Importance of cash management in Bank

Importance of cash management in Bank

Importance of cash management in Bank

Importance of cash management in Bank: Cash is a very important and sensitive item for day-to-day transaction of the Branches. Internal check, supervision and monitoring at different stages of cash handling is extremely necessary to avoid the incidents of thefts, fraud, forgeries, embezzlement and shortfall of cash. Adherence to the set rules & procedure is essential. Proper maintenance and handling of cash plays a vital role in smooth functioning of the Bank.

Custody of Cash

The Cash in-Charge, 2nd Officer and the Manager as Joint custodian must be present when the strong room is closed and opened. None should enter into it except in the presence of the key holders. The strong room must be under the double lock. Cash and documents kept in joint custody in the strong room should be handled only in the presence of all the joint custodians.

 General Instruction for Cash Handling:

The following general instructions must, however, invariably be followed at all branches.

No unauthorized person be allowed to enter into the cash counter which should be under lock and key from inside, stitching / sorting of cash must be done under proper supervision.

The Cash-in-Charge/Paying cashier must maintain the specimen signature of authorized passing officials and similarly receiving/paying cashier signature must be with cash receiving officer/passing officer. The dealing of cash by the corrupt employees and officials should be guarded against pocket / parallel banking.

Notes of each denomination must be sorted and arranged in the prescribed manner in packets of 100 pieces each. Packets of less than 100 pieces of each denomination should be treated as loose cash and not to be mixed up with full packets. Each packet should be secured by a rubber band and stitching or as per instruction given from Bangladesh Bank from time to time.

The full packets of 100 pieces each should be tightly tied with thread at the left hand edge of the packet. Upper side of the packet should be covered by pasting a denomination slip available at branches. However, the full packets of the Tk.100/- and Tk.500/-  notes shall have to be stitched as per practice of the Bangladesh Bank. 10(ten) packets of each kind of notes shall form bundle for arranging cash in tills.

The round rubber stamp of the branch should be distinctly affixed on both sides of the packets covering the thread portion under the initial of concerned receiving /counting cashier(s).

The staff counting and examining the notes will legibly put their signatures on the label as well as at the backside of the packets.

Cash-In-Charge should countersign the labels on all full packets and to see that the packets contain legible signatures as prescribed above of the cashiers who have counted and examined the notes. Normally all full packets of same denomination should be equal in size so that while putting counter signature of the Cash-In-Charge may be able to detect shortage or excess in any packet. The size of the packets may reveal such discrepancies.

At the time of closing the cash balance of all loose packets should be counted 100%.The full packets should be checked by random counting of few packets of different denominations.

The packets so made, counted and checked will then be tightly tied up in bundles of packets each before safe keeping in Vault.

Under no circumstances Defective/Mutilated/Burnt/Torn etc. notes should be mixed up in the packets of good notes. As a matter of rule those types of notes should not be accepted over the counter either as deposits or in exchange of good notes. Violation of this rule will invite disciplinary action against the person liable. At the request of valued clients these type of notes may be accepted only on collection basis, Such notes, if any, should be sent immediately for collection to the nearest office of Bangladesh Bank directly for payment of value in terms of Bangladesh Bank’s / Head Office instructions.

Soiled notes, if any, should be kept separate from those notes fit for re-issue. Such notes should be deposited to Bangladesh Bank and or Sonali Bank Ltd as per practice in vogue.

All notes must be protected against damp, insects etc. and should be kept in the chest / under lock and key.

Evening Banking: Late Payment And Late Receipt

The cash balance shall ordinarily consist of nothing but notes and coins and the 2nd officer will see that the whole of it is licked up in the strong room. In the event of any cash payment being made after the Cash Balance Book have been closed in an emergency or in any unavoidable circumstances, after closing of Cash Balance, the relative voucher must be passed by the Manager and entered in the Paying Cashier’s Book (B-7) under the following day’s date. A note to this effect is made in the Cash Balance Book under authentication of the Cash-In-Charge and the 2nd officer. Amounts received, if any after closing the Cash Balance Book (B-45) must also be similarly entered in the Receiving Cashiers Book (B-7) and noted in the Cash Balance Book. Any deviation from this rule will be regarded as a serious offense.

