What changed
The circular extends the exclusion of 'Put Through Date' from delayed period interest calculations to banks that had already paid penal interest between May 1, 2005 and December 31, 2006, allowing adjustment of excess payments against future claims. For outstation transactions under EASIEST, the permissible remittance period is increased from T+3 to T+5 working days, excluding put through date. Petty penal interest claims of Rs.500 or below are ignored from January 1, 2008, and the six quarters from April 1, 2005 to September 30, 2006 are exempted from penal interest due to OLTAS teething issues.
What it means for you
Banks that paid penal interest during the specified period can now get refunds or adjustments, reducing their financial burden. The extended remittance window for outstation EASIEST transactions gives banks more operational flexibility. Waiving petty claims and the OLTAS teething period exemption reduces compliance costs and historical disputes. These changes ease past penalties and streamline future remittance processes for PSBs.
What you must do
- Identify cases where penal interest was paid between May 1, 2005 and December 31, 2006 and adjust excess payments against future claims.
- Update internal systems to allow up to T+5 working days for outstation EASIEST remittances, excluding put through date.
- Ignore penal interest claims of Rs.500 or below from January 1, 2008 onwards and adjust records accordingly.
- Ensure branches do not levy penal interest for the OLTAS teething period (April 1, 2005 to September 30, 2006).
Who it affects
Public Sector Banks, State Bank of India and its Associates, Nationalised Banks, Jammu & Kashmir Bank Ltd., Branches handling government revenue remittances
What is the 'Put Through Date' and how does this circular affect banks that already paid penal interest?
The 'Put Through Date' is excluded from the time period for calculating delayed remittance interest. Previously, this benefit was only for banks that hadn't paid penal interest. Now, banks that paid penal interest between May 1, 2005 and December 31, 2006 can adjust the excess payment against future penal interest claims.
What is the new remittance time limit for outstation transactions under EASIEST?
The permissible period is increased from T+3 to T+5 working days, excluding the put through date. This applies only to outstation transactions, not e-payments, which have separate instructions.
Are there any exemptions from penal interest for past periods?
Yes, the six quarters from April 1, 2005 to September 30, 2006 are fully exempted from penal interest due to teething problems during OLTAS implementation. Also, petty claims of Rs.500 or below are ignored from January 1, 2008.