class 12 | Unit-3 ORGANIZATION OF A BANK BRANCH (part 2) | Banking | term 2

 

Security Arrangements in Bank

In this section we will discuss the security arrangements for the various equipment / channels provided by the Bank. 

ATMs Security Arrangements:

  • ATM should be equipped with a security camera and well lighted to have proper recording 
  • Banks deploy unarmed security guards personnel or caretakers. 

Branch Security measures:

  • The entrance / exit gate should be always guarded by a gunman. The gate should be open to permit entry or exit of only one person at a time. This will prevent the miscreants to run away quickly if they try to do some mischief. 
  • All other entries to the branch hall should be closed to prevent anybody from entering or exiting the bank from that entry point.
  •  Burglar Alarms should be fixed at several places in the branch,including one each in the Vault cash cabin/s, in the cash manager’s box or desk, or branch manager’s cabin.
  • CCTV should be fixed at strategic places at the entrance, cash cabin, inside & outside in the vault and also in the ATMs. 
  • Burglar alarm attached to the door of the vault should be heard in the road side also. In case of breaking open of the Vault’s door after the closure of the branch, there should be an alarm bell in the nearest Police Station as well as at the residence of the branch manager. 
  • Fire Extinguishers have to be provided in several places within the branch premises - solid, liquid and chemical extinguishers, to extinguish fire from different cases. Fire may occur due to electrical short circuit, paper or oil stored in the premises catching fire etc.

Question:-

  1. What are the security features implemented for a Bank vault?
  2. What is the need for segregation of the different areas of the Bank?

Bank vault security arrangement:

  • Entire cash and all other valuable items are to be stored in the vault for overnight.
  • Bank vault is a secure space specially constructed with RCC on all sides as per specifications laid down for bank vaults.
  • Lockers are also situated inside the vault. 
  • The vault protects their contents from theft, fire, natural disasters, and other threats. 
  • Burglar alarm, Fire alarm and CCTV are all fixed as per mandate of RBI.


RBI has stipulated safety measures for the vault security as follows:

  • The main entrance should be provided with shutter gates.After business hours, the shutter should be half-closed so that customers or anybody else do not enter the premises.
  • The cashiers’ cabin has to be as far away as possible from the entry / exist. 
  • Emergency lights should be installed and should always be in working condition. Windows / ventilators should have proper standard grills to prevent entry of burglars. 
  • Posting of guards (armed or otherwise) should be decided keeping in view the location of the branch and the assessment about the possibility of security threats. 
  • Currency Chest branches should have two armed guards throughout the day and night to ensure round-the-clock safety.
  • Night latches have to be provided to cashier’s cabin, grill gates to vaults, and alarm system etc. should be provided.
  • Hot line connection/s to Police Station / Police Control Room / Fire Brigade and auto dialer should be provided to all Currency Chest Branches irrespective of the monetary holding limits. 
  • All weak points like opening for exhaust fans and air-conditioning ducts, skylights and windows should be strengthened with appropriate RCC work or steel plates, steel grills etc.

Question

  1. Differentiate between clearing and settlement?
  2. What are the functions of Clearing House of RBI?
  3. Explain the process of cheque clearing?

Clearing Houses 

Payment Systems : 

The financial system provides transfer of funds from payers to payees through two systems 

  1. paper based mechanism (e.g. Cash, Cheques, Drafts etc.)
  2. paperless mechanism (e.g. Electronic Funds Transfer)

Clearing 

Clearing in the banking system is the process of settling transactions between banks. Millions of transactions occur every day, so bank clearing tries to minimize the amounts that change hands on a given day.

is an arrangement through which a bank exchanges cheque drawn on other banks are received by it for collections with the cheques which are drawn on it and sent by other banks for collection from it 

Clearing House 

is a place where banks that are members of the clearing house meet to exchange the cheques. Outward clearing refers to instruments that are deposited by customer that are drawn on other banks that need to be presented at clearing. Inward clearing means all the paper based instruments that have to be presented at the drawer bank either in person or by another bank in clearing for collection

 Clearing House Functions:

  • Facilitate the exchange of instruments
  • Settlements of Claims 
  • Settlements with Major Banks 
  • Settlements with the Central Bank 

Clearing houses clear and settle transactions relating to various types of paper based instruments like cheques, drafts, payment orders, interest / dividend warrants, etc. 

