worldbanks.news

Function of Cash Department in Banks

What is “Cash” for a Bank?

—Cash is the most volatile and liquide Current Asset of Bank’s Balance Sheet and as such demands special attention of “Efficient Management”. Cash Department plays a paramount role in creating good perception among customers about the service quality of a Bank.

 

Function of Cash Department:

7 (Seven) Functions of Cash Department:

1)Receiving of cash.

2)Payment of cash.

3)Daily balancing of cash.

4)Scrutiny of cash.

5)Safe keeping of cash.

6)Cash remittance.

7)Receiving & disposal of mutilated notes.

 

Function of Cash Department

Receipt of Cash:

—Before receiving cash from depositors in Pay-in-Slip / Credit Voucher the concerned cash official(s) shall:

a)Verify / check the (a) Title of Account, (b) A/C Number, (c) Amount in Words and Figures, (d) Date, etc. written on Pay in Slip / Credit Vouchers with the records of computer program and shall satisfy on their correctness and genuineness.

b)Carefully check and Count the Currency Notes.

c)Write down denomination.

d)Affix Cash Received stamp.

e)Make entry of particulars of the Cash Received

f)Verify entries / Particulars of Pay-in-Slip / Credit Voucher with those of the Cash Receiving Register.

g)Keep Cash in the Drawer of Cash Counter under lock and Key (within Counter limit) during transaction hours.

 

Payment of Cash:

—While Paying Cash against debit instruments namely Cheques, Demand Drafts (DD), Pay Order (PO), Pay Slip (PS), SDR, FDR, etc. and also against other debit instruments as well as Cash Debit Vouchers, the following formalities have to observed:

a)Verify Genuineness & Authenticity of the instrument, make posting, passing & cancellation of the Cheques and, thereafter, count relevant cash and note down denominations there against on reverse/ back side of respective instruments/ vouchers.

b)Obtain 2nd signature of payee/ recipients on the back of the instruments, affixing stamp and cancellation of instruments.

c)Enter particulars of instruments/ Cheque in Cash payment register in serial order and write down that serial number in a red circle to be made on the face of the instruments.

d)And finally after completion of all above formalities the Cash official, upon satisfaction, shall pay/ handover cash against the instrument/ cheque to the payee/ Recipients.

However, paying cash official(s) shall hold all paid debit instrument(s) until cash is closed and handed over to Cash-in-charge at the close of business.

 

Parties of a Cheque:

+Drawer :The person who draws the cheque (depositor).

+Drawee :The drawer’s banker on whom the cheque has been drawn.

+Payee :The person who is entitled to receive the payment of a cheque.

 

Function of Cash Department

Cheque and Date ( The Banker Should Refuse the Following Cheques):

Apparent Tenor of Cheque:

1.Date of Cheque

2.Sum payable on the cheque both in words and figures.

3.Name of the payee.

4.The signature of the drawer in the cheque.

 

List of Insurance Limits & Perils:

+Insurance limits are for:

I.Cash at Safe.

II.Cash Counter.

III.Cash in Transit.

+Perils covered:

I.Fire

II.Burglary

III.RSD

IV.Hurricane, Earthquake, Civil War, etc.

V.Fraud or Dishonesty of Employees.

 

Know Your Notes:

a)Re-issue notes.

b)Non-issue notes.

c)Defective notes:

I.Altered note

II.Half note

III.Mismatched note

IV.Mutilated note.

V.Obliterated note.

d)Forged notes:

I.Note .of crude forgery

II.Note by photocopier & scanner.

 

 

Function of Cash Department

Note Security & Forge Detection:

Note is printed associated with:

i.Special paper.

ii.Overt security.

iii.Covert security.

Fake note is detected by

i.Fake note detector.

ii.U.V light.

iii.Magnifying glass.

 

Security Features of Notes:

+Water mark & electro type water mark.

+Holographic window type security thread.

+Optical Variable Ink (OVI).

+Dots for blinds.

+Year of printing.

+Intaglio print.

+Micro print ( intaglio & offset)

 

Balancing of Cash: 

—Balancing of Cash Receiving Register:

+After receipt of total cash during the day the ‘Cash Receiving Official’ shall (i) aggregate the amount after the last entry in the ‘Cash Receiving Register’, (ii) write down the total amount in words and figure under the summation and ensure that it is okay and the figure agrees with the computer generated supplementary figure.

 

Function of Cash Department

— Balancing of Cash Payment Register:

+Paying Cash shall accomplish the following formalities:

a)Make date-wise entry of all payment Vouchers in “Cash Payment Register” in serial order.

b)Make sure that total amount of such payments of the day agrees with the total amount shown in the parallel computer generated supplementary.

c)Write down the total amount of cash paid during the day both in words and figures in ‘Cash Payment Register’ and authenticate the same by full signature.

