transactions.
	• Balance Enquiry
	• Change of PIN
	• Mini Statement
Different Bank	• Cash Withdrawal	5 free transactions per month. Rs. 20 is applicable for each cash withdrawal and Rs 9 for non-cash transactions.charged at Rs. 20 per transaction.
	• Balance Enquiry
	• Change of PIN
	• Mini Statement

How to Maximize your Home Loan Eligibility

All about Maternity Leave

According to Maternity Benefit Act, 1961 you're entitled to maternity benefits at the rate of your average daily wage for the period of your absence, for a maximum period of 12 weeks (6 weeks before delivery and 6 weeks after). You can only claim this compensation though if you have worked at least 80 days for your employer in the last 12 months.  The amount of maternity benefit for the period preceding the  date of her expected delivery shall be paid in advance by the employer  to the woman on production of such proof as may be prescribed that the  woman is pregnant, and the amount due for the subsequent period shall  be paid by the employer to the woman within forty-eight hours of  production of such proof as may be prescribed that the woman has been  delivered of a child.

The woman employee must give the notice of her absent from her duty prior six weeks of her pregnancy. Any woman who has not given the notice when she was pregnant
 may give such notice as soon as possible after the delivery also.

Notice to emplyer about the pregnancy

The failure to give notice under this section shall not disentitle a woman to maternity benefit or any other amount under this Act if she is otherwise entitled to such benefit or amount and in any such case an Inspector may either of his own motion or on an application made to him by the woman, order the payment of such benefit or amount within such period as may be specified in the order.

Payment of maternity benefit in case of death of the employee

Payment of maternity benefit in case of death of a woman who is entitled any amount under this Act the employer is liable for maternity benefit. the employer shall pay such benefit or amount to the person nominated by the woman in the notice given before to her delivery OR er legal representative.

Leave for miscarriage

Under miscarriage(expulsion of the contents of a pregnant uterus at any period after the twenty-sixth week of pregnancy) woman shall on production of such proof as may be prescribed be entitled to leave  with wages at the rate of maternity benefit for a period of six weeks immediately following the day of her miscarriage.

Leave for illness arising out of pregnancy, delivery, premature birth of child, or miscarriage

on production of such proof as may be prescribed, be entitled, in addition to the period of absence allowed to her under section 6, or, as the case may be, under section 9 of Maternity Benefit Act, 1961, to leave with wages at the rate of maternity benefit for a maximum period of one month.

Payment of medical bonus

Under section 8 of this ACT defines, Every woman entitled to maternity benefit under this Act shall also be entitled to receive from her employer a medical bonus of 1*[two hundred and fifty rupees], if no pre-natal confinement and post-natal care is provided for by the employer free of charge.

Nursing breaks

Under section 11 of this ACT defines,  Every woman delivered of a child who returns to duty after such delivery shall, in addition to the interval for rest allowed to her, be allowed in the course of her daily work two breaks of the prescribed duration for nursing the child until the child attains the age of fifteen months.

Dismissal during absence of pregnancy

Under section 12 of this ACT defines, When a woman absents herself from work in accordance with the provisions of this Act, it shall be unlawful for her employer to discharge or dismiss her during or on account of such absence or to give notice of discharge or dismissal on such a day that the notice will expire during such absence, or to vary to her disadvantage any of the conditions of her service.

The discharge or dismissal of a woman at any time during her pregnancy entitled to maternity benefit or medical bonus referred to in section 8, shall not have the effect of depriving her of the maternity benefit or medical bonus.

Provided that where the dismissal is for any prescribed gross misconduct, the employer may, by order in writing communicated to the woman, deprive her of the maternity benefit or medical bonus or both. If done so then within sixty days from the date on which order of such deprivation or discharge or dismissal is communicated to her, appeal to such authority as may be prescribed, and the decision of that authority on  such appeal, whether the woman should or should not be deprived of maternity benefit or medical bonus, or both, or discharged or dismissed shall be final.

Herewith a comparison across various nations.

Country	Duration Of Leave
Sweden	1 year
Croatia	2 year
Canada	52
UK	52
Denmark	44
Norway	22
Italy	20
Poland	20
UK	18
Australia	18
Venezuela	16
France	16
Spain	16
Netherlands	14
Germany	14
Japan	12
India	12
Maxico	12
South Africa	12
Pakistan	0

All about Paternity Leave

It is not compulsory, however to be considered as an employer of choice it is recommended. Paternity Leave, CCS (Leave) Rules, Rule 43-A applies to Married Government staff only. This defies  A Married male Government staff (including an apprentice) with less than two surviving children, may be granted Paternity Leave  by an authority competent to  grant leave for a period of 15 days, during the confinement of his wife for childbirth, i.e., up to 15 days before, or up to six months from the date of delivery of the child.