Normally, clearing activity is carried out by the Clearing house appointed by the central banker, but it can be outsourced to a vendor also or carried out by another bank appointed by Central Bank. 

Clearing process in India:

In India, the clearing system is local and confined to a defined jurisdiction covering all the banks and branches situated in the area under a particular zone. The clearing house is a voluntary association of banks under the management of a bank where the settlement accounts are maintained. Wherever Reserve Bank of India has its office (and a banking department), the clearing house is managed by it. In the absence of an office of the Reserve Bank, the clearing house is managed by the State Bank of India, its associate banks and in a few cases by public sector banks.

Currently, in India, there are about 1050 cheques clearing houses. These clearing houses clear and settle transactions relating to various types of paper based instruments like cheques, drafts, payment orders, interest / dividend warrants, etc. In 40 of these clearing houses, cheque processing centres (CPCs) using MICR (Magnetic Ink Character Recognition) technology have been set up.At 14 more clearing houses, MICR cheque processing systems are proposed to be set up. The Reserve Bank has issued the Uniform Regulations and Rules for Bankers’ Clearing Houses (URRBCH) which has been adopted by all the clearing houses. These regulations and rules relate to the criteria for membership / sub-membership,withdrawal/removal/suspension from membership and the procedures for conducting of clearing as well as settlement of claims between members.

The clearing process begins with the deposit of a cheque/other clearing instrument referred to above by the customer in a bank. The bank arranges these cheques submitted to it for clearing, bank wise and presents them through the clearing house to other banks. When there are more than one bank branch of a bank in the clearing area, they would have a coordinating branch/ service branch to take care of presenting the cheques to the clearing house. Upon receipt of the cheques/other instruments, they are passed for payment if the funds are available and the banker is satisfied about the genuineness of the instrument. The cheques that are unpaid are returned to the presenting bank through another clearing called the Return Clearing. The realization of the funds occurs after the completion of return clearing and by the absence of an unpaid cheque 

Settlement of Funds: 

The settlement of funds in clearing occurs at several levels. The aggregate amount or value of cheques presented by a bank on other banks represents the claim by that bank on other banks. Similar claims are made by all the banks on every other bank in the clearing. A net settlement is arrived at the clearing house and the debit or credit position of the bank is determined. These are booked in their current accounts maintained bythe settling bank. This represents inter- bank settlement. The settlement of funds between the service branch and the branch concerned represents the transfer of funds to the branch level. The payment process is completed only when the funds are debited from the drawer’s account and credited to the payee’s account.This occurs after the completion of the return clearing mentioned above. 

Questions

  1. Explain the functions of the front office of the Bank?
  2. Explain the functions of the middle office of the Bank? 
  3. Banking Products & Operations 
  4. Explain the functions of the back office of the Bank? 
  5. What are the security features implemented for a Bank vault? 
  6. Differentiate between learning and settlement? 
  7. Explain the typical structure of a Bank branch?
  8. Explain the Branch Manager’s duties as a Retail banker?
  9. What are the different service channels available to the Bank for servicing the customers?
  10. What is the need for segregation of the different areas of the Bank? 
  11. What are the functions of Clearing House of RBI? 
  12. Explain the process of cheque clearing? 
  13. Differentiate between clearing and settlement?

REFERENCE :- 

https://www.allbankinginfo.com/2020/08/cheque-clearing-process.html?m=1

https://www.totaljobs.com/advice/bank-manager-job-description

https://www.iedunote.com/bank-services

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