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F ederal Reserve Bank o f D allas DALLAS, TE X A S 75222 Circular No. 72-244 October 27, 1972 To All Banks and Others Concerned in the Eleventh Federal Reserve District: Enclosed is a revised copy of Bulletin 12 (formerly Bulletin 8D), "Automatic Payment for Cash Letters/' which is effective November 9j 1972. This bulletin has been reprinted in the new format and amended to include the requirement that cash letter charges to reserve accounts will be made on the day of presentment of the cash letters. The old, small-size copy of Bulletin 8D, effective September 1, 19&7* should be removed from your binder and destroyed. Yours very truly, P. E. Coldwell President Enclosure This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BULLETIN 12 Automatic Payment For Cash Letters FEDERAL RESERVE BANK OF DALLAS This bulletin sets out a plan for automatic paym ent of cash letters received from the Federal Reserve Bank of Dallas and its branches at El Paso, Houston, and San Antonio, and contains instructions to be followed by banks using such plan. TABLE OF CONTENTS Section 1, GENERAL 1.00 Collection contract 1.05 Authority 3.15 Action on nonreceipt of cash letters 3.20 Notifying this bank 3.25 Return items and reports of cash letter differences Section 2, DEFINITIONS AND REFERENCES 2.00 2.05 2.10 2.15 Definitions, references to Regulation J Reference to Bulletin 1 Use of term “remitting b a n k ” Use of term “correspondent bank” Section 3, AUTOMATIC PAYMENT FOR CASH LETTERS 3.00 Automatic charge plan 3.05 Advice of automatic charge 3.10 Right to counterm and 9-21-72 Section 4, APPOINTMENT OF PROCESSING ORGANIZATION AS AGENT 4.00 Appointm ent of processing organization as agent to make notifications and requests and to forw ard return items Section 5, INITIATION AND REVOCATION OF THE AUTOMATIC CHARGE PLAN 5.00 Initiation 5.05 Revocation BULLETIN 12 FEDERAL RESERVE BANK OF DALLAS Section 1, GENERAL This bulletin is directed to the member and par remitting nonm em ber banks of the Eleventh Fed eral Reserve District and others concerned: 1.00 Collection contract Regulation J, Bulletin 11, and this bulletin pre scribe the terms, conditions, and instructions for automatic paym ent of cash letters. 1.05 Authority This bulletin and our instructions to collecting and paying banks (Bulletin 11] are issued pursu ant to the provisions of section 4, 13, 14(e], and 16 of the Federal Reserve Act and the provisions of related statutes and in conformity w ith the provisions of Regulation J. Section 2, DEFINITIONS A N D REFER ENCES 2.00 Definitions, references to Regulation J All terms defined in Regulation J and used herein have the meanings stated in that regulation. 2.05 Reference to Bulletin 1 Several definitions and rules of construction, and other provisions applicable to this bulletin are found in our Bulletin 1, General Provisions, and are incorporated herein by reference. 2.10 Use of term “remitting bank” Use of term “remitting bank” means the bank on which the items in a cash letter are drawn. 2.15 Use of term “correspondent bank” The term “correspondent b an k ” in this bulletin refers to a correspondent member bank desig nated by a remitting bank to receive charges for the remitting b a n k ’s cash letters. Section 3, AUTOM ATIC PAYM ENT FOR C A SH LETTERS 3.00 Automatic charge plan Under the automatic paym ent plan, the amount of each cash letter is automatically charged to the remitting bank’s reserve account or, in the case of nonm em ber banks and m ember banks not wishing their own reserve account charged, the reserve account of a correspondent bank. The designation of a correspondent bank outside the Eleventh Federal Reserve District requires con currence of the Federal Reserve Bank of the other district. The charge will be m ade not later than the close of the banking day for this bank on which the cash letter is received by the remitting bank. If the banking day on w hich the cash letter is re ceived by a remitting bank is not a banking day for this bank, the charge will be m ade on the banking day of both this bank and such remitting bank next following the day of receipt. Each remitting bank is required to furnish this bank and the correspondent bank, if any, a list of days on w hich it is closed. For the purpose of this plan, the remitting bank will be treated as open on any day (other than Sunday) not so re ported as a day of closing. Our form TR-385 should be used for furnishing such a list; how ever, notification of any change in days of clos ing m ay be made by letter. All automatic charges will be for the full amount of the cash letter. Credits for return items and charges and credits for adjustments will be made by separate entry. An agreement by a remitting bank or, in appropriate cases, by a remitting bank and a correspondent bank to utilize the automatic paym ent plan shall authorize this bank to make all necessary entries to the reserve account in question. 