Question & AnswerQ&A (BSP CIRCULAR NO. 681, S. OF 2010)
Temporary overdrawings against demand deposit accounts are not allowed unless caused by normal bank charges and other fees incidental to handling such accounts.
Banks violating the regulations on temporary overdrawings shall be subject to a fine of one-tenth of one percent (1/10 of 1%) per day of violation, computed on the amount of overdrawing, but not to exceed P30,000 a day for each violation.
These shall be debited by banks under a 'Returned Checks and Other Cash Items' account in Other Assets and must be immediately reversed the following day, value dated on the date of original check presentation.
No, subject to conditions: reciprocal arrangements cover overdrawings, temporary overdrawings are covered within 15 banking days, and such accounts are credited only through foreign exchange inward remittance.
DAUDs are prohibited except when made against uncollected deposits representing manager's/cashier's/treasurer's checks, treasury warrants, postal money orders, and duly funded on-us checks, at the discretion of each bank.
The drawee bank must affix a Return Stamp with the date of return and reason for refusal. Remarks such as 'Drawn Against Insufficient Funds', 'No Funds', or 'Insufficient Funds' must be indicated on the stamp.
Checks must be returned by 7:30 AM on the clearing day immediately following the original date of presentation to PCHC or RCC.
The bank will be excluded from clearing that day and denied BSP credit facilities. Continuous overdrawing for five consecutive clearing days results in prohibition from new loans, declaring cash dividends, and establishing branches.
The OCL is a ceiling on overdrafts a bank may incur, consisting of clean OCL equal to 15% of rediscounting line with BSP plus collateralized OCL. Banks must meet specific criteria to avail of clean OCL, otherwise collateralized OCL is required.
No availment of clean/collateralized OCL is allowed. In end-of-day overdraft, the PSO advises PCHC on the amount available for settlement; in final overdraft cases, the bank is excluded from the next clearing.
They may participate directly in clearing operations through PCHC or indirectly through conduit arrangements with Universal/KBs. Other banks may indirectly participate via demand deposit accounts with UBs/KBs as settlement accounts.
These checks should be returned by drawee bank to the negotiating bank not later than the afternoon regular clearing. Returned checks in the AM clearing window get the same value date as original presentation; PM clearing returned checks get value on the day presented.
Banks must fully cover overdrafts not later than the next clearing day including interest at one-tenth of one percent per day or T-bill rate plus 3 points, or face exclusion from clearing and denial of BSP credit facilities, plus other operational prohibitions.
Settlement is value dated on the day checks are originally presented; overriding provisions on ceilings for overdrafts and procedures for handling returned checks govern interbank settlements as per BSP Circular No. 681.