Cash Management

Cash Management:

CASH COUNTER

Cash is the most volatile and liquid Current Asset of Bank’s Balance Sheet and as such it demands special attention of Efficient Management. Cash Department plays a paramount role in creating good perception among the customers about the services of a bank. Cash in-charge, ideally a senior level officer with direct experience in cash management shall be responsible in performing good cash management. good Cash Management constitutes the following roles.

 Receipt of Cash

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

  1. 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.
  2. Carefully check and Count the Currency Notes
  3. Write down denomination
  4. Affix Cash Receivedstamp
  5. Make entry of particulars of the Cash Received
  6. Verify entries / Particulars of Pay-in-Slip / Credit Voucher with those of the Cash Receiving Register
  7. 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 issued under scheme deposits of the Branch as well as Cash Debit Vouchers, the following formalities have to observed.

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

 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.

 Balancing of Cash Payment Register

Paying Cash shall accomplish the following formalities:

  • Make date-wise entry of all payment Vouchers in “Cash Payment Register” in serial order.
  • Make sure that total amount of such payments of the day agrees with the total amount shown in the parallel computer generated supplementary.
  • 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.

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-Transit 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.

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.

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 Currency Notes

Currency notes in till 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.

 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 Cash Shortage” with the concurrence of Head Office / Controlling Office. Outstanding entry so created in “Suspense A/C Cash Shortage 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.

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.

Note: during the purchase and sale of prize bond, the cash in charge must sign the register with counter sign by the Deposit in charge/Manager Operation (MoP).

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.

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.

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. 

Impurest-System of Petty Cash

It is a system that offers privilege to create collective voucher at periodic gap against small expenses for a number of days avoiding botheration for daily vouching. Branch, if feels comfortable, may apply this system in the following processes-

On the 1st day of every month the Cash Official shall draw lump-sum amount  (Not exceeding the amount required for one month or Tk. 5,000.00 whichever is lower) from the main cash by debiting  ‘Suspense Account Petty Cash’ and shall meet day-to-day petty expenses for conveyance, postage, stamp, etc. from this amount pending expenditure vouchers there against. At the end of the month / fortnight or week he / she shall sort all those paid petty-cash vouchers / memos account-wise and shall pass separate collective vouchers against respective heads of expenditure as under:

Dr. Expenditure A/C Conveyance (Total amount spent for conveyance)

Dr. Expenditure A/C Postage. (Total amount of spent for postage)

                Dr. Expenditure A/C Stamp etc. (Total amount spent for buying stamp etc)

                Cr.  Suspense Account – Petty Cash.

Cash Indent/ requisition

Indenting Branch, when required, shall secretly send their cash indent / requisition letter to the Feeding Branch by 4.00 p.m. of previous day through special messenger.

Manager Operation (MoP) and Cash In-Charge of Indenting Branch shall jointly sign the Cash Indent with their P.A. numbers and the Head of Branch (HoB) shall countersign the same. Thereafter, the Head of Branch, shall send the indent to the Head of Feeding Branch in a closed / covered envelop duly sealed with sealing wax marked confidential and addressed properly. Office copy of this cash indent is to be preserved secretly in the strong room under custody of Cash In-Charge.

For the purpose of security, no remittance should be made to and from any branch against requisition / instruction over phone unless Feeding Branch is fully confident about the

(i)  genuineness of such requisition

(ii) special safety / security arrangement for remittance and

(iii) recording of the indent received over telephone. Essentially, all information in connection with Cash Remittance shall be kept severely top secret.

Receiving of Cash from Feeding Branch 

  1. Branch, when in need of cash, shall confidentially send indent to feeding branch for supply of cash and the Feeding Branch, on receipt of such indent from the indenting branch, shall verify its bonafide and thereafter, it (feeding Branch) shall nominate Cash Official(s) accompanied by adequate Armed Security Guards, arrange transport and shall remit requisite amount of cash to the concerned Indenting Branch.
  2. Feeding Branch, while sending remitting Cash Remittance, shall issue an IBDA for the amount indented / requisitioned by making the following entries under signature of Manager Operation (MoP), Cash In-charge and counter signature of Head of Branch (HoB):
  3. Dr: MBL General Account; (Indenting Branch)
  4. Cr: Cash in Hand
  5. Feeding Branch, before delivering cash together-with IBDA (two copies) to its Nominated Cash Official and Armed Security Guard / Supervisor, shall enter particulars of the said remittance in their Cash Remittance Register and shall obtain signature of the concerned Cash Carrying Official(s) and Armed Security Guards / Supervisor on the back of the relevant voucher as acknowledgement of receipt for carrying and subsequent delivery of the cash to Indenting Branch.
  6. Concerned Indenting Branch, on receipt of Physical Cash and IBDA through Cash Delivery Officials of Feeding Branch, shall respond the said IBDA by creating the following entries under joint signature of Manager Operation (MoP) and Cash In-Charge and counter-signature of Head of Branch (HoB):

Dr:  Cash in Hand

Cr: MBL General Account; (Feeding Branch)

  1. Cash In-charge of Indenting Branch on receipt of Cash shall enter the particulars of the Remittance in (a) Cash Receiving Register, (b) Vault Register and also in the (c) Cash Remittance Register. Concerned Cash Delivery / Carrying Official (of feeding branch) shall put his signature in the Cash Remittance Register of Indenting Branch as token of delivery of cash to their end.
  2. Thereafter, concerned Indenting Branch shall send an acknowledgement of the feeding branch by mail on the same day.  