 

Writing and Checking of Cash Balance Book:

—After Balancing of (i) Cash Receiving Register and (ii) Cash Payment Register by the respective Cash Officials, Cash In-Charge shall prepare and sign the Cash Balance Book and shall submit the same to the Deposit In-charge/Manager Operation (MoP), who, upon satisfaction about its accuracy and genuineness shall authenticate the same by his / her countersignature thereon.

Checking / Closing of Cash and Writing of Cash Position Memo:

—At the end of day’s Cash transaction Cash In-charge shall Count, Sort and Balance the remaining cash (after receipt & payment) and shall prepare and sign the Cash Position Memo. However, Deposit In-charge / Manager Operation shall check and confirm that the figures mentioned in the Cash Position Memo agree with the total figures of (i) Cash Payment Register, (ii) Cash Receiving Register and (iii) Daily Affairs (cash in hand figure) and, upon satisfaction, shall authenticate the Cash Position Memo by his full signature / countersignature.

 

Safe Custody of Cash (after transaction) Over Night:

—Cash balance of the counter at the end of a day together with Cash in Safe (if any) shall be preserved in the ‘Fire Proof Iron Safe’ of Branch’s Vault for Safe-Triple-Custody until next reopening of the Vault. But before storing cash in the Iron Safe, the Triple Custodian shall additionally ensure that entire cash i.e. Closing Balance of the day as per Cash Position Book (Balance Cash of Cash Counter and remaining Cash Iron Safe) are accurate and correct.

 

Function of Cash Department

Vault Register:                 

—Cash In-Charge shall Maintain Vault Register for keeping record of Cash Movement to and from the Iron Safe. Denominations of Cash-in Hand mentioned in the Cash Balance Book must match with the denominations recorded in the Vault Register at the end of day’s transaction.

 

Cash-in-safe, Cash-on-Counter and Cash-in-Tansit Limit:

—Branch must handle cash within Cash-in-Safe, Cash-on-Counter and Cash-in-Transit Limit duly approved by Head Office. Excess cash over the approved limit shall not be held in the Branch at any time either on Counter or in Iron Safe. However, the Cash In-charge, under due record &  acknowledgment in the relevant register, shall immediately move the Excess Cash of the counter, to the Strong Room during transaction hours.

 

Cash Enclosure:

—Access of unauthorized person(s), including officials of other departments, to the Cash Enclosure of the Branch, is strictly prohibited. Only the officials working in the Cash Department shall have access to the Cash enclosure but normally they will not be allowed to go outside the Bank premises until entire cash is balanced and handed over to the Cash-in-Charge. Counting, Stitching / Banding of cash (as per instructions / guidelines of Bangladesh Bank/ Head Office) should be made inside Cash Enclosure by the concerned staff(s) who will not be allowed to leave Cash enclosure until cash is duly handed over to the Cash-in-charge in his full satisfaction & acknowledgement.

 

Function of Cash Department

Safety / Security of Strong Room During  Transaction Hours:

—Strong Room / Vault must be kept Closed / Locked during transactions hours under Joint Control of two key holders from Triple Custodians and both the Joint Controllers must be present whenever the strong room is re-opened during the Day / Office Hours. Cash In-charge must keep his / her hand balance (exceeding counter limit) in a steel box under lock & key in the strong room.

 

Maintaining Vault Limit:

—Branch has to ensure the vault/cash in safe limit as set by the Head Office time to time. Cash in excess of vault has to be deposited immediately with BB/Sonali Bank or designated cash feeding branch.

 

Security Measure of Cash-in-Transit:

—Branch shall ensure adequate and effective security measures while carrying cash to and from link branches of the Bank and Bangladesh Bank / any other banks, where the branch maintains Bankers’ Account.

 

Rotation of Cash Officers’ Duty:

—Rotation of duties between Paying and Receiving Cash Officials should be made at regular monthly frequency.

 

Function of Cash Department

Surprise Verification of Cash:

—Head of Branch (HoB) shall make surprise verification by physical counting of entire Cash-in-Safe at least once a month and shall confirm its accuracy with the remarks “Entire Cash Checked and Found Correct” on the particular page of Cash Position Book under his / her signature.

 

Recording Denomination of Note(s) / Coin(s):

—Cash at Bank (In Hand, In Iron Safe / Vault and On Counter of Branch) is to be noted down denomination-wise in Cash Position Book and that denomination must go with the denomination to be recorded in the Vault Register at the end of transaction of the day. Again, cash official shall record denominations of all the cash received and paid daily on the back of each respective credit and debit voucher.