(1). During such period of 15 days, he shall be paid leave salary equal to the pay drawn immediately before proceeding on leave.

(2). The paternity Leave may be combined with leave of any other kind.

(3). The paternity leave shall not be debited against the leave account.

(4). If Paternity Leave is not availed of within the period specified in sub-rule (1), such leave shall be treated as lapsed.

A male member of the Service (including a probationer) with less than two surviving children, on valid adoption of a child below the age of one year, may be granted Paternity Leave by the competent authority for a period of 15 days, within a period of six months from the date of such adoption.

* CCS - Central Civil Services

You should know all about Gratuity Act, 1972 (India)

What is it?

Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company. Gratuity is a defined benefit plan and is one of the many retirement benefits offered by the employer to the employee upon leaving his job. An employee may leave his job for various reasons, such as - retirement/superannuation, for a better job elsewhere, on being retrenched or by way of voluntary retirement.

Payment of Gratuity Act, 1972 provides for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. The Payment of Gratuity Act is administered by the Central Government in establishments under its control, establishments having branches in more than one State, major ports, mines, oil fields and the railways and by the State governments and Union Territory administrations in all other cases.

The employer may pay the gratuity proceeds from his current revenue. They may set up a gratuity fund as a part of their financial planning. Many insurance companies have designed special schemes which relate to gratuity.

Eligibility

As per Sec 10 (10) of Income Tax Act, gratuity is paid when an employee completes 5 or more years of full time service with the employer(minimum 240 days a year). In other word if an employee at least completed 4 years and 240 days of his employment with the employer then he/she is eligible for the gratuity.

How much your gratuity amount?

The amount you get as gratuity depends on the number of years you have served and the last drawn monthly salary. Roughly, you get half a month’s Basic and DA for every completed year of service. Here’s the formula to calculate gratuity: (Number of years of service) * (Last drawn monthly Basic and DA) *15/26. So, if you have served 30 years and draw monthly Basic and DA of Rs. 20,000 when you leave the job, you get gratuity of Rs. 3,46,154 calculated as (30 * 20,000 *15/26). Your employer can choose to pay you more but the maximum amount of gratuity according to the Act cannot exceed Rs. 10 lakh. Amount paid above this will be in the nature of ex-gratia — something voluntary and not mandated according to law.

If you serve more than six months in the last year of employment, it is considered as a full year of service. For instance, if your tenure is 30 years and 7 months, the years of service for gratuity calculation will be rounded off to 31. But if you serve 30 years and 5 or 6 months, then the number of years of service will be considered as 30. For your convenience I had given a link below to calculate your gratuity.

Waiving the rule

Going by the book, gratuity is payable only if you have been with the employer for five years or more. But this rule is waived if an employee dies or is disabled. In such cases, gratuity is paid to the nominees or to the employee, even if the tenure is less than 5 years.

Even employees not covered under the Payment of Gratuity Act are entitled to gratuity. But in such cases, the formula for gratuity calculation differs. It is computed as the (number of years of service) * (average monthly salary in the last 10 months of employment) * (15/30). This computation makes the gratuity amount lesser than that under the Act. For instance, in the above example, an employee not covered by the Act will be entitled to Rs. 3,00,000 as gratuity, calculated as (30 * 20,000 * 15/30). This is Rs. 46,154 lower than employees covered under the Act are entitled to. Another difference is that only fully completed years of service are considered in the calculations, and partial service in the last year, even if it in excess of six months, is ignored. For instance, service of 30 years and 7 months, will be considered as 30 years and not 31 years.


Another positive is the favourable tax treatment that gratuity receipt enjoys. Tax treatment

If you are a government employee, then the entire amount you get is exempt from tax. If you are not a government employee but are covered under the Act, you get tax deduction for an amount which is the lower of the following:

a) Actual gratuity received
b) 15 days Basic and DA for each completed year of service (according to calculations in the example above)
c) Rs. 10 lakh

Say, in the instance above, your employer paid you gratuity of Rs. 5,00,000, which is more than the Rs. 3,46,154 actually payable under the law. You will enjoy tax deduction on Rs. 3,46,154 and the surplus Rs. 1,53,846 will be subject to tax. Note that the total tax deduction on gratuity amounts received, including those from previous employers in earlier years, cannot exceed Rs. 10 lakh.

Employees not covered under the Payment of Gratuity Act are also entitled to tax deduction on the amount they receive. The deduction rules are similar to those applicable for employees covered by the Act.

Here is the Gratuity Calculator to calculate your gratuity receivable.

Write to us if you found the topic is useful. It encourages to grow and do more for you.

What is EMI and how is it computed?

