Checking of various Control Procedures in Banks

While checking various control procedures in the bank there are certain points you need to take into consideration. So in this article let’s see the checking of controls in various aspects. 

General control 

  • The staff and officers of the bank should be shifted from one position to another frequently and without prior notice, this is known as the rotation of jobs. 
  • The works of one person should be checked by another person so that if any inconsistency is detected by another person. 
  • Are responsible officers should be given possession of demand drafts, checkbooks, etc. 
  • The signature book and telegraphic codebook should be kept with a responsible officer. 
  • The banks should take insurance policies against loss and employees’ wrongful acts. 
  • The rights and duties of management should be drawn and should be properly understood. 

Control on cash 

  • Cash should be kept in the joint custody of at least 2 responsible officers. 
  • Surprise checking should be conducted. 
  • The cashier should not have access to the customer’s ledger account and daybook. 
  • Payments should be made only after the voucher has been passed by a proper officer. 
  • Received and payment scrolls (books maintained by the cashier) should be compared with the cash column of the daybook by an independent person. 
  • The limit on the payment powers of the tailor should be laid out. 

Constituent’s ledger 

  • Before making payment, cheques should be checked in respect of signature, balance on hand and should be passed by a proper officer. 
  • No withdrawals should normally be allowed against clearing cheque deposited on the same day. 
  • Access to voucher summary sheets should not vest with the ledger keepers. 
  • Interest debited or credited to the constituent account should be independently checked. 

Bills for collection 

  • The proper officer should receive and entered all documents accompanying the bill in the register.
  • The accounts of the principals should be credited only after the realization of the bill. 
  • While amalgamating the balance sheet it should be ensured that bills sent by one branch to another branch for collection are not included twice. 

Bills purchased 

  • At the time of purchase of bills, an officer should verify that all documents of title are properly assigned to the bank. 
  • A sufficient margin should be kept while purchasing or discounting a bill. 
  • Periodical reporting of all irregular outstanding accounts should be made to the head office. 
  • In case of purchase or discounting of a bill, proportionate income should be recognized between the periods.

Loans and advances 

  • Advances should be made only after evaluating the creditworthiness of the borrowers and obtaining sanction from proper authorities of the bank. 
  • All the loan documents like promissory notes, letter of hypothecation, guarantee letter, etc. Should be executed by the party before advances are made. 
  • While determining the loan amount to be sanctioned, a sufficient margin should be kept against securities taken to cover any decline in the value thereof and also to comply with RBI directives. 
  • Securities should be received and returned by the responsible officer and should be kept in the joint custody of at least 2 responsible officers. 
  • Securities which require registration should be registered in the name of the bank. 
  • In the case of physical possession of goods as security, the goods should be test checked at the time of receipts. In respect of hypothecated goods not in the position of the bank, surprise checks should be made. 
  • Personal inquiries should be made to determine the market value of goods. 
  • All irregular accounts should be brought to the notice of the headquarter regularly. 
  • There should exist a proper system for post disbursement supervision and follow up. 
  • Classification of advances should be made as per guidelines given by the Reserve Bank of India. 
  • Ensure that the funds disbursed should be utilized only for the purpose for which advances have been granted.

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