3.05 Advice of automatic charge This bank will forw ard to the remitting bank and to the correspondent bank, if any, an advice of each automatic charge. We will likewise forw ard to the bank or banks in question an advice of all other reserve account charges and credits arising under this plan. Should the am ount of an advice of automatic charge disagree w ith the remitting bank’s figures, the remitting bank should notify us immediately. 3.10 Right to countermand The remitting bank and its correspondent shall each have the right to counterm and any auto matic charge by notifying this bank prior to this bank’s close of business on the day the charge is to be made. W hen an automatic charge is coun termanded, other acceptable remittance m ust be furnished not later than the banking day for this bank on w hich timely paym ent or rem ittance would have been received by this bank in the ordinary course. W ith regard to acceptable forms of remittance, attention is directed to Reg ulation J of the Board of Governors of the Fed eral Reserve System and this bank’s Bulletin 11, BULLETIN 12 FEDERAL RESERVE BANK OF DALLAS entitled “Instructions to Collecting and Paying Banks.” 3.15 Action on nonreceipt of cash letters If the cash letter is not received at the usually expected time, the remitting bank should notify this bank immediately as prescribed in section 3.25 of this bulletin. If this is done, we will not make an autom atic charge for such cash letter. W hen the cash letter is thereafter received, the remitting bank may, on the date of receipt re quest that we make an automatic charge on such day of receipt. If the remitting bank fails to furn ish such notification of nonreceipt of any cash letter, we will require it to hold us harm less from any loss contributed to by such failure. 3.20 Notifying this bank On days this b ank is open, notification of m atters relating to the automatic paym ent plan m ay be given by a collect telephone call to the m anager or assistant manager of the Checks Department at the appropriate office, or to any of the officers over the checks function at such office. On Satur days and holidays observed by this bank, notifi cation should be given by a collect telegram. A collect telegram or letter may also be used if the proper parties of this bank can not be reached by telephone. 3.25 Return items and reports of cash letter differences The reserve account of the remitting bank, or in appropriate cases that of the correspondent bank, will be credited w ith the amount of all items for which paym ent or rem ittance is recov erable under section 210.12 of Regulation J of the Board of Governors of the Federal Reserve System. The rem itting bank should notify this bank immediately of differences of $1,000 or more found in cash letters. Lesser differences may be reported by letter or m em orandum ad vice. Return items, notification of nonpayment, and reports of differences in cash letters should be forw arded in the stamped, self-addressed en velopes provided by this bank. Section 4, APPOINTM ENT OF PRO CESSING ORGANIZATION A S AGENT 4.00 Appointment of processing organization as agent to make notification and requests and to forward return items If the remitting bank requests delivery to another organization for processing, the processing orga nization may be appointed as agent for the re mitting bank to make the notifications and re quests called for in sections 3.05, 3.15, 3.20, and 3.25 of this bulletin and to forw ard return items to this bank. The advices provided for by this bulletin will also be furnished by this bank to any processing organization that is appointed agent for these purposes. Appointm ent of the processing organization as agent does not relieve the remitting bank of any liabilities to this bank under this bulletin or otherwise. Section 5, INITIATION A N D REVOCA TION OF THE AUTOM ATIC CHARGE PLAN 5.00 Initiation To use the automatic charge plan, m em ber banks that w ish to charge their own reserve account should execute authorization form TR-383. Non m em ber banks and member banks that do not wish to charge their own reserve account should, in conjunction w ith the designated correspond ent bank, execute authorization form TR-384. For arrangements involving delivery of cash let ters to a processing organization, execution of special collection agreement form TR-411 is re quired. On receipt of a properly executed form TR-383, TR-384, or TR-411, this bank will inform the re mitting bank and the other parties, if any, of the effective date of the plan. The plan-will apply to our cash letter dispatched on the date specified and to all cash letters dispatched thereafter. 5.05 Revocation An agreement to use this plan may be revoked at any time by this bank, the remitting bank, or the correspondent bank, if any, upon w ritten notice to the other party or parties. Revocation by the remitting bank or correspondent bank will be effective immediately upon receipt of the notice by this bank or at the time stated in the notice, w hichever is later. Revocation by this bank will be effective at the time stated in our notice. Re vocation will not affect the right of this bank to m ake all reserve account entries required by this plan relating to any cash letter dispatched by us prior to the effective date of the revocation.
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