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FEDERAL RESERVE BANK
O F N EW YORK
r

Circular No.

8642 T

L September 28, 1979 J

CHECK COLLECTION OPERATING CIRCULARS
Revisions Reflecting Photocopy and Fine-Sort Changes
To A ll M em ber B anks in the Second Federal
Reserve D istrict, and O thers Concerned:

Enclosed are revisions of our O perating C irculars No. 4, “ Collection of Cash Item s,” and No. 6,
“Instructions to Collecting Banks and Paying B anks,” together w ith the F ifth Supplement to our
O perating C ircular No. 5, “Time Schedules— A vailability of C redit fo r Cash Item s.”
O perating Circulars No. 4 and No. 6 have been revised principally to—
(a) Incorporate the outstanding supplements to the previous editions of those circulars;
(b) Reflect the new procedures for handling photocopies of missing or destroyed cash items announced in
our Circular No. 8580, dated May 25, 1979; and
(c) Include updated procedures (in paragraphs 13 and 14 of O.C. 4 and in paragraphs 5 and 13 of O.C. 6 )
relating to the interterritory fine-sort program announced in our Circular No. 8621, dated August 10, 1979.

The F ifth Supplement to O perating C ircular No. 5 reflects the elimination of the minimum volume
requirem ent of 200 items per package in end-point sorted cash letters, as announced in our C ircular
No. 8621.
If you have any questions regarding these changes, please call:

Head Office
Jerome P. Perlongo, Manager, Check Adjustment and
Return Items Department (Tel. No. 212-791-5292)

Buffalo Branch
Robert J. McDonnell, Operations Officer
(Tel. No. 716-849-5022)

Cranford Office
Fred A. Denesevich, Manager
(Tel. No. 201-272-9000)

Jericho Office
Leonard I. Bennetts, Manager
(Tel. No. 516-997-4569)

Utica Office
Robert C. Thoman, Vice President
(Tel. No. 315-736-8321)

A dditional copies of the enclosures will be furnished upon request.




T

h o m a s

M.

T

im l e n

,

First Vice President.

FEDERAL RESERVE BANK
OF N E W YO R K

[

Operating Circular No. 4 "1
Revised September 18. 1979 J

COLLECTION OF CASH ITEMS
To A ll Member Banks in the Second Federal
Reserve District, and Others Concernedl :

CONTENTS

Topic

Paragraph
Number

G eneral............................................................................................................ 1-2
Items which will be handled as cash item s............................................ 3-4
Items which will not be handled as cash item s...................................... 5-8
Terms and conditions of collection...........................................................9-12
Preparation of cash letters by sen ders................................................... 13-15
Endorsements ..............................................................................................16-17
Presentment for paym ent...........................................................................18-19
Uniform instructions regarding protest and advice of nonpayment....20-23
Communications concerning cash item s.................................................. 24
Time schedules and availability of credit.............................................. 25-28
Immediate cred it................................................................................... 27
Deferred credit ..................................................................................... 28
Instructions to collecting banks and paying b an k s................................29-30
31-33
Information to senders regarding return item s.............
Direct sending of cash items to other Federal Reserve B a n k s......... 34-35
Direct sending of cash items to other offices of this B a n k .................36-37
Reimbursement of transportation costs .................................................38-40
Standardization, sorting, routing and mechanized processing..........41-44
Missing or destroyed cash item s; photographic copies .....................45-50
Right to am en d............................................................................................. 51
Effect of this circular on previous circular.............................................. 52
Government checks.............................................................................Appendix A
Postal money o rd e rs.......................................................................... Appendix B
Food coupons.................................................................................. Appendix C
1 Instructions pertaining to the handling of cash items by collecting and paying
banks are contained in our Operating Circular No. 6, entitled “ Instructions to Col­
lecting Banks and Paying Banks.”
[Enc. Cir. No. 8642]




