branch banking. unit vs. branch banking most countries have only a few large banks, each banks with...

Branch Banking

Unit vs. Branch Banking

Most countries have only a few large banks, each banks with many branches located throughout the nation. Other countries, however, have distinct and separate banks throughout the country.

This is because some countries only allow unit banking – which is a system that permits each bank to have only a single geographic location; a prohibition against branch banking.

Branch Banking – as its name suggests, is one of two or more banking offices owned and operated by a single banking corporation.

What is a Deposit? Deposit – is money placed in a bank for

safekeeping or to earn interest and to be used according to banking practice. Deposits are the lifeblood of a bank.

A deposit is a contract between savers (creditors) and the bank (debtor), thus giving rise to a debtor-creditor relationship.

Note: Bank deposits constitute one of the most influential factors in the whole financial system. They are not only the largest element of money stock, but at the same time form an important source of investment funds.

Why Banks Accept Deposits?

1. Banks are businesses – they must be operated like any other businesses (strive to make their business profitable).

2. A major portion of the bank’s income comes from lending, and to be able to do so, they must accept deposits.

3. Since profits is a pre-requisite to survival, banks must engage in the generation of income.

Note: Deposits constitute the bulk of the liabilities of a bank.

Types of Deposit1. As to Source

a. Private Deposits – made by private individuals and businesses.b. Public deposits – made by the government (local or national).

2. As to the Way They are Createda. Direct or Primary Deposits – come from: (1) Households (2) Businesses, and (3) Local/national gov’t

Note: Direct deposits are deposited over-the-counter by depositors. They are called primary because they arise at the discretion of customers and the bank must place a cash reserves behind these deposits. Direct deposits do not increase money in circulation

Types of Deposit

Cont’d. (Types of Deposit)3. Method of withdrawal

a. Checkable Deposits – customers are allowed to write checks or other orders to pay on demand for purchases of goods/services; also called demand deposits (withdrawable on demand) or current accounts (simultaneous deposit/ withdrawals).b. Nontransaction Deposits – can not be withdrawn by demand or checks but may be withdrawn over-the-counter, ex. Savings or Time Deposit Accounts.

Forms of Deposits

1. Cash (or cash items) 2. Checks issued by the bank3. Checks issued by other banks (a.k.a “Clearing

Items”). Note: If a check cannot be credit right away to a depositor’s account, this is referred to as “Items for Collection from Banks and Other Financial Institutions”.

4. Proceeds of loans and discounts5. Traveler’s checks6. Drafts7. Promissory Notes8. Money orders

Cash Items

Cash (or Cash Items) – are currencies and coins kept by banks. Currency can either be referred to a particular currency, ex. peso, coins and banknotes.

Cash items are for immediate credit to the account of the depositor (unlike checks which are subject for clearing) and withdrawable anytime.

Checks A Check – is a written order of a depositor to a

bank to pay a specified amount, from a demand account, either to himself or to a third person.

Checks may be drawn “on us” or drawn on other banks (known as Clearing Items). Checks are valid for 6 months only.

Manager’s Check (or Cashier’s Check) – are checks drawn by the bank against itself; guarantees payment to the receiver of the check

Checks

Parts of a Check:1. Place of issue2. Check number3. Date of issue4. Payee5. Amount6. Signature of the drawer/maker7. MICR – routing, account number

Checks Parties to a Check:

1. Drawee Bank – the primary party; the bank to whom the check was drawn.2. Drawer – the secondary party; the maker of the check against funds on deposit in the bank. The maker writes the various details including the amount, date, and a payee, and signs it, ordering his bank to pay a person or company the amount of money stated.3. Payee – the third party, the person or entity who endorses the check.

Note: Both maker and payee must be natural persons or legal entities.

Checks

Types of Checks:1. Order Check – the most common; payable only to the named payee or his endorsee; usually contains “Pay to the order of (name)”2. Bearer Check – payable to anyone who is in possession of the document; usually containing no payee or payable to either “Bearer” or “Cash”.3. Counter Check – bank check given to customers who have run out of checks or whose checks are not yet available; used for purposes of withdrawal.

