Payment and Remittance

Objectives

In this session, you will be able to:

Understand the process for issuing a Pay Order (PO) Understand the process for cancelling a PO Understand the process for issuing a Demand Draft (DD) Understand the process for issuing a duplicate PO Understand the process for issuing a duplicate DD Process a request for intra branch and inter branch transfers

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Payment and Remittance

Process for Issuing a PO

Customer pays by cash or cheque to the bank Customer gives a requisition for issue of PO Bank issues PO to the customer after receiving funds Customer submits PO to the payee instead of paying cash

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Payment and Remittance

Process for Issuing a PO

1. Pays by cash / cheque Customer 2. Issue of PO Bank A

3.PO submitted for fees payment

College

4.PO sent for collection

Bank B

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Payment and Remittance

Process for Issuing a PO (Contd.)

Requisition slip to be filled in by customer Pay by cash or cheque Entry in Finacle

Debit cash or customer account Credit funds payable account

Printing of PO on security stationery Verification of instrument and signing by customer service manager Handover PO to customer against counterfoil Customer acknowledges receiving of PO

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Payment and Remittance

SOX Process for Issuing a PO

Points to note:
POs to be issued only if the drawee and issuing branches are same. Relevant charges as per Directory of service charges to be collected. Prescribed stationery has to be issued for printing the PO, and should be kept under double lock. POs by cash can be issued only for an amount less than Rs 50,000 as per Income Tax guidelines. Requisition slip to be scrutinised for date, PO amount, exchange amount, beneficiary name, cash or cheque details, and signature of applicant.

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Payment and Remittance

Process for Issue of PO by Cash

INPUTS
Applicant

PROCESS
CSO-Cash Accept requisition and cash Is the amount > Rs 50000?

OUTPUTS

Requisition for Pay Order

No Scrutinise the requisition for being correct and complete

Yes

Rejected requisition

Inform Pay Order cannot be issued in cash for Rs.50000 & above as per Income Tax guidelines Return request for rectification W1

Applicant

Is it OK?

Discrepant application

Count cash and check for correctness

Applicant

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Payment and Remittance

Process for Issue of PO by Cash (Contd.)

INPUTS PROCESS
A
Acknowledge the counterfoil. Inform TAT and ask to collect the Pay Order from the CSO at front office W2 Pass and post the entry W3 Finacle Dr CS.Teller a/c Cr FP.01 Cr EXBCHQ Cr SL/TAX

OUTPUTS

Counterfoil Applicant

2
CSM Cash

Scrutinise and Verify entry

Finacle

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Payment and Remittance

Process for Issue of PO by Cash (Contd.)

INPUTS PROCESS
B
Send the voucher to CSO in front Office for printing PO CSO

OUTPUTS

Print the PO

Finacle

Hand over PO (and voucher) for signature

CSM

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Payment and Remittance

Process for Issue of PO by Cash (Contd.)

INPUTS PROCESS
C

OUTPUTS

Verify the physical PO and purchase order and sign them

Return the PO along with the voucher

CSO Handover the PO against acknowledgement on the voucher

Pay Order

Applicant Spike the voucher

END

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Payment and Remittance

Issuing PO by Cheque

Points to be considered while issuing PO by cheque:

Cheque should be favouring Yourselves for PO favouring __________________________________________ Cheque should be for the total amount including the PO, exchange, and service tax amount If the cheque is only for PO amount, the customers account has to be debited towards the exchange and service tax

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Payment and Remittance

Specimen of Printed PO (Contd.)

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Payment and Remittance

Specimen of Printed PO (Contd.)

Issuing branch and drawee branch are the same Bankers cheque number is printed on the top Security crossing from 0 to 9 appears on the right. Bankers cross the first digit of the amount Abbreviations OT, TT, OL, or TL, which represent one thousand, ten thousand, one lakh, or ten lakhs respectively, appear on the left of the PO

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Payment and Remittance

Process for Cancelling a PO

Cancellation Request:
Customer to sign on the reverse of the PO on a revenue stamp. In case the customer does not come in person, the customer signs a request for cancellation of PO. In the request, the customer must specify that the PO should be cancelled and the proceeds credited to the customers account. The banker verifies the name and account number of the customer. The banker confirms the status of the PO. The banker confirms the signature on the request for cancellation with the request for issue of the PO. The banker debits the PO account. The banker credits the proceeds of cancellation to the customers account or the banker issues a PO favouring the customer. The banker cannot pay the proceeds in cash to the customer. The banker recovers the cancellation charges from the customer.