General
1. Regulation J of the Board of Governors of the Federal Reserve
System (hereinafter referred to as Regulation J ) , this operating circular,
and our time schedules prescribe the terms and conditions upon which
we will handle cash items for collection. This operating circular, our
Operating Circular No. 6, and our time schedules are issued pursuant
to the provisions of Sections 4, 13, 14(e), and 16 of the Federal Reserve
Act and the provisions of related statutes and in conformity with the
provisions of Regulation J. All terms defined in Regulation J and used
herein have the meanings stated in that regulation.
2. Unless otherwise stated, all references to the Federal Reserve
Bank of New York, or “ this Bank,” will include the Head Office, its
Buffalo Branch, and its Cranford, Jericho, and Utica Offices.
Items which will be handled as cash items
3. Except as otherwise provided by this operating circular, the fol­
lowing items may be sent to this Bank for handling as cash items in ac­
cordance with and subject to the provisions of Regulation J , of this oper­
ating circular, and of our time schedules:
(a ) Checks, except checks drawn upon any bank included in the
current “ Memorandum on Exchange Charges” published by the
Board of Governors, which indicates the banks that would make
exchange charges on checks presented, sent or forwarded by Federal
Reserve Banks and consequently would not be paying their checks
at par.
(b ) Government checks, postal money orders, and food coupons.2
(c) Such other demand items, collectible at par in funds accept­
able to the Federal Reserve Bank of the District3 in which such items
are payable, as we may be willing to accept as cash items.
4. Whenever any instrument is accepted by us for credit to our own
account, the account of another Federal Reserve Bank, or any account on
our books, we will handle the instrument as a cash item if it would have
been a cash item but for the fact that it was not sent to us by a sender.
Items which will not be handled as cash items
5. This Bank will not handle any item as a cash item i f :
(a )
A passbook, certificate, or any other document is attached to
the item; or
2 Provisions governing the collection of the foregoing cash items are contained in
Appendix A, Appendix B, and Appendix C, respectively, of this operating circular.
3 For the purposes of this operating circular, the Virgin Islands and Puerto Rico
shall be deemed to be in or of the Second Federal Reserve D istrict; and Guam and
American Samoa shall be deemed to be in or of the Twelfth Federal Reserve District.
See Regulation J , note 1.




2

(b) Special instructions, including requests for special advice of
payment or dishonor, accompany the item; or
(c) The item consists of more than a single thickness of paper,
except as provided in paragraph 41 of this operating circular; pro­
vided, however, that any mutilated, erroneously encoded, or other
cash item contained in a carrier qualifying under existing standards
for handling by high-speed check-processing equipment will be han­
dled by us as a cash item ; or
(d ) Except as provided in paragraphs 46-49 of this operating cir­
cular, the item has not been preprinted, or post-encoded before its re­
ceipt by us, with the routing symbol and the suffix of the A.B.A.
routing number of the paying bank (or nonbank payor), and the
dollar amount of the item in magnetic ink in E-13B type in the man­
ner prescribed, and at the location assigned, by the A .B .A .; provided,
however, that this Bank will handle such items as cash items when,
in our judgment, special circumstances justify such handling.
Such items, if sent to this Bank for collection, should be sent only as
noncash items and, if so sent, will be received by us for collection subject
to all the terms and conditions of Regulation J and of our operating circu­
lar relating to the collection of noncash items.
6. In the event that an item which will not be handled as a cash item
by virtue of this operating circular is sent to any Federal Reserve Bank
in a cash letter, the Federal Reserve Bank will charge it back and return
it to the sender. In addition, we reserve the right to return and charge
back an entire cash letter which does not conform to the sorting require­
ments of this operating circular and of our time schedules.
7. This Bank will not handle any item if the item has been dis­
honored two or more times. We reserve the right, in our discretion, to
return or to handle as a noncash item any item which has been dishonored
or if special conditions require that it be handled as a noncash item, and
this Bank shall decide whether such special conditions exist.
8. A cash item payable by or through one office of a bank will not
be received from another office of the same bank for collection as either
a cash item or a noncash item by us or by any other Federal Reserve
Bank.
Terms and conditions of collection
9. Regulation J prescribes terms and conditions under which all
Federal Reserve Banks will collect checks and other cash items for the
senders thereof. Such terms and conditions and the terms and conditions
of this operating circular, our Operating Circular No. 6, and our time
schedules will apply to the handling of all cash items which we accept
for collection thereunder and to the handling of all bank drafts and other
forms of payment or remittance which we receive for such items.