Items for CollectionKinds of Items for Collection1. According to Destination

a. City Collections – payable locallyb. Country Collections – payable out-of-townc. Foreign Collections, Imports – payable outside the countryd. Foreign Collections, Exports – originating outside of the country

2. As to Type of Itema. Draftsb. Notes or acceptancesc. Real estate contracts or mortgagesd. Bonds and couponse. Stock certificates

Traveler’s Checks – are issued by banks in booklet form and usable only if countersigned by the traveler.

Conversely, TCs are checks not drawn on a particular bank, but are payable anywhere throughout the world.

They are used extensively in foreign travels not only because of the convenience they afford to their holders but also because of their safety.

Traveler's Checks

Bank Drafts A Bank Draft – is a type of check drawn by

one bank upon another bank.A type of “Order to Pay” instrument

endorsed in the same way as checks and deposited the same way.

Drafts drawn by a depositor or by another person are handled as a collection item and as such are not credited until paid.

Negotiable Instrument, PN and B/E, Distinguished

A Negotiable Instrument – is a specialized type of contract for the payment of money that is unconditional and capable of transfer by negotiation .2 Classes:1. Promissory Note - written promise by the maker to pay money to the payee. 2. Bill of Exchange – is a "draft" or a written order by the drawer to the drawee to pay money to the payee.

What is a “Holder in Due Course”?

It is often convenient to use cash as payment in certain transactions (e.g., those involving large sums of money), but ordinary promises to pay are unsuitable as a substitute for cash because contract defenses may apply.

A Holder in Due Course (HDC) – is a person who takes a negotiable instrument, such as a PN, for value without knowledge of any apparent defect in the instrument nor any notice of dishonor.

Status as a "holder in due course" is an affirmative defense against all legal claims the debtor may have against the original creditor.

What is a “Holder in Due Course”?

Example: A consumer purchases a car on an

installment plan from a car dealer. The credit transaction would be secured by a PN, a chattel mortgage, deed of trust, or other contract (i.e., retaining "title" by retailer and permitting it to repossess the car if the consumer does not make payment according to the installment sales terms).

The retailer may then sell the note and related documents to a bank or other finance company. The retailer would assert that it is an HDC and therefore, not responsible for any defects in the car or for any misrepresentations about it that the retailer made to the consumer.

Money Order

A Money Order – is a document purchased by a party who desires to transmit money.

Postal Money Order - is a check sold by a post office which “orders” the payment of money by its branch or affiliate at the location to which it is to be sent by the “payor”.

This is a more trusted method of payment than a personal check.

Merchants welcome the extra security of a pre-paid money order instead of a personal check, which can bounce.

The Checking Account A Checking Account – is a service provided by banks

which allows individuals and businesses to deposit money and withdraw funds from their accounts.

Since deposits are withdrawable upon demand through the use of checks, they are invariably termed as checking accounts.

The terms of a checking account may vary from bank to bank, but in general a checking account holder can use personal checks in place of cash to pay debts.

Virtually every bank offers some form of checking account services. Some require a minimal initial deposit, along with proof of identification and address.

Account holders have a supply of official checks of the bank.

The Checkbook A Checkbook – consists of pre-printed

bank checks, a registry for recording payments and deposits, and a protective sleeve with a pocket for receipts.

A checkbook is given after payment of a nominal amount (intended to cover the cost of printing and documentary stamps).

PD No. 783 – commercial banks now use MICR-encoded checks.

Checks Over Cash Checks can be written for convenient amounts,

adapts itself to the needs of the moment. It is more portable than currency. Economizes the use of money. More secure (in case of loss, the owner may

“stop payment” of the check). It serves as a voucher record. The returned cancelled checks serves as receipt

evidencing payment. Traceable (i.e., only rightful owners can cash it).

A typical checking account is handled through posting of deposits and withdrawals.

When a check is filled out correctly, the recipient treats it the same as cash.

The recipient after receiving a check either encash it over the counter or deposit it to his own bank account.

