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Tuesday, August 4, 2020

What is Penal Interest?. How to Calculate?


Amounts defrauded from S.B. Accounts to Departmental Officials and not accounted for in the books of the Department.

58(1) After satisfying himself about the bonafides of the claim of the depositors in respect of defrauded amount, the Head of Circle/Regional Director/ Divisional Superintendent will approach CEPT Team to check whether defrauded amount can be restored in the accounts. In cases where CEPT approves restoration, the competent authority should issue sanction for the restoration of the defrauded amount with interest thereon up to the end of the year preceding the year in which the amount is restored to the account. The amount of interest to be restored to the account will be calculated by the Head Post Office and checked by the S.B. Control Organisation. In cases where restoration is not admissible, sanction will be issued for directly paying the defrauded amount to the claimant by Cheque. Accounts standing in CBS application should be closed in such cases in closure proceed paid to the depositors as per laid down rules.

Note :- The Head of Division(irrespective of status of the division) and Group 'A' Postmasters can sanction the claims upto Rs. 5000/- in each case regardless of the aspect of recovery of the loss subject to the condition that sanctioning authority has to ensure that there has not been any negligence on the part of the defrauded person in contributing to the fraud and also that settlement of claim will not cause any hindrance in concluding the enquiry, fixing responsibility and taking appropriate action against the officials at fault. These powers will be exercised personally by the Divisional Heads/Group 'A' Postmasters. Regional Directors are vested with powers to sanction claims without any limit. (DG Posts Letter NO. 8-5/2003-Inv(Pt) dated 5.6.2003)

(2)          Immediately on receipt of the sanction for restoration of amount, the Head Postmaster should credit the amount in the respective account (principal) and Interest should be credited by using HIARM menu by Supervisor SBCO. The net loss sustained by the department in respect of principal amount (arrived at after taking into consideration the deposits and withdrawals not accounted for by the departmental official) and interest thereon should be entered in the schedule of unclassified payment(UCP) by per contra entry as deposit (Total amount) in the list of transactions. Complete details of the charge should be given in the remarks field of the account and in column 3 of the schedule of unclassified payment to enable the Postal Accounts Office to classify the amounts properly.

(3)          When the amounts defrauded are to be recovered from the officials at fault, penal interest should be calculated in the manner prescribed in Rule 156(2) of the Central Government Compilation of General Financial rules, extract given below, on the amount outstanding from time to time for the actual number of days such amounts remain outside the custody of Government.

Rule 156 (2):- “A loan shall bear the interest for the day of payment but not for the day of repayment.  Interest for any period shorter than a complete half year shall be calculated as :-

Number of day x yearly rate of interest
365

unless any other method of calculation is prescribed in any particular case or class of cases.”

(4)          The penal interest will be recovered at the rate of 2 ½ % per annum (compound) over and above the rate of interest fixed from time to time for the various types of accounts and savings certificates for the period during which the amount was defrauded. The amount of penal interest will be calculated by the Head office and intimated to the punishing authority after check by the Control Organisation.

(5)          The interest may be recovered from the depositor/investor on the amount paid in excess for the actual period (total number of days) for which the amount excess paid is retained by him if the period is less than a complete half year. This will be done in the manner prescribed in sub para (3) above.

(6)          The normal rate of interest payable on each type of account or certificate and not the post-maturity interest rate will be applicable.

(7)          If the period is more than a year, the interest will be recovered at the compound rate of interest.

Note:- In case of recovery of interest from the members of the public to whom double or excess payment on account of discharge value of savings certificate or in any type of account due to negligence of the departmental officials and the amount over paid was retained by the depositor/investor for the considerable period till its refund at the instance of the department, the interest at normal rate only should be recovered from the depositor on the amount paid excess and for the period the amount was retained by him. The term “normal rate” means the rate of interest which was paid to the depositor/investor on his account/certificates, as the case may be. In case it is proved on enquiry that the member of the public defrauded the department by taking double payment deliberately, the desirability of instituting a criminal case may also be kept in view.

Fox Eg. SB scheme 
Normal Int rate = 4.0 %
Penal Int rate = 2.5 %
Total = 6.5 %

Sl No
Account No
Date of Suppression
Date of Credit
Defrauded
Amount
No. of Days
Normal Interest
Penal Interest
Total
 6.5 %
1
100000001
12-01-2019
22-08-2019
10000
223
562.08
152.74
714.82
2
do
31-01-2019
22-08-2019
5000
204
111.78
69.86
181.64
3
100000036
19-02-2019
31-08-2019
7500
194
159.45
99.66
259.11
4
do
25-02-2019
31-08-2019
15000
188
309.04
193.15
502.19
5
do
01-03-2019
31-08-2019
2000
184
40.33
25.21
65.33
 39500
1182.68
540.62
1723.30

Defrauded Amount
Rs. 39500
Total Interest ( Rounded off)
Rs    1723
Total Recovery
Rs  41223
** The penal interest will be recovered at the rate of 2 ½ % per annum (compound) over and above the rate of interest fixed from time to time for the various types of accounts and savings certificates for the period during which the amount was defrauded.


Source : SB Order 5/2018 (CBS Manual), Page No. 61, 62

//copy//-SAPOST

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