3

10. Section 210.3 of Regulation J provides that the provisions of
that regulation and of the operating circulars of the Federal Reserve
Banks shall be binding upon the sender of a cash item and shall be bind­
ing upon each collecting bank, paying bank, and nonbank payor to which
the Federal Reserve Bank, or any subsequent collecting bank, presents,
sends, or forwards a cash item received by the Federal Reserve Bank.
Section 210.16 of Regulation J provided *that each Federal Reserve Bank
shall issue operating circulars not inconsistent with the provisions of that
regulation governing the details of its operations in the handling of cash
items and containing such other matters as are required by the provisions
of that regulation.
11. A cash item payable in any other Federal Reserve District and
forwarded for collection to the Federal Reserve Bank of such other Dis­
trict by us or sent direct to such Federal Reserve Bank for our account
by a sender which maintains or uses an account with us will be handled
by such Federal Reserve Bank subject to the terms and conditions of
Regulation J and of the applicable operating circulars and time schedules
of such Federal Reserve B an k ; but we will give credit to the sender for
such item in accordance with our time schedules.
12. Under Section 4-204(1) of the Uniform Commercial Code, a
collecting bank must send items by reasonably prompt methods, taking
into consideration any relevant instruction, the nature of the items, the
number of such items on hand, the cost of collection involved, and the
methods generally used by it or others to present such items. In further­
ance of the purpose of this requirement, and in the interest of good bank­
ing, the indirect routing of cash items is discouraged, and senders may
not send to us or to other Federal Reserve Banks for our account any
items payable in other Federal Reserve Districts which bear the endorse­
ments of banks located in other Federal Reserve Districts, in cases where
it is evident that such items have been routed indirectly.
Preparation of cash letters by senders
13. All cash items sent to us, or to another Federal Reserve Bank
direct for our account, may be listed without description. All cash letters
and tape listings accompanying such cash letters should be dated and
identified with the name and nine-digit routing number, if any, of the
sender.
14. Each sender is urged to maintain adequate records to enable it
to identify its depositors or other endorsers on items sent to Federal Re­
serve Banks for handling so that, if such an item is lost or destroyed
while in transit to a Federal Reserve Bank or thereafter, the sender may
take appropriate action with respect to the item. Federal Reserve Banks
do not generally maintain copies or descriptions of items handled, and
do not maintain any records with respect to items contained in presorted
cash letters to be handled by Reserve Banks without endorsement. Fed­
eral Reserve Banks have no responsibility for describing lost or destroyed




4

cash items charged back to a sender or for obtaining reimbursement or
insurance for a sender’s costs or other loss with respect to such items,
except as provided in Appendix A with respect to Government checks.
Senders are also advised that Treasury regulations (31 C F R 103) re­
quire the maintenance of records of certain items handled.
15. A sender located in a city, town, metropolitan or similar area is
strongly urged to exchange directly cash items payable at banks also
located in that area. We reserve the right to require that a sender located
in such an area must sort, list, and package such items according to the
office of the paying bank at which such items are payable. We also reserve
the right to require such separate sorts of cash items as we may deem
appropriate; and we reserve the right to require both separate sorts and
deposits in separate cash letters of Government checks, postal money
orders, and food coupons. Other instructions relative to sorting and list­
ing of cash items are set forth in our time schedules.
Endorsements
16. All cash items sent to us, or to another Federal Reserve Bank
direct for our account, should be endorsed without restriction to, or to
the order of, the Federal Reserve Bank to which sent, or endorsed to, or
to the order of, any bank, banker, or trust company, or endorsed with
equivalent words or abbreviations thereof. The endorsement of the sender
should be dated and should show the routing number of the sender, if
any, in prominent type on both sides of the endorsement.
17. In the event a cash item is received by a Federal Reserve Bank
from a sender without the endorsement thereon of such sender, the
Federal Reserve Bank may present, send, or forward the item as if it
bore such endorsement, or place on the item the name of such sender and
the date of its receipt by the Federal Reserve Bank, or return the item
to the sender for proper endorsement by the sender. This Bank makes
the warranties stated in Section 210.6(b) of Regulation J by presenting,
sending, or forwarding a cash item. These warranties arise whether or
not such item bears the endorsement of this Bank.
Presentment for payment
18. As contemplated by Section 210.7 of Regulation J, any cash item
may be presented for payment by a Federal Reserve Bank or a subse­
quent collecting bank, may be sent by a Federal Reserve Bank or a
subsequent collecting bank for presentment and payment, or may be for­
warded by a Federal Reserve Bank to a subsequent collecting bank with
authority to present it for payment or to send it for presentment and
payment. However, this Bank and the other Federal Reserve Banks re­
serve the right to return without presentment any cash item payable by
or through a bank which is designated in the “ Memorandum or E x ­
change Charges’’ published by the Board of Governors or may have been
reported closed.




