Remittance:

Remittance of funds is ancillary services of MTBL. It aids to remit fund from one place to another place on behalf of its customers as well as non- customers of Bank. MTBL has its branches in the major cities of the country and therefore, it serves as one of the best mediums for remittance of funds from one place to another.

The main instruments used by MTBL, Dilkusha Branch for remittance of funds.

▫ Payment Order Issue/Collection
▫ Demand Draft Issue/Collection
▫ T.T. Issue/Collection
▫ Endorsements
▫ Travelers Cheque Issuance
▫ IBC/OBC Collection.


Payment Order Issue/Collection:

The pay order is an instrument issued by bank, instructing itself a certain amount of money mentioned in the instrument taking amount of money and commission when it is presented in bank. Only the branch of the bank that has issued it will make the payment of pay order.

Issuing of Pay Order:

The procedures for issuing a Pay Order are as follows:
▫ Deposit money by the customer along with application form.
▫ Give necessary entry in the bills payable (Pay Order) register where payee’s name, date, PO no, etc is mentioned.
▫ Prepared the instrument.
▫ After scrutinizing and approval of the instrument by the authority, it is delivered to customer. Signature of customer is taken on the counterpart.

Different modes of PO when a customer can purchase:

By cash:
Cash A/C Debit
Bills payable (PO) A/C Credit.
Income on commission A/C Credit.
 
By account:
Customer’s A/C Debit
Bills payable (PO) A/C Credit.
Income on commission A/C Credit.
 
By transfer:
MTBL General/ other Dept Clients A/C Debit
Bills payable (PO) A/C Credit.
Income on commission A/C Credit.

PO A/C is the current liabilities of bank, which is acquired to be discharged by beneficiaries against cash or through an account.

Settlement of a PO:

When PO submitted by collecting bank through clearing house, the issuing bank gives payment.

Bills payable (PO) A/C Debit
MTBL General A/C Credit.

But before giving payment it is duty for issuing to observe whether endorsement was given by the collecting bank or not, then the instrument is dishonored and marking ‘Endorsement required’.

Cancellation of a Pay Order:

If a buyer wants to cancel it, he should submit a letter of instrument in this regard and also return the instrument.

Accounting treatment: Adjustment entry wills be-

Bills payable (PO) ---------------Dr.
Customer A/C------------------Cr.

When PO is lost:

If the instrument is lost, the holder will inform to the issuing bank immediately. Bank will mark ‘stop payment’ on the Bills payable (PO) Register. Buyer will then ask for a new instrument by submitting a GD copy, and indemnity bond. A new instrument will be delivered.


Demand Draft Issue/Collection:

The person intending to remit the money through a Demand Draft (DD) has to deposit the money to be remitted with the commission which the banker charges for its services. The amount of commission depends on the amount to be remitted. On issue of the DD, the remitter does not remain a party to the instrument: i) Drawer branch ii) Drawee branch iii) Payee. This is treated as the current liability of the bank as the banker on the presentation of the instrument should pay the money. The banker event on receiving instructions from the remitter cannot stop the payment of the instrument. Stop payment can be done in the following cases:

 Loss of draft before endorsement: In this case, “Draft reported to be lost, payee’s endorsement requires verification” is marked.
 Loss of draft after endorsement: In this case, the branch first satisfies itself about the claimant and the endorsement in his favor.

Accounting treatment:
In case of issuing of the instrument:

Cash/ customer’s A/C---------------------Dr.
MTBL General A/C (Drawn on branch)----------Cr.
Income A/C commission---------------------------Cr.

After giving these entries an Inter Bank Credit Advice is prepared which contains the controlling number, depicting that the branch is credited to whom it is issued.
An IBCA implies the following entries,

MTBL General A/C Issuing Branch -------Dr.
Drawn on branch------------------------------------Cr.

Role of the Drawn Branch:

After receiving the IBCA lodgment is done by the branch. The following entries are given “DD In-Issuing branch” register:

Issuing branch A/C-------------------------Dr.
Bills Payable ---------------------------------------Cr.
(After receiving an IBCA)
Bills Payable (DD) A/C--------------------Dr.
Client’s A/C--------------------------------Dr.

Entries are given in “DD In-Issuing branch” register:

Issuing branch A/C-----------------------Dr.
Bills Payable---------------------------------------Cr.
(After receiving an IBCA)
Bills Payable (DD) A/C------------------Dr.
Client’s A/C------------------------------Dr.

Charges:

A commission of 0.15% is taken on the draft value & Tk.50/= is taken as postal charge.

Cancellation:

To cancel an issued DD, the client has to submit an application. Issuing branch then sends an Inter Branch Debit Advice (IBDA) to the drawn branch against previously issued IBCA.

After that the following entries are given:

General A/C drawn on branch---------Dr.
Client’s A/C ---------------------------------------Cr.

Issuing of Duplicate DD:

If the customer wants to issue a duplicate DD, than customer is asked to do the following formalities:

 Making a general diary (GD) in the nearest Police Station.
 Furnishing an Indemnity Bond in Tk.50/= stamp

The banker immediately marks “stop payment” in the register after receiving the application from the customer and a duplicate DD is issued.