The recipient’s bank then send the check for clearing. Through a clearing house, the bank of the check owner receives the check and debits the check owner’s account.

If the account has insufficient funds, the check is then sent back to the clearing house (which in turn will sent it to the recipient’s bank).

This process continues for every check written against an individual checking account.

How Banks Handle Checking Account?

The PCHCIn the country, checks are being cleared by

the Philippine Clearing House Corporation (est. July 1977, RA No. 3591).

The Clearing RuleEvery clearing member needs to maintain an

account with PCHC. It’s the clearing member’s function to make

sure that the funds are available in his account with PCHC on the day of pay-in to meet the obligations.

In case of a pay-out, clearing member receives the amount on pay-out day.

Clearing of Checks

Opening of Checking Account

Who Can Open a Checking Account?– Anyone of majority age, irrespective

of sex and regardless of nationality can apply.

– Some requirements include identity of the applicant, references, type of business, if any, etc.

How Much is the Initial Deposit?– Banks impose a minimum initial

deposit and a maintaining balance (or sometimes, average balance) every month, or they will impose service charges for non-compliance.

Prohibited to Maintain Checking Accounts

BSP Circular No. 549 (December, 1976) – prohibits the following bank officers and employees KBs from maintaining checking accounts with the banking offices in which they are assigned:1. Officers and employees of the cash

department.2. Officers of banking offices other than the

main office (e.g., branches, extension offices, money shops, etc.)

3. Officers/employees who have direct/immediate responsibility in the handling of transactions and records pertaining to demand deposits.

Note: Included are spouses/children, business interests, of the officers/ employees covered by the prohibition.

Bank Statement A Bank Statement – is a detailed record of the

depositor’s checking account transactions with the bank during the month.

It gives the following information:

1. A statement of the balance at the beginning of the month.

2. Entries showing each deposit and withdrawal made during the month.

3. Service charges made by the bank4. The balance on hand at the end of the month.Note: With the statement, the bank likewise

sends the depositor his cancelled checks.

The depositor must reconcile it with his check stubs for his interest and advantage.

Check EndorsementsA Check Endorsement – refers to how the back of a check is written (or endorsed) upon by the person that receives the check. When receiving a check, there are many ways that it can be endorsed. Blank Endorsement: When the recipient of the

check signs their name on the back of the check. Once the check is signed, it becomes like cash and can be negotiated similarly.

Restrictive Endorsement: Specifies the way in which a check can be negotiated. The most common form of restrictive endorsement is "For Deposit Only," which makes a check unable to be cashed.

Check Frauds Check Washing – altering the face of the check.

Ex. An account holder writes out a check in the amount of, say P1,000. The recipient of the check uses techniques to alter the check so that the payable amount becomes P100,000.

Check Fraud Through Mail Theft – thieves intercept checks issued by a company to a vendor. The face value of the check is left intact but the recipient information is altered to allow the thief to deposit the check into account set up for the purpose of receiving the money.

A variation of this is to steal checks to produce counterfeit checks that can be made out for any amount. (Note: Forged checks accounts for a huge amount of check fraud today.)

The Savings Account

A Savings Account – is a thrift account bearing fixed interest rate (lowest, but customers can withdraw at will) but no specific maturity.

Savings banks and savings department of commercial banks accept deposits from people of average means.

Interest rates are regulated by a CB in order to eliminate the possibility of cut-throat competition among banks (at the same time enable them to make profits).

Savings account is evidenced by a passbook or ATM card.

Checking Account vs. Savings Account

Checking Account

Spendable money (by writing checks chargeable against the checking account).

Usually do not earn interest.

Savings Account Money can only

be spent by withdrawing funds from the bank in the form of cash (or MCs) or by transferring funds to checking accounts.

Earn interest.

Withdrawals Withdrawals – refers to taking the money out from

an account.

Withdrawal Rules:1. As much as possible, withdrawals should be

made by the depositor in person by filling out a withdrawal slip (with the passbook). Nonetheless, banks usually permit a person authorized by the depositor to make withdrawals on the depositor’s behalf.