$

19. We do not by this operating circular, or otherwise, agree to
present any item, or to cause any item to be presented, earlier than such
item is required to be presented, in the exercise of ordinary care, under
the provisions of applicable State law.
Uniform instructions regarding protest and advice of nonpayment
20. Except as provided in paragraph 21 hereof, all Federal Reserve
Banks will receive, handle, and forward cash items subject to the follow­
ing uniform instructions regarding protest and wire advice5 of nonpay­
ment, except that Government checks will not be protested; and any
contrary or special instructions noted on cash letters or otherwise trans­
mitted with cash items will be disregarded:
(a ) P R O T E S T any dishonored item of $2,500 or over:
(i) which appears on its face to have been drawn at a place
which is not within any State,6 unless it bears on its face the
A.B.A. no-protest symbol of a Federal Reserve Bank or of a
preceding bank endorser, or
(ii) which bears on its face the legend, “ P R O T E S T R E ­
Q U IR E D ,” of a Federal Reserve Bank or of a preceding bank
endorser.
(b) DO N O T P R O T E S T :
(i) any item of less than $2,500, or
(ii) any item of $2,500 or over unless it is protestable under
subparagraph (a ).
(c) W IR E A D V IC E of nonpayment of any item of $2,500 or
over, unless it has not been paid because of a missing irregular, or
unsatisfactory endorsement or unless it bears on its face the legend,
“ DO N O T W IR E N O N P A Y M E N T ,” of a Federal Reserve Bank
or of a preceding bank endorser. Include in the advice of nonpayment
the amount of the item, the reason for nonpayment, the date of our
cash letter, the name of the drawer or maker, and the names of all
endorsers preceding the Federal Reserve Bank or their routing
numbers, if any.
(d ) DO N O T W IR E A D V IC E of nonpayment o f :
(i) any item of less than $2,500, or
(ii) any item of $2,500 or over unless such advice is required
by subparagraph (c ).
21. DO N O T P R O T E S T A N D DO N O T W IR E A D V IC E of
nonpayment of any cash item, regardless of amount, endorsed by the
5 For the purposes of this operating circular, the term “wire” includes telephone,
telegraph, cable, or other form of electronic telecommunications.
6 The term “ State” is defined in Section 210.2 (n) of Regulation J to mean any
State of the United States, the District of Columbia, or Puerto Rico, or any territory,
possession, or dependency of the United States.