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Payment and Remittance

Process for Cancelling a PO (Contd.)

INPUTS
Applicant Cancellation request and the PO

PROCESS
CSO

OUTPUTS W1

Accept the request

1 2

C
Yes

Is instruction for payments or cash NO Verify applicants signature

W2
C

3
Check if PO is paid and verify the signature of the client NO Is the request in Order?

Finacle

Return the request

Discrepant request

Yes

Customer

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Payment and Remittance

Process for Cancelling a PO (Contd.)

INPUTS PROCESS A
Inform the applicant about the charges Draw two transverse parallel lines across the face of PO and write the words Cancelled between them.

OUTPUTS

Pass the entry for cancellation and recover the charges.

W3

W4
Finacle

C
Handover the voucher for verification CSM Scrutinise the request

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Payment and Remittance

Process for Cancelling a PO (Contd.)

INPUTS PROCESS
C

OUTPUTS

Verify the entries

Finacle

Dr. FP.01 Cr. Applicant

Spike the voucher

Dr Applicants A/c Cr CN/Others Cr SL/Tax

Inform the applicant amount is credited

END

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Payment and Remittance

Process for Issuing a DD

Bank A Chennai Funds credite d Bank A Mumbai

Cash/ cheque DD on Mumb ai DD couriered

Bank B Mumbai DD deposited for clearing Magazine Office in Mumbai

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Payment and Remittance

Process for Issuing a DD (Contd.)

DD is to be issued if the drawee and issuing branches are in different centres. Relevant charges according to the Directory of Service charges to be collected for DD issuance. Cash cannot be paid for purchase of DD for Rs 50000 and above. Prescribed stationery has to be issued for printing the DD and should be kept under double lock. SOX process for issue of DD similar to issue of POs. SOX process cancellation of DD is similar to cancellation of PO.

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Payment and Remittance

Specimen of Printed DD

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Payment and Remittance

Process for Issuing a Duplicate PO

The banker advises the customer to give a request letter to the bank for issuing a duplicate PO against the original PO, which has been lost. He is advised to give all the details of the original PO. The banker verifies the correctness of the details regarding the date of issue, amount, and payees name from the banks record. The banker verifies the signature of the applicant. The banker verifies the books to ensure that the PO is still outstanding before issuing a duplicate PO. The customer is required to execute a stamped Indemnity on the banks standard format. After verifying the Indemnity for correctness, the banker issues a fresh PO and the number of the PO, which is lost, is cancelled in the system. The banker writes or stamps Duplicate prominently on the fresh PO.

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Payment and Remittance

Process for Issuing a Duplicate PO (Contd.)

The bank keeps the Indemnity as an important branch document after entering the information in the Branch Document Register.

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Payment and Remittance

Process for Issuing a Duplicate DD

The process of issue of duplicate DD is similar to the process of issue of duplicate PO. However instead of crediting FP.01 A/c, the credit goes to IB.DD A/c. In the case of issue of a duplicate DD on Correspondent Bank (BOI) similar transaction takes place. However instead of crediting IB.DD A/c, the credit goes to SL.DDBOI A/c.

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Payment and Remittance

Duplicate DD on Correspondent Bank

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Payment and Remittance

Duplicate DD on Correspondent Bank (Contd.)

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Payment and Remittance

Duplicate DD on Correspondent Bank (Contd.)

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Payment and Remittance

Duplicate DD on Correspondent Bank (Contd.)

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Payment and Remittance

Duplicate DD on Correspondent Bank (Contd.)

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Payment and Remittance

Duplicate DD on Correspondent Bank (Contd.)