Cash Checking Procedure:

Before taking notes and coin into the joint custody the 2nd officer will check their correctness in the following manner:

He will personally count all notes of denominations and will verify as large a portion as practicable.

The 2nd officer will satisfy himself in each evening that the joint custody balance corresponds exactly with the entries in the cash position slip as well as Cash Balance Book. The Manager satisfies himself about the Cash Balance of the Branch on each day either by counting the whole amount or on test basis. However, the Manager will check at least once a month the WHOLE of the Cash Balance and the fact is to be noted in the Cash Balance Book under his full signature with date.

Cash Shortage

Any shortage in the cash balance, occurs under any   circumstances should be recovered from the concerned Cashier/Cash-In-Charge on the same day, if possible. Failing recovery on the same day, the amount must be debited to “Protested Bills Account”, under telegraphic/Telex advice to Head Office/Zonal Office followed by a letter in detail describing the shortfall fixing responsibility of the offender with specific recommendations of the Branch-incumbent. The amount must be recovered as soon as possible and the entry in “Protested Bills Account” adjusted under advice to Head Office.

Excess Cash:

While taking day’s cash position, any excess if found in cash balance it must be credited to “Sundry Deposit Account” under advice to Head Office naming the cashier at fault. Any claim made for the amount should be paid by means of a Payment Order/ transfer voucher if the Manager is fully satisfied himself that the demand is in order. On 31st December in each year, items which have been lying unclaimed for one year or more will be referred to Head Office for instructions as to their disposal.

Forged Currency Notes

Care should be made that no forged/miss-matched currency note(s)is/are received at the counter. Whenever a forged note is detected at the counter, the depositor should be handed over to the police.

Ordinarily no defective (mutilated, burnt, torn, defaced, soiled etc. unfit for exchange) notes tendered at branches should be accepted. In the event of any such notes being detected the amount will be immediately recovered from the Cash- In-Charge / dealing cashier. However, on account of deposit of such notes by the valued clients should be received on collection basis like OBC i.e. collected from Bangladesh Bank through feeding branch. The account of the depositor will be credited after realization of the proceeds and recovery of Bank’s charges.

Insurance of Cash:

 Insurance of Cash-in-safe, Cash-over-counter and Cash-in-transit in respect of all branches is arranged by the GSD, Head Office. Particulars of remittances received and dispatched, will be recorded by the branches in the Cash-in-transit Register and monthly statements thereof be submitted to the GSD, Head Office by the 7th of the following month. The amount of premium payable to the insurance Company will be paid by Head Office by debiting the branches concerned through IBDA. The branches will in turn respond the entry (IBDA) by debiting their Expenditure Account under sub-head “Insurance” on receipt of the relative advice from Head Office. Insurance limit relating to Cash-in-safe, Cash-on-counter and Cash-in-transit should be meticulously observed including maintenance of the Cash within the respective approved Limit / ceiling.

Change of Officials:

Whenever the 2nd officer / joint custodian of cash is changed or a Branch Manager is relieved, the official taking over, will verify the whole of the cash balance of the branch & will submit the Cash Verification Report to HRD, Head Office.

Whenever the Cash-in-charge is changed, the outgoing and incoming officers will sign the Cash Balance Book (B-19) on the date of relieve.

Whenever cash balances are verified by an Executive / Auditor, Verifying Officer, Manager/2nd officer, must remain present during the period of verification.

Deposit of Cash With Authorized Officers:

When the cash in hand exceeds the limit fixed by the Head Office, cash excess over limit shall have to be remitted to the nearest feeding branch Local Office / Bangladesh Bank at the earliest.

On receipt of information, the Feeding Branch should arrange collection of cash. Feeding Branch will be debited by Remitting Branch through SIB General A/c. and IBDA with Cash Remittance Invoice be sent with the cash escort party which will be responded on receipt of cash by the Feeding Branch. Transport of cash must be within the insurance limit of Cash-in-transit. The cash should be remitted through/carried by an Officer with adequate armed guards and security measures.

Cash Remittances & Cash lifting:

Cash remittances to and from branches must be accompanied by an officer and necessary armed guards or police escorts. Number of armed guards/police escorts required should be determined by volume of cash involved and means of transport available.

