Law Summary

Introduction

This memorandum outlines the guidelines and procedures governing currency note deposits and withdrawals by banks from their demand deposit accounts with the Bangko Sentral ng Pilipinas (BSP). It categorizes currency into fit, unfit, and mutilated types, referencing BSP Circular No. 61, Series of 1995.

Currency Classification

• Legal Principle/Provision: Currency is classified into three types:

  • Fit: Currency that is suitable for circulation.
  • Unfit: Currency that is not suitable for circulation but can be deposited.
  • Mutilated: Currency that is damaged and must be returned directly to BSP for redemption.

• Key Definitions:

  • Fit Currency: Currency that remains in circulation.
  • Mutilated Currency: Currency that cannot be accepted for deposit and must be assessed for redemption.

• Important Requirements:

  • Mutilated currency must be forwarded to the BSP or nearest Regional Cash Unit.
  • Fit currency does not need to be deposited but can be exchanged between banks.

Cash Deposit Guidelines

• Legal Principle/Provision: Banks must follow specific procedures when making cash deposits to ensure compliance and efficiency.

• Requirements/Procedures:

  • Cash deposits or withdrawals must be completed by 2:00 PM.
  • A 0.5% service fee applies to deposits of fit currency notes.
  • Fit currency deposits are accepted after a package and bundle count, which won’t undergo piece verification unless not withdrawn within one month.

• Timeframes:

  • If fit currency is not withdrawn or reissued within one month, it is subject to piece-by-piece verification.

• Penalties/Consequences:

  • Non-compliance with packaging and sorting standards may lead to rejection of deposits.

Currency Sorting and Packaging

• Legal Principle/Provision: Proper sorting and packaging of currency notes are mandated to facilitate efficient handling.

• Requirements/Procedures:

  • Currency notes should be pre-sorted for fitness.
  • Notes must be arranged face up in packages of 100 and sealed in containers with specific labeling and verification details.

• Packaging Standards:

  • Containers should hold 20 complete bundles per denomination.
  • Each package must be marked with the denomination, amount, verification date, and names of verifying employees.

Withdrawal Procedures

• Legal Principle/Provision: The BSP will service cash withdrawals from verified deposits or unverified fit currency note deposits.

• Requirements/Procedures:

  • Only authorized bank representatives can open sealed containers of their unverified deposits.
  • Withdrawals made after 12:00 noon will be processed on the next banking day.
  • Bundle/package/piece counts must be conducted at the withdrawal area and witnessed.

• Consequences:

  • Any discrepancies in cash counts must be reported immediately; failure to do so may result in the bank absorbing any shortages.

Final Provisions

• Cross-References: This memorandum supersedes previous guidelines set forth in the July 24, 1981 memorandum.
• Effective Date: The guidelines take effect on May 15, 1995.

Key Takeaways

• Currency is classified into fit, unfit, and mutilated types.
• Strict procedures are established for cash deposits and withdrawals to ensure compliance and accuracy.
• Banks must adhere to specific packaging, sorting, and verification standards for currency handling.
• Discrepancies in cash transactions must be promptly addressed to avoid financial penalties.