 

Packing / Banding of  Notes:

—Notes of the Branch are to be packed denomination-wise separately with 100 pieces in each packet and those packets shall be stitched / banded as per specification of Bangladesh Bank. A cash slip (fly leaf) bending at left side of each packet is to be pasted and signed by the official who has counted / verified the notes in the packet. Branch’s rubber stamp (round seal) is to be affixed on both sides of each packet covering part of Cash Slip (fly leaf) and a part of the currency notes. Cash balance with less than 100 pieces notes (unstitched / unbanded) is to be kept denomination-wise in separate loose packets. 10 packets of 100 pieces notes in each packet (100 x 10) shall make a ring / bundle which should be tied up with rope and stacked denomination-wise in Fireproof Iron Safe(s) under Triple Custody.

 

Soiled Notes:

—Branch, with due record in a register, shall always keep Soiled and Mutilated Notes separated from the notes for circulation and shall arrange Change of the same at necessary interval from Bangladesh Bank / Sonali Bank Ltd. / Main Branch of the Bank to avoid irrational accumulation.

 

Forged Notes:

—Whenever a forged note is detected in branch the matter must be brought to the notice of Head of Branch (HoB) for   disposal in the light of directives issued by Bangladesh Bank.

 

Function of Cash Department

Coins to be Kept in Bags:    

— Coins should be kept denomination wise in bags of uniform size. A Cash Slip Form, with description of the coin, signed by two officials who counted and checked them, should be placed inside each coin bag. Bags full of Coins are to be stored in the Iron safe in orderly manner.

—All coin bags in Iron Safe are to be checked to ascertain genuineness and accuracy of its contents.

 

Cash Shortage / Discrepancy:

—Any discrepancy in cash (excess payment / short receipt, forged, mutilated, counterfeit, notes, etc.) should immediately be brought to the notice of Head of Branch (HoB), who, upon its enormity, (particularly Cash shortage and forged notes), shall inform Head Office right away. If shortfall is caused due to less receipt / excess payment, branch authority shall recover the amount from concerned cash official(s) and or from the concerned customer(s) if he is identified to be liable or culpable. On failure to recover at the end of the day, the said shortfall shall have to be covered / made up by debiting  “Suspense A/C”  with the concurrence of Head Office / Controlling Office. Outstanding entry so created in “Suspense A/C”  shall have to be reversed at the earliest by recovering / realizing the money from the delinquent official(s) and or customer(s) or from both as per their involvement in the matter. However, Police Action, if required, shall be   taken in time against delinquent official(s) / customer(s) in concurrence with Head Office.

 

Function of Cash Department

Purchase & Sale of Prize Bond:

— When a customer placed the prize bond over the counter, cash official check the authenticity of the prize bond. Then, he/she put the serial number of the prize bond into the prize bond and in the purchase register. Then he/she issue cash debit voucher and pay cash to the customer.

—When the customer approaches the cash official to buy the prize bond, the cash official receive the money in cash of the said prize bond. Then, he/she out the prize bond from prize bond in hand register serially following first in first out (FIFO) method. Then he/she issue cash credit voucher and handover the prize bond to the customer.

 

Sales of Lottery Ticket:

—Banks usually serve some social activities such as selling tickets for the help of the society. In this regard, branch always  follow the instruction of Head Office.

 

Function of Cash Department

Receipt of Utility Bills:

—Cash receiving officer receive the utility bills as per contract of bill authority (BTRC/Grameen Phone/Titas Gas etc.). Cash receiving officer receive the utility bills after proper stamping, affixing seal and sign on it. At the end of the day the entire received amount deposited to a collection A/C & at the end of the month bank remit the entire bill amount as per contract.

 

Function of Cash Department

Receipt of Cash After Banking Hours (Evening Banking):

—A particular branch, when licensed by Bangladesh Bank, for  ‘Evening Banking’ Operation shall receive cash within fixed period of time after closing of the normal transaction of the day by observing the following procedures:

—Procedure for receiving cash shall be the same as explained earlier under the caption, ‘Receipt of Cash’. A separate Evening Banking Cash Receiving Register called “Evening Banking Register” have to maintain.

—Cash received during Evening Banking Hours together with the relevant Deposit Slip / Pay-in-Slip is to be preserved separately in the Iron Safe within the strong room under Triple Safe Custody as per usual banking practice. 

 

Deposit of Cash With Main Branch:

a)If the cash in hand exceeds the limit as authorized by the Head Office, the excess cash is to be deposited with the main branch.

b)Prior   information is given to the main branch for deposit of the excess cash.

c)The remitting branch remits the excess cash through authorized cash officer (s) under armed guard escort in cash carrying vehicle. A letter is issued to the main branch-mentioning denomination of notes, name of the cash carrying officer (s), name of the security guards and number of the vehicle.

d)Following entry is passed at the Branch: Dr : (Debit-Cash Voucher) Suspense  A/C Cash Remittance.

e)The cash is received in the Main Branch.

f)Main Branch sends an Inter Branch Credit Advice for the amount received from the Branch concerned.

g)The outstanding entry in the suspense Account is reversed on receipt of the Credit Advice.

