What is the definition of a cash item? (3.3-1)
Checks or other items in process of collection payable in cash upon presentation. Commonly known as: bookkeepers' return items, rejected or unposted debits. Should represent the total of only ONE day's items.
Definition of due from time deposit? (3.3-2)
Time balances with any bank which are not subject to immediate withdrawal but have the usual time account restrictions.
Primary Reserves
Cash and demand balances due from other banks. These accounts generally represent a bank's most liquid assets, except to the degree that they comprise a bank's "required" or
statutory reserves. Held in this capacity, they lack the flexibility generally associated with liquidity reserves.
What are the objectives of a proof & transit system? (3.3-1)
1) To forward items for collection so that funds are available as soon as possible
2) To distribute all incoming checks and deposits to their destinations
3) To establish whether deposit totals balance with the totals shown on deposit tickets
4) To prove the totals on the general ledger entries and other transactions
5) To collect data for computing the individual customer's service charges and determine the availability of funds
6) To accomplish the assigned functions at the lowest possible cost
REG F - LIMITATIONS ON INTERBANK LIABILITIES
Requires all institutions to establish and maintain written policies and procedures to prevent excessive exposure to any individual correspondent. This rule covers all "credit exposure" to a correspondent. The rule requires that a bank establish internal limits on exposure only where the financial condition of the correspondent and the form or maturity of the exposure create a significant risk that payment will not be made as contemplated.
The rule provides that a bank should limit overnight credit exposure to a correspondent to 25% of the exposed bank's capital, unless the bank can demonstrate that its correspondent is at least "adequately capitalized."