For all cash remittances sent, branches should maintain a Register (b-46) and the receipt of the accompanying officer/cashier shall be obtained therein for the amount of cash delivered to them. Signatures of the members of the escorts should also be obtained and verified.

For the amount of cash remitted, the remitting branch will debit the concerned branch and send the relative IBDA with the officer accompanying the remittance. The denominations of notes and coins and the value against each denomination should be mentioned in the overleaf of the IBDA.

The receiving branch will check the cash as per particulars to the IBDA and account for the remittance on the same day by responding the IBDA. The receiving branch must also acknowledge receipt of the remittance in the sub-joined portion of Invoice duly signed by the Branch Incumbent, 2nd Officer and the Head Cashier. The acknowledgement should be handed over to the accompanying officer, who in turn will deliver the same to the remitting Branch on his return. For acknowledgement received the relative column in the Cash Remittance Register (B-40) should be kept in the safe custody of the authorized official.

For lifting of cash from branch or branches specific and fresh Letter of Authority on each occasion should be issued in favor of the officer deputed for the purpose. Letter of Authority should be addressed to the branch from where cash is to be lifted as per intimation received. Where cash is to be lifted from more than one branch by an officer it is not necessary to issue a separate letter of authority addressed to each individual branch. One Letter of Authority addressed to all branches should be enough. The officer concerned, on his return from the branches with cash, should surrender the Letter of Authority which should be cancelled and filed by the authorized official at the cash lifting branch.

At the receiving branch cash lifted from a branch or branches should be checked before the accompanying official as per particulars mentioned in the relative IBDA (s). The IBDA(s)  should be responded on the same day of cash is received. An acknowledgment duly signed jointly by authorized officials as provided in the sub-joined portion of Invoice mentioned above should be sent out at once to the branch from where cash has been lifted.

The date of receipt of the acknowledgment from the cash lifting branch should be entered by the remitting branch in the Cash Remittance Register (B-40) against initial of the authorized officers. Non-receipt of the acknowledgment should be followed up with the cash-lifting branch without any delay. Acknowledgment should be preserved in a file

Like Cash Remittances sent, records of Cash Remittances received should also be maintained in the Register (B-40) as mentioned hereinabove.

In both, the cases of remittance received and sent the record of Cash Remittance shall be recorded in the Register (B-40) duly filled in the appropriate column without fail and that should be ensured by the Branch-Incumbent positively.

Shortage, if any, found in any packet should be recovered from the staff with due information to the branch-incumbent of concerned/respective branch and not be debited to Suspense Account. Due care to be taken to check embezzlement of cash in transit.

Shortage/ Excess cash Found at Counter

Any incident of shortage/excess of cash at the cash counter in the daily receipt and payment must be subject to written clarification/explanation from the concerned receiving and paying cashier. The excess payment/short receipt, if any, must be recovered from the concerned cashier on the spot and the excess, if any, must be kept in Sundry Deposit Account till identification of the cases and settlement thereof within the acknowledgment of the branch incumbent/competent authority.

The District Headquarter branches will make their remittance through Sonali Bank Ltd, Treasury Branches as per present practice. In case, if necessary, District Headquarter Branches will contact with Local Office, directly to make remittance to and from them.

Where there is Bangladesh Bank Office, the Divisional Headquarter Branches will avail the said remittance facilities through Bangladesh Bank and where there is no Bangladesh Bank Office, they will also remit to and from through Sonali Bank Ltd, Treasury Branch.

No soiled, mutilated non-issue notes are to be issued to cash counter for payment purpose. Such notes accumulated at the Branch are to be kept ready for getting exchange from Bangladesh Bank through the designated feeding Branch on collection basis under intimation to BDMD, Head Office. While the designated feeding branch has no scope to get those notes exchanged from Bangladesh Bank directly, the same may be sent to Principal Branch, Dhaka with prior approval from BDMD, Head Office, Dhaka. The branch shall ensure regular persuasion to Principal Branch, Dhaka till receipt of the Exchange value from them. The BDMD, Head Office shall monitor early disposal of the notes/remittance of the exchange value. Such remittances will be carried out by Principal Branch, Dhaka by its own escort with transport.