2. There is no limit that a depositor can withdraw provided the amount does not exceed the balance outstanding to his credit (shown in the passbook).

3. The bank may require a pre-notice if withdrawals would be significant (amounts bigger than that kept in the bank).

Automatic Withdrawals Automatic Withdrawals – are automatic

transference of money from one account to another; i.e. from one's checking account to a company in payment of a bill (Automatic Bills Payments), or from one's checking account into one's savings (Automatic Transfer Arrangements).

Note: Automatic withdrawals (from checking to savings account) can be useful for savings, retirement, and investment purposes.

Passbooks Passbooks – are simple paperbooks that

include pages that are intended for use with simple accounting notations regarding a bank account.

Functions of Passbooks:1. It as an evidence of a contract between the depositor and the bank.

2. Serves as a miniature ledger of all the deposits and withdrawals made.

Loss of a Passbook

If the passbook is lost, the bank should be immediately notified (for the mutual protection of the bank and depositor).

The bank may request an affidavit of lost passbook from the depositor, after which the bank shall issue a duplicate passbook.

In some instances, banks require depositors to file an indemnity bond (to protect the bank from loss).

Time Deposits A “Certificate of Time Deposit” accompany time

deposits (as proof of deposit/ownership). This entails payment by the holder of a documentary stamp tax (DST).

Computing for the documentary stamp taxes in a CTD.Ex. If the regulation is P0.30 (DST) for every P200, how much is the docs. stamp tax of a P5,350 time deposit?

Answer: P5,400 ÷ 200 x 0.30 = P8.10Rounded-off to the nearest 200.

Deposit Substitute – (in addition to the earlier definition) shall mean an alternative form of obtaining funds from the “public”, other than deposits.

Done through the issuance, endorsement, or acceptance of debt instruments for the borrower's (i.e., the bank’s) own account, for the purpose of relending or purchasing of receivables and other obligations, or financing their own needs or the needs of their agents or dealers.

Note: The term “public” – means borrowing from 20 or more individual or corporate lenders at any one time.

Other Types of Accounts

Money Market Account – is an interest-earning savings account with limited transaction privileges; usually limited to six (6) transfers or withdrawals per month, with no more than three (3) transactions as checks written against the account.

The interest rate paid on a money market account is usually higher than that of a regular passbook savings rate.

Money market accounts also have a minimum balance requirement.

Other Types of Accounts

Other Types of Deposits

Dollar or Foreign Currency Deposits (CBP Circular No. 304 dtd. July 21, 1970) – was issued so banks could accept dollar deposits. Note: Dollar/foreign currency deposits may be withdrawn anytime provided no liens are attached to such deposits.

R.A. 6426 – Foreign Currency Deposit Act of the Phils. (April 1972) – not only for banks to deposit dollars but also other currencies; guarantees secrecy of deposits in foreign currencies and confiscation.

Dormant or Inactive Account

Dormant or Inactive Account – is when a savings or checking account showed no activity (other than posting interest) for some specific period.

In the country, a savings account shall be classified as dormant if it has no activity for 2 years, while checking account for 1 year.

Note: Dormant accounts after 10 years shall be escheated to the local government (such as the Bureau of Treasury).

How Banks Handle Dormant/Inactive Accounts?

Banks shall review all deposit ledgers and segregate accounts that fall under dormant accounts.

When an account becomes dormant, a short letter should be sent to the depositor encouraging him to use the account.

At the end of every quarter, all dormant accounts are segregated and placed under joint custody of two responsible officers/employees.

Entries to dormant accounts should be verified and approved by a designated officer. His initials should be placed next to the entry of the ledger sheet.

Service Charges on Dormant/Inactive Accounts

Banks may impose service/maintenance fees on dormant/inactive accounts subject to the following conditions:

1. The charge is imposed pursuant to an appropriate provision in the contract between the bank and the depositor.

2. There is a limit to the charge, say P200/month.

3. The period of inactivity before imposition of a charge shall be at least 2 years (for SA account) and 1 year (for CA account).

4. A notice shall be sent to the depositor at his last known address approximately 30 days in advance before any charge is levied.