EMI is an oft repeated term that is associated with any loan taken. Let us understand how EMI works and what are the different aspects associated with EMI. TheEMI facility helps the borrower plan his budget. The EMI is calculated taking into account the loan amount, the time frame for repaying the loan and the interest rate on the borrowed sum.

An equated monthly installment (EMI) is the amount of money that is paid back to the lender on a monthly basis. It is essentially made up of two parts, the principal amount and the interest on the principal amount divided across each month in the loan tenure. The EMI is always paid up to the bank or lender on a fixed date each month until the total amount due is paid up during the tenure.

Now, you might assume that the equal parts of the principal and interest is repaid to the financial institution every month, however this not the case. During the initial years the interest component repaid is higher and during the latter years of repayment the principal component is higher. So, if you think you have paid half of the amount borrowed from the bank in 5 years in a 10 year loan tenure, that would not be the case. You would probably have reduced the total interest component due considerably and would have only repaid the interest component.

Here is a simple example that explains how the repayment of your EMI reduces your loan amount during repayment period leading up to the end of the loan tenure.

Here the loan amount is 100000, which is lent at a interest rate of 12% with a loan tenure of 12 months.

The monthly EMI is calculated at the annualized rate of 12% and amounts to Rs.8,885 per month with the total interest component amounting to Rs.6619.

You will notice that the Interest repaid decreases with each passing month and the principal repaid increases with each passing month. This means that with a larger loan amount of say 5 L with a longer tenure of 20 years, the interest component will be the greater portion of the EMI, which will reduce leading up to the loan tenure, while the reverse is true for the principal component.

Amortization Table

Month no.	Outstanding amount	Interest paid this month	Principal paid this month	EMI Payment for this month
1	100,000	1,000	7,885	8,885
2	92,115	921	7,964	8,885
3	84,151	842	8,043	8,885
4	76,108	761	8,124	8,885
5	67,984	680	8,205	8,885
6	59,779	598	8,287	8,885
7	51,492	515	8,370	8,885
8	43,122	431	8,454	8,885
9	34,668	347	8,538	8,885
10	26,130	261	8,624	8,885
11	17,507	175	8,710	8,885
12	8,797	88	8,797	8,885

Claim process for your health insurance policy!

A health insurance provides you protection against expensive treatment costs. It guards you against paying the full costs of medical services when you’re injured or sick. It not only relieves you from financial distress but also gives you confidence to fight those odds in life. With your health insurance, you can afford the medication cost in your desired hospital and need not compromise on the quality of treatment to save some cash.

To make insurance experience hassle-free, insurance companies are providing world-class services to their customers. This include handling claims processing professionally and compassionately. Although your insurance company sells an insurance plan to you, but when you apply for claims, they are either processed by their in-house team or are outsourced to “Third Party Administrator (TPA)”. TPA is the organisation or institution authorized by IRDA and engaged by the insurance company for a fee, for providing policy and claims services to the insured person for an insurable event.

Health Claims can be obtained mainly in two ways:
    a) Cashless Claim

    b) Reimbursement Claim

Cashless Claim with Network Hospital:

Process for availing Cashless Claim (for planned hospitalization):

There are times when you plan your hospitalization in advance, especially when you know about the occurrence of an event like maternity, surgery etc. In those situations, you might prefer treatment in a hospital of your choice where you can also avail cashless facility through your health insurance plan. Follow the below mentioned process for hassle free Health Insurance Claim during planned hospitalization:

Step 1: Approach Network Hospital of your choice for Cashless Treatment

Step 2: Contact the Hospital counter that deals in insurance requests, at least 3-4 days prior to the date of hospitalization. Produce your health insurance card to identify yourself as the beneficiary for cashless service.

Step 3: The hospital, after verifying customer details, sends request to insurance company or TPA. Coordinate with network hospital to forward pre-authorization request (by fax) to insurance provider/Third Party Administrator (TPA).

Step 4: Insurance company/TPA reviews your request and authorizes cashless claim services as per the policy benefits and its terms & conditions.

Step 5: TPA sends the response to the hospital. Your claim request may be approved or denied depending on your policy T&C. The time taken for processing and approving cashless claims varies from 1 hour to 1 day (depending on the insurance provider).

Step 6: (i) If your claim is approved, get admitted to hospital without any deposits and avail cashless services as per your plan. On discharge, verify the hospital bills for accuracy. Any amount over pre-authorized limit to be paid by you or your family members at the time of discharge.

(ii) If your claim is rejected due do some reason, proceed with the usual hospitalization process as a cash patient i.e. pay all your bills and later apply for reimbursement claim with your insurance provider.

Note: Denial of “Cashless Facility” is not denial of treatment. You may continue with the treatment, pay for the services to the hospital, and later submit the claim for processing and reimbursement.