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Payment and Remittance

Intra-Branch Transfer

Transfer of funds between two accounts in the same branch. Steps for Intra-Branch transfer are:
Cheque issued by customer for payment to beneficiary Cheque deposited by beneficiary with pay-in-slip Scrutiny of cheque and pay-in-slip for correctness Debit drawers account and credit beneficiary account

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Payment and Remittance

SOX Process for Intra- Branch Transfer

INPUTS
Customer Transfer requisition

PROCES S
CSO

OUTPUTS
Discrepant requisition

Scrutinise request for completeness and correctness Is it ok for processi ng further? Brand counter foil with Transfer , stamp,initial Handover counter foil

Customer N o

Acknowledged counter foil

Check drawers balance and signature

Finacle

Customer

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Payment and Remittance

SOX Process for Intra- Branch Transfer (Contd.)

INPUTS PROCESS
A
Is it ok for processin g further? Yes M2 Enter tran

OUTPUTS

No Prepare Return Memo and sign Finacle Attach customer requisition to return memo and despatch to beneficiary Discrepant requisition

Hand over voucher for verification CSM Scrutinise correctness of particulars Verify Tran Return voucher to CSO for spiking END

Beneficiary

Finacle

Dr. Drawer A/c Cr. Beneficiary A/c M1

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Payment and Remittance

Scrutinise Transfer Request

Ensure that date on cheque is not stale or post-dated. Check amount in words and figures match on cheque. It is signed by drawer. Verify that beneficiarys name and amount on pay-in-slip matches with that on cheque. Check particulars on counter foil are same as on pay-in-slip.

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Payment and Remittance

Enter Transaction (Tran)

Enter Tran using the TM module in Finacle Write Tran Id on voucher Check mode of operation of the account Cancel customers signature and initial the cheque Brand the transfer stamp on the face of the pay-in-slip and cheque

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Payment and Remittance

Inter-Branch Transfer

Transfer of funds between accounts of customers at different branches For branches in same network transfer transaction as in same branch transaction For branches in different servers- Anywhere banking Module anywhere transfer transaction Cheques with pay-in-slips sent to regional processing Centre Transactions processed at RPC

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Payment and Remittance

Inter-Branch Transfer RPC Linked Branch

INPUTS
Customer Cheque and Pay in slip 1 Is it ok for processi ng further? YES Brand counter foil with Transfer , stamp,initial Handover counter foil

PROCES S
CSO

OUTPUTS

Scrutinise it for completeness and correctness

NO

Ensure that date on cheque is not stale or post-dated. Check amount in words and figures match on cheque and it is signed by drawer. Also verify that beneficiarys name and amount on pay-in-slip matches with that on cheque. Check particulars on counter foil are same as on pay-inslip

Discrepant requisition

Customer

Acknowledged counter foil

Check drawers balance and signature

Finacle

Customer

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Payment and Remittance

Inter-Branch Transfer RPC Linked Branch (Contd.)

INPUTS
2 Fowarding schedule must
indicate the total number of instruments sent to RPC for processing Is the request in order ?

PROCESS
A

OUTPUTS

NO

Return the request for rectification

Discrepant request

Customer Prepare the forwarding schedule for the RPC duly signed 2 Dispatch the schedule and cheques to RPC W1 Schedule with cheque

C
RPC

File the copy of schedule in branch file

END

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Points to Check for Funds Transfer

Points to Check for Funds Transfer

Payment and Remittance

Balance availability Verification of specimen signature Cheque is proper in all respects Payee name in cheque matches with the name of customer in Finacle

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Payment and Remittance

Activity: Funds Transfer

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Summary

In this session, you learnt that:

A bankers cheque or PO is an instrument that a banker issues after receiving funds from the customer. The PO is printed on security stationery and issued to the customer. A DD is similar to a PO in that it is issued after funds are received from the customer. The main difference is that a PO is payable locally at the branch which issues the PO or at the service branch whereas a DD is drawn and payable on a branch located at another centre. Account to account transfer within the branch is called Intra-Branch transfer. Where customers have accounts in different branches of a bank, request for transfer of funds from one account to another, is called Inter-Branch transfer.

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