Deposit insurance – is an insurance coverage to protect/cover depositors’ deposits to banks.

Depositors, if they heard of the slightest hint of trouble, “ran” to the bank to withdraw all of their money. Rumors make people uneasy about the security of their money in the bank.

“Bank runs” have often than not, lead to failures of many banks and huge losses of savings for many people.

Other banking insurance – were especially designed to cover deposits in cases of burglaries, robberies, vandalism, etc.

Deposit Insurance

The PDIC For the protection of depositors in the

country, the Phil. Deposit Insurance Corp. (RA No. 3591) was established to insure deposit liabilities of banks. Originally set at P10 thousand, now it is P250 thousand.

Note: While insurance protects bank deposits, legal reserves are considered as a safety fund in meeting the normal demands of the depositors and tool of monetary policy to regulate money supply.

How Depositors Claim from PDIC?

For Depositors of Insolvent or Closed Banks – PDIC shall pay by (1) cash, or (2) a

transfer bank deposits (in another insured bank).

PDIC may require proof of claims or, if needed, a final examination of a court of competent jurisdiction before paying such claims.

Primary Reserve – first line of defense for withdrawals.

Primary reserves are as follows:1. Vault cash

2. Deposits with other banks

3. Cash and other cash items outstanding for payment

4. Deposits with CB

Note: These accounts will not generate much income for which reason they are kept to the minimum enough to meet operational needs.

Deposit Reserves

Secondary Reserve – assets which can be converted into cash; supplements the primary reserve consisting of time loans, mortgages, and bonds (all of which should mature at a relatively short periods of time).

Secondary reserves are as follows:1. Self-liquidating, short-term working capital loans.

2. Bankers’ Acceptances

3. Commercial papers

4. Government securitiesNote: These accounts should mature at a relatively short period of time and paid at maturity. Loans should not be extended. Securities’ marketability/market value must be strong

Deposit Reserves

The Required Reserve Ratio – is the percentage of total reserves that the CB requires banks to hold in the form of vault cash, deposits with CB, and invested in GS.• The required reserve ration is broken

down to statutory and liquidity reserve. Explanation. A 22% reserve

requirement may be composed of 12% statutory (or regular) reserve and 10% liquidity reserve. – Statutory Reserve – are kept in bank

vaults and deposits with other Banks/CB.

– Liquidity Reserve – are invested in GS

The Required Reserve Ratio

Example:

1. BSP imposed a 22% reserve requirement (to all banks) which is composed of the following:1. Statutory reserve: 12%2. Liquidity reserve: 10%

2. The legal reserve (i.e., the amount that should be deposited with BSP) is 25% of the reserve requirement.

Computing the Reserve Requirements

Note: The compliance to this requirement is done on a per week basis using banks’ weekly ADB as basis.

1. Simulate deposits and withdrawals (from Feb. 1 to 28). Compute the total deposits (cash and checks) and withdrawals made (ADB) on a per week basis.

ADB 1st Wk Feb 1–7P10,000,000 + 500,000 – 200,000 = P10,300,000

ADB 2nd Wk Feb 8–14 P10,300,000 + 340,000 – 800,000 = P9,840,000

ADB 3rd Wk Feb 15–21 P9,840,000 + 716,000 – 358,000 = P10,198,000

ADB4th Wk Feb 22–28 P10,198,000 + 777,000 – 428,000 = P10,547,000

2. Compute the Average Daily Balance (ADB) for the month.

ADBFeb = (ADB1 + ADB2 + ADB3 + ADB4)/n = (10,300,000+ 9,840,000 + 10,198,000+

10,547,000) ÷ 4 = P10,221,250


3. Compute the reserve requirement on a per week basis using the following templates:

RR1st Wk = ADB1st Wk (P10,300,000)*22% P2,266,000

Breakdown:

