Remittance

Inland Remittance: Issue and payment of DD & TT, Pay Order, Pay Slip and Security Deposit Receipt, Issue of Duplicate DD, Cancellation of DD, PO, SDR, recovery of charges/ commission & handling of Test Keys. 

Meaning:

The way of transferring money from one place to another within the country is known as Inland Remittance.

In Banking Channel, money can be transferred from one place to another in the following ways:

  1. Demand Draft (DD)
  2. Telegraphic Transfer (TT)
  3. Payment Order (PO)
  4. Pay Slip (PS)
  5. Security Deposit Receipt (SDR)
  6. Mail Transfer (MT)

Issue of Demand Draft:

A Demand Draft can be issued in the following three different ways, which depends upon the mode of payment by the customer:

a)       Against Cash

b)       Against Cheque

c)        Against a letter of instruction

  • Except the accounting procedure, in all cases the procedure of issuing a Demand Draft is almost same. The general procedure for issuing a DD is mentioned below:
  • The customer is asked to complete the form (No.       ) which is treated as an application as well as credit voucher for Head Office Account.
  • Commission, charges etc. are calculated and inserted in the case provided on the form
  • Required amount of money is deposited either by Cash or by debiting the customer’s account.
  • After receiving the cash, the voucher is given to Remittance Department.
  • Test Number should be inserted on the DD from the amount starting from Tk. ————- with two officers’ signature.
  • Draft is prepared and the particulars are entered against the respective Branch.
  • Branch-wise serial number is given on the draft beside the printing number putting an oblique ( ∕ ) in between. The amount of the draft is protectographed.
  • After completing required the signatures of the bank-officers the Draft is crossed if the customer desires and delivered the same to the customer against his acknowledgement on the voucher.
  • A memorandum is issued to the customer if he desires. 

Accounting Procedures:

In case of Cash Receipt

Against Cheque

Against letter of instruction

Dr.    : Cash

Cr.    : HO A/C (Branch Concerned)

Cr.    : Income A/C, Com. On DD

Dr.    : Party’s A/C (cheque)

Cr.    : HO A/C (Branch Concerned)

Cr.    : Income A/C, Com. On DD

Dr.    : Party’s A/C (application)

Cr.    : HO A/C (Branch Concerned)

Cr.    : Income A/C, Com. On DD

Issue of Duplicate Demand Draft:

In case of issuing a duplicate Demand Draft, following steps are to be maintained:

Step-1: On receipt of application, from the purchaser of the draft, the signature of the applicant is to be verified from   the original application.

Step – 2: The drawee branch is informed about the loss of draft and requested to exercise caution mark.

Step – 3: After receiving the confirmation from the drawee branch that the draft is still outstanding a duplicate Draft can be issued to the purchaser after obtaining an Indemnity Bond.

Step – 4: The Draft is issued by marking “Duplicate” in red ink repeating the original printing number striking out the present printing number and giving the original controlling number.

Step – 5: Drawee branch is advised regarding issuance of the duplicate Draft.  

Step – 5: The “Indemnity Bond” is to be filed in “Indemnity Bonds for Duplicate Instruments Issued File”

 

Payment of Demand Draft:

The DD can be paid by a branch in any of the following ways:

a)       Cash Payment (normally discouraged)

b)       Payment through Transfer

c)        Payment through Clearing

In all cases mentioned above, there are two modes of payment of a Demand Draft;

  1. After Receipt of Advice
  2. Before Receipt of Advice

In all the cases, the payment system is same excepting the accounting procedure. The general procedures for the payment of a Demand Draft are mentioned below:   

After Receipt of Advice:

a)       On receipt of advice from drawee branch, the particulars of the advice are to be checked and verified by the respective officer.

b)       The particulars are then entered in the respective branch-space.

c)        Required test is to be done for payment of the DD

d)       The entries to be passed for this purpose are mentioned below. 

Before Receipt of Advice:

Procedure is is similar to that explained in above

Entries related to after receipt of Advice

Entries related to before Rrceipt of Advice

Dr.   : Head Office A/C, (Branch Concerned)

Cr.   : Bills Payable A/C-DD Payable

Dr.      : Head Office A/C, (Branch Concerned)

Cr.      : Bills Payable A/C-DD Payable

Dr.      : Bills Payable A/C-DD Payable

Cr.      : Sundry  Assets A/C- DD paid without advice

Note that, date of entry reversed is to be noted under the initial of the Remittance In charge. 