Cashless Claim Process for unplanned/emergency hospitalization:

An individual cannot always plan for his hospitalization in advance. There can be situation when you need life-saving emergency treatment immediately, for instance, in case of accident, unexpected illness etc. For those unexpected moments, keep your family members informed about your insurance details and below procedure for hassle-free claims processing:

Step 1: Get admitted to the hospital for emergency treatment

Step 2: Patient or his family members should approach the hospital counter with patient’s health insurance details (Health Insurance Card). This should ideally be done within 24 hours of getting admitted to the hospital. Family members can also contact the insurance provider or TPA directly for sharing health insurance details, in case of lack of assistance from the hospital.

Step 3: Patient’s family members to co-ordinate with hospital and TPA for arranging the pre-authorization request.

Step 4: TPA to process the request as per policy terms and conditions within defined time period (varies from 1 hour to 1 day).

Step 5: If the request is approved, proceed with cashless services at the hospital else family members need to settle the bills at the time of discharge.

Step 6: If claims were rejected, then proceed with the usual hospitalization process as a cash patient i.e. pay all your bills and later apply for reimbursement claim with your insurance provider.

Whenever you register a loss with claims team (TPA), be ready with the following information:

a) Contact details of insured,
b) Name of the Insured
c) Policy number
d) Date and time of problem
e) Nature of problem
f) Location of problem

If your claims are rejected for cashless services, you can still apply for reimbursement of your claims by submitting following documents.


Original Documents to be submitted:

a) “Claim form” duly filled and signed by the beneficiary i.e. the Insured
b) Hospitalization discharge slip/card/summary
c) Hospital bills with their payment receipts
d) Surgical summary (in case the Life Insured has undergone a surgery)
e) All supporting diagnostic reports and prescriptions
f) All Pharmacy receipts and corresponding prescriptions
g) Ambulance invoice, if applicable

Self-attested copies of following documents:

a) Health card or Policy document
b) ID proof of the insured

The documents mentioned are only indications. Based on the circumstances of the claim, the insurer may however, request additional documents.

Tip: It is always important to follow the right process. If your claims are rejected, always check the reason by calling up the customer care unit of your insurance provider or Third Party Administrator (TPA).

It is also important to know exclusions in your health insurance plan. The common exclusions, for which no payment is made by insurance companies are:

a) Occurrence of illness/hospitalization within 30 days of start of your policy may stop you from all the benefits. Once your policy starts, initial 30 days are considered as a cooling or waiting period. Accident, however, is an exception to this criterion.

b) Treatments received outside India are generally not covered by insurance providers in India. If you are planning for a treatment abroad, it is advisable to check your insurance plan well in advance.

c) Non-allopathic treatment, Cosmetic Surgery, HIV/AIDS, dental treatment (except due to accident), routine eye and ear treatment (cost of routine eye and ear examinations, cost of spectacles, laser surgery for correction of refractory errors, contact lenses, hearing aids, dentures and artificial teeth) etc. are some of the exclusions that most insurance companies do not pay for.

d) Any Pre-existing disease prior to the commencement of your health insurance plan is not covered in the first 2-4 years of the policy depending on your age and the nature of the policy.

Reimbursement Process for Non-Network Hospital:

It may be possible that the hospital that you picked for your treatment or when you were admitted in an emergency is not covered under list of network hospitals of your insurance provider. In that case, you can follow the below mentioned process to avoid chaos at the last moment.

Reimbursement of claims in case of planned hospitalization:

Step 1: Approach the non-network hospital of your choice and inform your insurance provider/TPA at least 3-4 days in advance i.e. before getting hospitalized

Step 2: Get admitted and pay all your bills as a cash customer.

Step 3: Within 7 days of discharge, fill complete details in your claim form and submit it along with other supporting documents (indicative document list mentioned above) to your insurance provider/TPA

Step 4: Your insurance provider/TPA will verify all the documents and settle your claim within 15 days to 1 month of request.

Reimbursement of claims in case of unplanned/emergency hospitalization:

Step 1: Get admitted to the hospital for emergency treatment

Step 2: Patient or his family members should inform the insurance provider/ TPA about insured patient’s hospitalization and share his/her health insurance details (Health Insurance Card). This should ideally be done within 24 hours of getting admitted to the hospital.

Step 3: Pay all your hospital bills at the time of discharge

Step 4: Within 7 days of discharge, fill complete details in your claim form and submit it along with other supporting documents (indicative document list mentioned above) to your insurance provider/TPA

Step 5: Your insurance provider/TPA will verify all the documents and settle your claim within 15 days to 1 month of request.

Tips for faster Claim Settlement:

a) Intimate your insurance provider/TPA immediately (as early as possible) about hospitalization
b) Always repay your insurance premium in time (on/before due date)

c) Submit complete documentation and correct information to your insurance provider

Also read my post Claiming health insurance from multiple insurers!