1. Statutory Reserves:

ADB1st Wk (P10,300,000)*12% 1,236,000

a. BSP Deposit RR1st Wk

(2,266,000)*25%P566,500

b. Other Bank Dep

(Stat. Res.–BSP Dep.)*50%

334,750

c. Cash Vault (Stat. Res.–BSP Dep.)*50%

334,750

2. Liquidity Reserves:

ADB1st Wk (P10,300,000)*10% 1,030,000

a. GS Liq. Res. * 100% 1,030,000


1st Week

RR2nd Wk = ADB2nd Wk (P9,840,000)*22% P2,164,800

Breakdown:


ADB2nd Wk (P9,840,000)*12% 1,180,800

a. BSP Deposit RR2nd Wk

(2,164,800)*25%P541,200

b. Other Bank Dep


319,800


319,800


ADB2nd Wk (P9,840,000)*10% 984,000

a. GS Liq. Res. * 100% 984,000


2nd Week

RR3rd Wk = ADB3rd Wk (P10,198,000)*22% P2,243,560

Breakdown:


ADB3rd Wk (P10,198,000)*12% 1,223,760

a. BSP Deposit RR3rd Wk

(2,243,560)*25%P560,890

b. Other Bank Dep


331,435


331,435


ADB3rd Wk (P10,198,000)*10% 1,019,800

a. GS Liq. Res. * 100% 1,019,800


3rd Week

RR4th Wk = ADB4th Wk (P10,547,000)*22% P2,320,340

Breakdown:


ADB4th Wk (P10,547,000)*12% 1,265,640

a. BSP Deposit RR4th Wk

(2,320,340)*25%P580,085

b. Other Bank Dep


342,778


342,777


ADB4th Wk (P10,547,000)*10% 1,054,700

a. GS Liq. Res. * 100% 1,054,700


4th Week

Available ReservesCash on Hand 332 Investment Bonds 1,022 Due from BSP 562 Due from Other Banks 333

Total Available Reserves 2,249

Required Reserves on DepositsDemand Deposits 2,555 Savings Deposits 5,111 Time Deposits 1,500 Others 1,055

Total Deposit Liabilities 10,221

Total Req. Res. (i.e., 22%) on Dep. Liab. 2,249

Excess or (Deficiency) Over Requirement 0

STATEMENT OF AVAILABLE ANDREQUIRED RESERVES

(Million Peso)

Excess and Prudential Reserve

An Excess Reserve – are reserves that a bank (or depository institution) or the whole banking system holds above required reserves.

Ex. If the required reserve of Bank X is P5 million but its actual reserve is P8 million the excess reserve is P3 million (P8,000,000 – P5,000,000). A Prudential Reserve – are reserves that a bank (or depository institution) voluntarily hold above required reserves in order to remain liquid to prepare for troubled-times.

The Signature Card After the necessary information and

verification has been made, the applicant is required to accomplish a special new account form.

Two signature cards are used – wherein the applicant is required to affix his manual signature (called specimen signature) twice or thrice on these cards.

These cards are kept to be used to check and verify the signature of the depositor appearing on the check to insure correct payment.

The Need for References There are 2 reasons why references are

needed:1. It is customary for banks to satisfy

themselves as to integrity, reputation, and financial standing of their customers. Fraudsters can use checks to defraud the bank and the unsuspecting public.

2. Banks which were lax in observing this requirement have contributed to their financial loss. References have become subjects of verification and scrutiny (to insure genuineness and trust).

Deposit Slip Deposit Slips – are used to cover

deposits made by depositors. It must show an itemization of the

funds being deposited whether cash or in the form of checks.

For checks, the name of the bank must be indicated under the column for that purpose, the check number, and amount.

The Ledger The Ledger – is the sheet used for the

bank’s record of customer’s transactions and balances.

Forms used by banks may vary but the ledger’s contents are more or less the same.

At the bottom of the ledger or ledger card, as sometimes it is called, are 2 lines intended for the manual signatures of the depositor (for proving or proof).

Channels Through which Deposits are Received

1. Receiving tellers (deposits left by bank customers in person or through their authorized representative)

2. Mail and special messengers3. Telegraphic transfers4. Bank departments

Receiving Deposits Outside Bank Premises

Banks may be authorized to receive deposits outside their bank premises, subject to the following conditions:1. The proposed area should be clearly

defined.2. It should only be confined within the

locality.3. Banks should institute and maintain

adequate safeguards.4. A CB should certify that the practice is

sound and that funds are safe.