For such remittance, the following entries are to be passed by the remitting branch.

Debit: Suspense Account

Credit: Cash in Hand Account

Debit: SIBG Account (after receipt of the cash)

Credit: Suspense Account (after receipt of the cash)

Deposit of Cash with Bankers:

When cash in vault of the branch, maintaining account with Bangladesh Bank or Sonali Bank Ltd exceeds the insurance limit approved by the Head Office, deposit the excess amount with the Bangladesh Bank or the Sonali Bank Ltd, as the case may be as per arrangement.

The deposit should be made by debit to “Balance with other Bank Account” Or “Bangladesh Bank principal Account” maintained with the branch/Local Office and cash deposited through pay-in-slip and in turn a receipt will be issued by the Bank with which cash is deposited.

Necessary entries should be made in “Balance with other Bank Account”/”Bangladesh Bank Principal Account” Register      (B-62) which should be signed by the Manager or the authorized officer.

The officer who will carry and deposit cash with the Bangladesh Bank/Sonali Bank Ltd will sign on the reverse of the relative voucher.

The cash along with the pay-in-slip will be carried by the official concerned to the Bank accompanied by armed guard (s) and deposited against receipt issued by the Bank where cash is deposited.

When the concerned official returns after deposit of cash, the counterfoil of the pay-in-slip should be checked by the Manager himself and pasted/kept with the relative debit voucher.

In case of Principal Branch Cash is being deposited to Bangladesh Bank through Financial Administration Division (FAD). Generally, FAD prepares & signs the pay-in-slip for depositing the money.

  Withdrawal of Cash from Banker:

When withdrawal of cash from the Bangladesh Bank / Sonali Bank Ltd / other Bank is required where the account of the branch is maintained, the same may be withdrawn through cheque duly recorded in the Bank Ledger (B-62)/Computer after completion of necessary formalities.

The cheque should be drawn in chronological order under the signatures of the authorized officers in the appropriate manner. The Officer (s) who will be sent to bring the cash will sign on the back of the counterfoil of the cheque. Adequate armed guards should accompany the Officer(s) who will be sent to bring cash.

The amount of the cheque will be credited to Bangladesh Bank / Sonali Bank Ltd / Other Bank Account by contra debit to Cash Account when the cash is received.

In case of Principal Branch, Bangladesh bank Cheque are issued by FAD as & when requested by Principal Branch for withdrawal of Cash from Bangladesh Bank.

Payment through counterfeit cheques should be checked.

Telegraphic Transfer Discounting

If a branch outside Dhaka having T.T. discounting facility with the Bangladesh Bank or Sonali Bank Ltd at the same station is short of fund to meet its requirements for payment, the same may be managed by discounting T.T. with the concerned Bank within the limit fixed for the purpose, the T.T. being re-disbursable at Dhaka by FAD, Head Office.

When required a letter should be written to the Bangladesh Bank or Sonali Bank requesting them to discount T.T. specifying the amount of the T.T. to be discounted under signatures of the authorized officer.

A telegram will be sent by the branch to FAD requesting them to reimburse the amount of T.T. discounted to the bank concerned. On receipt of the telegraphic advice from the branch concerned FAD will arrange for the reimbursement to Bangladesh Bank or Sonali Bank as the case may be.

Custody of Keys:

A Register (B-24) of all-important keys, including those of he Cashier must be kept at every branch. This Register will contain full particulars of the keys of the branch and will show where the originals and the duplicates are to be found. The entries in the register will be initialed by the official holding the original key and the Manger. The entries should’ also be initialed by every incoming Manager, whenever there is any change of Manager. “Important keys” include keys of strong- room, doors and safes and cabinets therein containing cash, gold, ornaments, banks’ and correspondents’ control documents, articles in safe deposit, documents of value to the Bank, revolver and gun licenses etc.

Custodians of Important Keys:

None of the custodians is authorized to leave the ‘Important keys’ with any officials without the written approval of the Manager and Manager without the approval of the competent authority. Such approval should be recorded in the Key Register (B-24) by making proper entry under due authentication of the Branch Incumbent.