Remittance of Excess Cash to Feeding Branch 

a)       Branch, while exceeding its approved Cash-in-safe limit, shall confidentially request the concerned Feeding Branch in writing to collect the Excess Cash.

b)       On receipt of such request from Remitting Branch, Authorized Feeding Branch shall send / depute Cash Official(s) and Armed Security Guards along with a Letter of Authority to collect their excess cash. Head of Branch (HoB) / Manager Operation (MoP) of Feeding Branch with their P.A numbers shall attest signature(s) of the Concerned Cash Carrying Official(s) and Armed Security Guards on the aforesaid authorization letter for the purpose of identification.

c)        Remitting Branch, upon satisfaction about the genuineness of the aforesaid Letter of Authoritywith identification of Cash Carrying Officials of Feeding Branch,shall hand over their excess cash together with an IBDA to the aforesaid Cash Carrying Officials and Armed Security Guard / Supervisor of Feeding Branch after obtaining their signatures on Cash Remittance Register for onward delivery of the same to the Feeding Branch. In such a situation, the Remitting Branch shall make the following entry for issuing IBDA under joint signatures of Manager Operation (MoP) with Cash In-charge and counter signature of Head of Branch (HoB):

Dr:   MBL General Account; (Feeding Branch)

Cr: Cash in Hand

Remitting Branch shall also inform the Feeding Branch over telephone regarding delivery of Physical Cash.

d)       Feeding Branch, on receipt of the aforesaid cash, shall respond the IBDA by passing the following entries:

Dr:  Cash in Hand

Cr: MBL General Account; (Remitting Branch)

e)       Thereafter, Feeding Branch shall make entry of all particulars of the said remittance in their Remittance Register as well as in the cash receiving register and shall obtain signature of the concerned Cash Carrying Official(s) and Armed Security Guard / Supervisor on relevant Register(s) as record of carrying cash.

 

Deposit of Excess Cash in Bankers Account with Bangladesh Bank / Sonali Bank Ltd. / Other Banks 

  1. When the Cash balance of a Branch exceeds its approved Vault Limit or the branch perceives that cash may be excess over a foreseeable future requirement, such excess Cash should be remitted to and deposited in the Bankers Account with Bangladesh Bank  / Sonali Bank Ltd. / other banks in that locality after observance of the following formalities:
  2. Remitting Branch shall depute its Cash Official(s) and Armed Security Guards for carrying and depositing cash in the Bankers Account with Bangladesh Bank / Sonali Bank / other bank.
  3. Branch shall create the following entries to draw money from its Cash Till for onward deposit in the Bankers Account:

Dr:  Bankers Account with Bangladesh Bank / Sonali Bank Ltd. / other Banks

Cr: Cash in Hand 

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

  1. Branch, in need, may withdraw cash from its deposit in the Bankers Account with Bangladesh Bank / Sonali Bank Ltd. / other banks after observance of following formalities:
  1. Cash In-charge, shall depute a Cash Official and Armed Security Guards to withdraw and carry Cash against Cheque from Bankers Account. He shall prepare a single credit voucher by Crediting Banker’s A/C and also shall issue a Cheque there against duly signed by two authorized signatories of Bankers Account including Head of Branch (HoB).
  1. The deputed Cash Official duly escorted by Armed / Security Guard, shall encash the cheque, from the Bankers Account and shall carry and deliver the money withdrawn there against to the Cash In-charge of his branch.  

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.

 

 

 

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10 Responses to Cash Management

  1. Ibrahim Adamu says:

    A good and educative write up

  2. Mohammed Tayub ullah says:

    It is very effective for cash department

  3. anonymous says:

    Very informative and throws light on the behind the scene working of after banking hours.
    Just wanted to notify that petty cash functions on the imprest system

  4. ANIK says:

    Please Don’t Mind
    Can you give me verified references ?
    .

  5. Azimul Islam Azam says:

    every cash official should follow the following formula for smooth cash operation……….azam/dhnamondi

  6. sanjeev says:

    Please elaborate the treat ment of excess cash found on counter which is transferred to Head office after 90 days . What is the process of treatment for this cash balance at headoffice level.

    • suhag603 says:

      I mentioned that You should transferred the excess cash daily… You know that every bank has to maintained an account in Bangladesh Bank/ Sonali Bank (Where is not any office of Bangladesh Bank). You have to deposited the excess cash to Bangladesh Bank and sent an advice (IBTA)to Treasury Division of your bank. Fund management is the core function of treasury division.

  7. Muhammad Yaseen Shaikh says:

    Excellent explanation for Cash Management.
    Muhammad Yaseen Shaikh
    Head Cash Distribution Center HBL Karachi Pakistan

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