Kinds of Account There are 3 kinds of account:

1. Individual or Joint Account An account in the name of one

person is the simplest of individual accounts – only that depositor has the right to use the funds.

In a survivorship account, 2 or more persons are authorized to withdraw funds. Checks with the signature of any of them may be valid. In the case of death, the account becomes the property of the surviving person/s.

Joint account – an account under the name of two (2) or more persons, the signatures of all required for withdrawal of funds.– This type of account is termed two-name account, a three-name account, and so on, depending upon the number of names which are necessary to effect withdrawals of funds.

2. Partnership account Requires the submission of the

Partnership Agreement including the authority of the partners for withdrawal of funds.

Kinds of Account

3. Corporation account Requires the submission of the

company’s board resolution naming the corporation’s representatives to deposit/withdraw company funds.

The bank shall keep a specimen of signatures of officials authorized to make withdrawals on behalf of the company.

All checks should be endorsed with the corporate name followed by the name of the authorized representative.

Kinds of Account

Principal Duties of a Bank Teller

Receiving Teller:1. Verifies Cash Amount

(Proving): A sound and practical procedure while the depositor is at the bank; cases when the actual amount counted is less than what appears in the deposit slip.

2. Watches Bogus Bills and Counterfeit Notes: The teller protects the interest of the bank, her interest, and the economy (elimination of what may amount to economic sabotage).(Note: Receiving tellers are sometimes responsible to separate mutilated or generally old paper money.)


3. Ensures Particualr Items are Classified as Cash Items – basic knowledge distinguishing cash items and those that are not.

4. Determines Proper Endorsements – checks should be properly endorsed (and whether they are post-dated or ante-dated). Endorsements identify the customer and establish his responsibility for the item in case of non-payment when presented by the bank.

5. Verifies Deposit Total – cash and checks deposited must tally with the total amount as written in the deposit slip by the depositor.

6. Acknowledges Deposits Receipts – this is done through the use of a bank form. Confirmation of the amount indicated on the deposit slip is made by a validating officer.


Paying Teller:1. Encashments/Withdrawals:

Take charge of encashments (for checking accounts) and cash withdrawals (savings and other accounts).

2. Payments: Paying tellers pay a number of items internally.a. Cash advancesb. Request for payments

3. Assessments/Reports/Call-Back: Determines the amount of cash, necessary for the day, to be taken from the vault. The coins are placed in separate compartments while the paper money is put up in bundles with a paper strap. A teller must accomplish a teller’s report and call-back his transactions for the day.

Things Considered by Paying Tellers

1. Checks encashed must have sufficient funds or balances.

2. Checks must not be altered.3. Authentic and genuine signature.4. Words and figure must tally.5. Checks must neither be post-dated or

stale-dated.6. There must be no attachment on the

check.7. Stop-payment orders (SPOs).8. Checks should be properly endorsed.9. Proper identification.10.Cross checks.

The Teller’s Cash ProofAt the end of every banking day, the teller

counts and balances her cash for the day (after all deposits have been proved).

First, the teller takes the amount of cash with which she starts the day. She adds the cash received from the vault and adds the cash received over-the-counter.

From this amount, she subtracts the total of cash items paid.

Finally, she counts her cash and compares the figures shown on her cash proof.

If balanced, she delivers her cash to the cashier which shall be placed in the vault for the night.

Some banks employ business machines which list individual totals for each classification, and provide grand totals.

Note: A proof department sometimes are established for this purpose. With a proof, clearing and transit items are instruments against which the bank has either advanced cash or for which the customer’s account has been credited.

The Teller’s Cash Proof

branch banking. unit vs. branch banking most countries have only a few large banks, each banks with...

Documents

bank deposits

direct deposits

private deposits

primary deposits

public deposits

nontransaction deposits

demand deposits withdrawable

banks income