When the strong-room keys and other keys are kept in the personal safe of the Manager (or the 2nd officer jointly in-charge of cash), the key of the safe in which they are lodged must not leave his custody. Sub-ordinate employees of other unauthorized persons must never be allowed to handle the keys of the strong-room and safes, for any purpose whatsoever. Should this by any chance occurs, the circumstances must be immediately reported in full to Head Office so that necessary steps may be taken to safeguard the Bank’s interest. A small safe may also be given to the 2nd Officer/Cash in-Charge for keeping the strong-room keys, important documents etc. and others keys held by him. The key of this safe must not leave his custody. The important keys should never be given to any unauthorized officer or person nor made visible during the course of use and custody at any moment.

In the event of absence from duty, the 2nd Office/Cash-in-Charge may, subject to the approval of the Manager, authorize his senior-most assistant to perform his duties.

Great care must be taken with all locks and keys. Any important key Showing signs of serious wear should be send to Head Office in a sealed packet in order that a new one may be made the duplicate being used meanwhile. No important key may be made, and, except in an emergency, no repair to any important lock may be carried out by local mechanics without the prior permission of Head Office.

Duplicate Keys:

The duplicate keys of the strong-room and the duplicates of  all   other important keys must be greased and labeled and put into a strong wooden or tin box.

The box containing the duplicate keys of the branch must be locked or otherwise secured, wrapped in waterproof cloth and sealed by the Manager with the branch seal in the presence of the 2nd Officer/Cash-in-charge and the supervising official concerned. The packet will be labeled with the name of the branch.

The box will then be signed by the Manager and deposited at the nearest branch of SIBL/the Bangladesh Bank or Sonali Bank or any other Bank of good standing as Head Office shall instruct. If the duplicate keys are to be deposited by one branch with another near by branch of the Bank, the same procedure should be followed. In all cases, the relative safe deposit receipt will be entered in the Branch Documents Register (B-26) and kept with the other documents in Branch documents file. The acknowledgement in this regard must be preserved along with the duplicate copy of the forwarding letter duly signed by the Manager & 2nd Officer.

Duplicate keys must be removed from the safe deposit at every inspection / audit of the branch and whenever there is change of Manager, 2nd Officer/ Cash-in-Charge. The reason for and the duration of their holding after withdrawal will be recorded in the Key Register (B-24) . The packet must be opened by the Manager in the presence of the 2nd Officer & Cash-in-Charge of Cash who will themselves break the seals on the packets containing their keys. When the duplicate keys have been examined, they may be taken into use and in their place the originals may be deposited in the packet in accordance with previous para. If, however, the duplicate keys are more worm than the original, the duplicates will be re-greased and re-deposited.

Every effort must be made to return the packet for safe deposit in the same day, failing which the steps taken for its safe keeping must be reported to Head Office/Zonal Office. When the packet is held by another branch, the dates of its withdrawal and redeposit will also be advised to Head Office/ Zonal Office by that branch.

The duplicate keys of all other cabinets, almirahs, boxes etc. will be greased and labeled showing the names of the official holding the originals thereof and locked in a box, the key of which will be kept by the Manager or the authorized officer and kept in the strong-room. Particulars of these keys will be recorded in a separate section of the Branch Keys Register.

Cautionary Notes:

 All concerned are advised not to keep any amount in their vault/counter exceeding the cash limit covered by the insurance taken for their respective branches and in case of remittance per single carry limit must not be exceeded.

All officials should not go to prayer at a time keeping the cash unsafe rather it may be performed by phases.

No doubtful entry of stranger shall be allowed inside the branch.

None other than the branch officials shall be allowed inside the branch premises during the lunch/prayer period.

Entire cash shall be taken off from the counter and be kept in the safe separately in the vault during lunch/prayer time. If not possible, the cash counter shall invariably be guarded to prevent unauthorized entry of any unauthorized person in side the counter.

No cash in the counter be kept open to the reach of outsiders/unauthorized officials .The custodian is responsible for making over the cash and must be vigilant in every step.

Control over computer operations should be ensured .Daily computer sheets should invariably be checked by the respective authorized officer other than the computer operator, from the vouchers.

Key of vault/safe/Almirah must be under the custody/possession of the respective authorized custodian and be used by them in every deposit/withdrawal duly recorded.

Compiled by :  Manjur Alam Khan – Vice President