 

Function of Cash Department

Receiving of Cash from Main Branch: 

a)If the branch is in need of cash, the Main Branch is to be informed in writing of the cash requirement before.

b)Cash requiring branch issues IBCA for the required amount to the Main branch and also a letter as to whom cash is to be delivered attesting his signature by the branch manager and another authorized officer mentioning the vehicle number, name of the armed guard and security guards who escort the cash.

c)The Credit advice is issued in favour of the Main branch to the debit of suspense A/c. cash remittance.

d)On receipt of cash from the main branch the receiving branch reverses the outstanding entry in the suspense A/c by simple credit (cash) voucher.

 

Deposit of  Cash in Bankers Account with BB / Other Bank (s):

a)If cash in hand exceeds the limit authorized by the Head  Office excess amount is deposited with Bangladesh Bank or other bank where account is kept by the branches other than main branch.

b)The following entries are passed to draw cash from the branch and deposit with the bank concerned :Dr : (Debit-Cash Voucher) Banker’s Account Bangladesh Bank/ other Bank where the A/c is maintained.

c)If the amount to be deposited exceeds the limit of cash to be carried in one trip, separate voucher are passed and cash is carried strictly according to limit.

d)The Officer who carries and deposits the cash with the Bank signs on the reverse of the voucher and draw cash.

e)A Pay-in-slip of the bank concerned is filled in and signed by the Manager.

f)The Cash alongwith the Pay-in-slip is carried by the Officer and to the bank accompanied by guards.

g)When the officer returns, the counter foil of the Pay-in-slip is checked and pasted with the relative voucher.

h) The main branch follows all the above procedures except (b). Incase of excess cash deposit main branch deposits the same with Bangladesh Bank or other Bank (where accounts are maintained by Head Office) to the debit of suspense A/c cash After making the deposit with other bank(s), the main branch sends the original deposit slip to Head Office for imuance of IBCA in favour of main branch. On receipt of the IBCA main branch reverses the entry outstanding in suspense A/c cash remittance.

 

Function of Cash Department

Withdrawal of Cash from Bankers Account with BB / Other Bank(s): 

a)Cash is withdrawn from the Bangladesh Bank/other bank where the account is maintained by branches other their main branch.

b)If the amount to be drawn exceeds the transit insurance limit cash      in several trips separate cheques are drawn and cash is brought  strictly according to limit.

c)The Officer who brings the cash signs on the reverse of the cheque. The Signature of the officer is attested by the Officers drawing the cheque.

d)The cheque is handed over to the officer and his signature is obtained on the counter foil of the cheque.

e)The officer carries the cheque to the bank concerned accompanied by guards.

f)The following entries are passed to deposit the cash in the branch :

—Cr. : Banker’s Account Bangladesh Bank/other bank

 

—Main branch follows all the procedures  except (f). In case of cash requirement, main branch issues IBCA for the required amount in favour of Head Office by debiting suspense A/c cash remittance and requests Head Office to issue cheque on Bangladesh Bank/Other Bank (where Head Office maintains accounts) favouring an authorized officer whose signature is attested by the main branch. Accordingly Head Office issues cheques in favour of the authorized officer of the main branch attesting his signature on the back. After receipt of the cash main branch reverses the outstanding entry in suspense A/c by simple credit (cash) voucher.

 

Common Irregularities & risk in cash Department: 

—Often Post dated, Advance dated Cheques are paid in the counter.

—Denomination of cash in the cash receiving and payment voucher are not always mentioned.

—Particulars of depositors i.e. name and account no. are not always mentioned in the  specific column of the cash receiving register while receiving cash.

—Indent letters for inward and outward cash remittance are kept in a single file instead of separate file.

—Branches are often holding excess cash over their approved limit, which causes to reduce the branch income.

—Sometimes vouchers passed with single signature.

—Sometimes revenue stamps are not affixed on the debit instruments.

 

Remedies against Fraud and Forgery in cash Department:

—All cash officials must be vigilant, cautious and careful before receiving any cash vouchers & Check genuineness to reduce the above-mentioned irregularities.

—Denomination has to be mentioned

—Name and account no. have to be mentioned in the specific column of the cash receiving register while receiving cash.

—Optimum cash limit has to be maintained as per vault limit set by Head Office.

—Proper authorization, stamping, cancellation has to be maintained.

3 thoughts on “Function of Cash Department in Banks”

  1. Thank you very much for your good article and in future more article publish i think.

Leave a Reply

Your email address will not be published. Required fields are marked *