Following large scale computerization and extensive use of sophisticated software in Core Banking Solutions and various complicated calculations, certain simple arithmetic calculations are not taken care off.
For example, the pension payment regulations stipulate that the reduction in the pension should be done only from the date of credit of the commuted amount to the pensioner’s account and not from the first day of the month. But in practice, none of the banks follow this procedure.
Suppose, if a pensioner is sanctioned a monthly pension of Rs.10,000 and he is paid a commuted value of Rs.5,00,000 on the 15th of Jan 2011 with a monthly commutation of Rs.5000 (i.e. 50% of his monthly pension) he should be paid full pension from 01.01.2011 to 14.01.2011 and reduced pension from 15.01.2011 to 31.01.2011 for that month. But in practice, the banks does not follow this regulations, they simply pay the reduced pension for the whole month.
Look at the monetary loss to the pensioner for that month:-
Full pension for 14 days (10000/31) x14 .. .. Rs.4,517.00
Reduced pension for 17 days (5000/31) x17 .. .. Rs.2,742.00
Total pension to be paid for the month .. .. Rs.7,259.00
If reduced pension is paid for the whole month .. Rs.5,000.00
Therefore total loss to the pensioner for that month .. Rs.2,259.00
The pensioner loses a sum of Rs.2,259 in Jan 2011 pension. This is a manually induced error ignoring the laid down procedure. This is happening in all banks. Neither the pensioner nor the banks is aware of this error. The correct procedure is simple and it is to be followed during the first payment of pension and commutation. I don’t think any advanced software programmed is used for this purpose by any banks. Recently we have come across this error in a number of pension payments of a leading bank with a most advanced centralized pension payment system.
SOURCE EX SERVICEMAN
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