Cancellation of Demand Draft:

a)       On receipt of the application along with the Demand Draft (DD) for its cancellation, the signature of the applicant is to be verified from the original application and the genuineness of the DD is to be examined.

b)       Before the Draft is cancelled, it is ascertained that the Draft has not been paid and no duplicate Draft has been issued.

c)        The following entries are to be passed

Dr.           : Sundry Assets A/C-DD Cancelled

Cr.           : Party’s A/C or, Bills Payable A/C-Pay Slip issued (in case party does not maintain any account)

d)       The draft is cancelled bearing out the signature thereon and a note to this effect in red ink is made in the original application form.

e)       The cancelled Draft is attached with the debit voucher.

f)         The Branch concern is advised to this effect with instruction to send IBTCA.

g)       On receipt of IBTCA the entry in Sundry Assets A/C-DD Cancelled is reversed.

h)       No Draft should be allowed to be cancelled without obtaining prior confirmation from the drawee Branch.

Issue of Telegraphic / Telephonic Transfer:

A Telegraphic Transfer can also be issued in the following three different ways, like a Demand Draft:

a)       Against Cash

b)       Against Cheque

c)        Against a letter of instruction

The general procedure for issuing a TT  is mentioned below:

v  The customer is asked to complete the form (No.       ) which is treated as an application as well as credit voucher for Head Office Account.

v  Required commission, charges etc. are calculated and inserted in the case provided on the form.

v  Required amount of money is deposited either by Cash or by debiting the customer’s account.

v  After receiving the cash, the voucher is given to Remittance Department.

v  Test Number should be inserted on the voucher by encoding Day, Date, Month & Amount code. Note that, Test Number should be applied in the TT  ignoring the amount.

v  Relevant information are to be entered in the respective space.

v  Telephonic message is passed to the respective Branch.    

Accounting Procedures:

v    

In case of Cash Receipt

Against Cheque

Against letter of instruction

Dr.    : Cash

Cr.    : HO A/C (Branch Concerned)

Cr.    : Income A/C, Com. On DD

Dr.    : Party’s A/C (cheque)

Cr.    : HO A/C (Branch Concerned)

Cr.    : Income A/C, Com. On DD

Dr.    : Party’s A/C (application)

Cr.    : HO A/C (Branch Concerned)

Cr.    : Income A/C, Com. On DD

Payment of TT:

a)       After receiving the message from TT issuing Branch, paying Branch has to verify the test number.

b)       If the Test Number agrees a stamp “Test Number Agrees” should be affixed.

c)        Following entries are then passed:

  1. :  Head Office A/C (Branch Concerned)
  2. Cr.           : Bills Payable A/C, TT Payable A/C

Issue, Payment and Cancellation of Payment Order:

Issue of Payment Order:

Steps for issuing a Pay-Order is as like as the steps followed in case of issuing a Demand Draft (DD). For PO, following entries are to be passed:

In case of Cash Receipt

Against Cheque

Against letter of instruction

Dr.    : Cash

Cr.    : Bills Payable A/C-PO issued

Cr.    : Income A/C, Com. On PO

Dr.    : Party’s A/C (cheque)

Cr.    : Bills Payable A/C-PO issued

Cr.    : Income A/C, Com. On PO

Dr.    : Party’s A/C (application)

Cr.    : Bills Payable A/C-PO issued

Cr.    : Income A/C, Com. On PO

Payment of PO:

When PO is presented for encashment, similar procedure is to be adopted as explained above for payment of DD

Cancellation of PO:

a)       On receipt of the application along with the PO for its cancellation, the signature of the applicant is to be verified from the original application and the genuineness of the DD is to be examined.

b)       Before the PO is cancelled, it is ascertained that no duplicate PO has been issued.

c)        Following entries are to be passed

Dr.           : Bills Payable A/C-PO issued

Cr.           : Party’s A/C or, Bills Payable A/C-Pay Slip issued (in case party does not maintain any account)

d)       The PO is cancelled bearing of signature thereon and a note to this effect in red ink is made in the original application form.

e)       The cancelled Draft is attached with the debit voucher.

Issue, and Payment of Security Deposit Receipt (SDR):

Issue of Security Deposit Receipt (SDR):

a)       Similar procedure is to be adopted as explained in issuing a DD/PO

b)       The only difference from PO is that for SDR a separate Head of Accounts viz. “Sundry Deposit Account” is to be credited instead of Bills Payable Account.

c)        SDR cannot be cancelled as is done in the case of other instruments. 

Issue of Duplicate Security Deposit Receipt (SDR):

a)       In addition to the application of the purchaser, a confirmation of the beneficiary should also be obtained to the effect that, the instrument has been lost or not received by him/her

b)       Head Office approval is to be obtained before issuing a duplicate SDR.

c)        All other formalities/procedures are as like as mentioned for issuing a duplicate DD.

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