Operational Aspects Of Cash/Clearing: Key Takeaways

Cash Replenishment At ATMs

The cash is restored at the ATMs using the following system of CTS:

Cheque Truncation System (CTS) – This system ensures that there is a minimum-security feature in the printed cheques which are issued by the banks and customers on a uniform basis across the industry.

Therefore, there need to be certain benchmarks to achieve standardization of cheques issued by banks all over the country.

The standardization is achieved in the quality of paper, watermark on cheques, void pantograph, bank’s logo in invisible ink, and the placement of field on cheques. These prescribed Benchmarks are collectively termed as ‘CTS-2010 Standard’.

Banks that provide a facility of cheques to their customers are recommended that they use the ‘CTS-2010’ standard for cheques. 

Those cheques which do not comply with CTS-2010 standards are required to be cleared at less frequent intervals i.e. On a weekly basis.

Cheque Collection Policies

• Local Cheques

Cheques that are payable within the jurisdiction of the clearinghouse can get presented through the clearing system which is installed at the center are termed as local cheques.

Credit that arises on account of the local cheques will be given to the customer’s account as it has been prescribed in the Cheque Collection Policy of the bank that collects the cheques. 

Notwithstanding the CCP for the local clearing process, banks are required to allow the usage of the shadow credit in the customer’s account immediately after the cheques are cleared on the next working day or otherwise, maximum within an hour of the business commencement on the third working day from the day that cheque has been presented for clearing.

• Outstation Cheques

Maximum time which is used to allow the collection of cheques which are drawn from the capitals of States, major cities, and other locations are 7, 10, and 14 days respectively. 

In case the cheques are lost in transit or are lost in the process of clearing paying Bank’s branch when the instrument is physically delivered for clearance, the bank is required to immediately notify the beneficiary so that he or she can inform the drawer of the cheque to record stop payment as well as we can also take care of the other cheques which have been issued anticipating the credit which arises out of the cheques which are lost or are not dishonored because of non-credit of the amount of the lost cheques or instruments.

In CTS, in case the instrument gets lost after lodging the cheques with the collecting bank but before the bank can start truncating the same to send through image-based clearing, the presenting bank is also required to follow the mentioned procedure.

An important thing to keep in mind is that the customer is entitled to the reimbursement for related expenses when he/she has obtained duplicate instruments and is also entitled to interest for any reasonable delays in obtaining the same by banks.

Cash & its custody:

• Balance in cash and small coins should be kept in the strong room under joint custody. 
• Staff members are not allowed to receive money over the counter except cashiers or tellers. 
• There should be a double lock on the strong room and safe, and it should be kept under a cashier and a supervising official. 
• Hand balance with the cashier should be as low as possible and the bulk of the cash balance should always be in a safe or strong room under joint custody.

Checking of Cash Balance:

Report cash balance or coins can be taken into the joint custody, supervising official is acquired that he or she:

• Counts all the notes whose denomination is > Rs.10.00 personally 
• Count all the other nodes using the clip system 
• Have the bags of coins weighted in his or her presence? 
• Count a few pieces and leave the reminder so that it can be counted in his presence on the system of the clip.
• Check that the hand balance of loose notes under the head cashier or cashier is as per the records. 
• Ensure that the hand balance is kept in the cash box and locked in his presence which remains under the Head cashier/cashier.
• At the end of the working day, you are required to verify that the ‘balance under joint custody ‘ matches with the entries made in the cash balance book. 
• Before the closure of the safe, the supervising official, head cashier, and cashier should also check the bundles and verify whether it is consistent with the reserve cash register.

Shortage Or Excess In Cash

• If there is any shortage in the balance of cash, it needs to be covered on the same day by the cashier or head cashier. 
• If the shortage of cash balance is failed to recover, the amount is required to be debited to the suspense account after taking the signatures of members who are responsible for depositing the same to the head office.
• It is the responsibility of the head cashier and cashier for any shortage whether it is in hand balance or vault balance.
• The cashier who has signed the denomination slips will be held responsible for the shortages of notes.
• If there is any excess in the balance of cash it must be credited to the sundry creditors’ accounts on the same day.

Remittance Of Cash

When currency notes are remitted from one office to another, there are certain instructions that are required to be complied with on a strict basis: 

• Currency notes or not to be carried over without having an armed guard 
• This task has to be entrusted to an authorized employee who has an experienced subordinate staff and armed guard. 
• Journey in the night and any unusual halts must be avoided 
• The Remittance box has to be conveyed in the Van which has been provided for the purpose. 
• It must be ensured that the box has been properly secured with the chains and has been locked. 
• Recording of all these cash remittances must be maintained in a register.

Clearing Operation

There are certain prerequisites that must be there before a cheque is sent for clearance and some of these are mentioned underneath:

• When instruments are exempted from clearing they are required to bear the clearing stamp along with the bank name, branch, and date. 
• They are also required to bear the ‘Bank crossing stamp’ with the MICR code. 
• The payee’s name must be verified in the pay-in slip. 
• The amount which is mentioned in the cheque and on the pay-in-slip should also be one and the same. 
• Cheques that have the account payee crossing are required to be connected to the payee’s account only. 
• Cheques that remain unpaid should be returned through branch couriers so that they can reach the clearing branch before the stipulated time.

The instructions which have been specified for the following are required to be followed:

• Inward clearing cheques
• Outward clearing cheques
• Balancing of Clearing House Account 
• Electronic Clearing System (ECS)
• High-Value clearing
• Clearing House Account Reconciliation