6

United States Treasury, or endorsed for credit to the United States
Treasury, or bearing on its face or in an endorsement the legend “ This
check is in payment of an obligation to the United States and must be
paid at par. N.P. Do not wire nonpayment” or words of similar import.
22. If any sender desires to have any cash item (other than a Gov­
ernment check, postal money order, or food coupon) handled by us or
by any other Federal Reserve Bank under any instructions differing from
the uniform instructions given above, it will be necessary for such sender
to forward such item as an individual noncash item, with the instructions
noted in the letter of transmittal, for collection and credit when paid, in
accordance with the terms of our current operating circular relating to
the collection of noncash items.
23. This Bank shall have no responsibility for determining whether
any other bank has (a) made or provided for the protest of any cash item
protestable under the provisions of this operating circular or (b) given
any wire advice of nonpayment required under the provisions hereof, nor
shall this Bank have any responsibility for giving wire advice of nonpay­
ment unless a wire advice of nonpayment required hereunder is received
from the paying bank or any other bank.
Communications concerning cash items
24. All communications between this Bank and its senders pertaining
to payment, nonpayment, or tracing of cash items or in connection with
receiving or transmitting pertinent information or instructions with
respect to cash items, will be sent over the Federal Reserve communica­
tions system, over commercial telegraphic wires or cables, without
charge to such senders. A Federal Reserve Bank may, in its discretion,
use the telephone in lieu of commercial wire or cable for any purpose
indicated by this paragraph.
Tim e schedules and availability of credit
25. Section 210.16 of Regulation J provides that the Federal Reserve
Banks may classify cash items, require separate sorts and cash letters,
and provide different closing times for the receipt of different classes or
types of cash items. In conformity with that provision, we publish and
furnish to member banks and other senders time schedules containing
further provisions with regard to separate sorts and cash letters and
which indicate when credit for cash items will become available for with­
drawal and other use by the senders after receipt by us. For all items
accepted as cash items, the senders will be given immediate credit or
deferred credit, in accordance with such time schedules and as provided
in Regulation J. Credit for cash letters containing items unsorted as to
availability may be deferred for the longest period of availability pre­
scribed by the current time schedules of this Bank with respect to any
item enclosed.
26.

Time schedules do not in many instances show the actual time




7

required for collection, and advices from us showing the availability of
items cannot be considered as advices of actual payment on the dates of
availability. Credit will in all instances be subject to receipt of payment
by us in actually and finally collected funds.

Immediate credit
27. For all such cash items as are accepted for immediate credit in
accordance with our current time schedules, immediate credit will be
given upon our books at full face value in the reserve account or other
appropriate account upon the day of receipt, and the proceeds will at
once be counted as reserves for the purposes of Regulation D and become
available for withdrawal and other use by the sender; provided, however,
that we may in our discretion refuse at any time to permit the withdrawal
or other use of credit given for any item for which we have not yet re­
ceived payment in actually and finally collected funds.

Deferred credit
28. For all such cash items as are accepted for deferred credit in
accordance with our current time schedules, deferred credit will be entered
upon our books at full face value, but the proceeds will not be counted
as reserves for the purpose of Regulation D nor become available for
withdrawal or other use by the sender until the expiration of the time
specified in our time schedules, at which time credit will be transferred
from the deferred account to the reserve account or other appropriate
account and will then be counted as reserves for the purposes of Regula­
tion D and become available for withdrawal and other use by the sender;
provided, however, that we may in our discretion refuse at any time to
permit the withdrawal or other use of credit given for any item for which
we have not yet received payment in actually and finally collected funds.
Instructions to collecting banks and paying banks
29. Instructions pertaining to the handling of cash items by collecting
banks and paying banks are set forth in our Operating Circular No. 6.
30. We will send to member banks and other depositors maintaining
an account on our books statements of account, which may be supported
by advices, with respect to entries in such an account made by us in
accordance with the provisions of Regulation J and our operating cir­
culars. If, within one calendar year from the date of any entry in such
an account, such a depositor fails to advise us in writing of its objection
to such an entry, the depositor, and any sender, collecting bank or paying
bank using the account maintained by the depositor which has handled
the item to which the entry relates, shall be deemed to have approved the
entry and the statement of account shall be deemed finally adjusted. The
foregoing shall not relieve such a depositor from the duty of exercising
due diligence to examine statements of account sent to it and of notifying
us immediately upon discovery of any error, nor shall it apply to claims




8

based upon the breach of a warranty in respect of an item to which an
entry relates by a Federal Reserve Bank.
Information to senders regarding return items
31. The attention of senders is called to our “ Instructions to Col­
lecting Banks and Paying Banks” to the effect that (a) each paying bank
which takes or receives a credit or obtains a refund in respect of a cash
item received by it from or through a Federal Reserve Bank warrants
to such Federal Reserve Bank, to a subsequent collecting bank, and to
the sender and all prior parties that it took all action necessary to entitle
it to recover such payment within the times limited therefor; (b ) a col­
lecting bank which returns an unpaid item to a Federal Reserve Bank
warrants to such Federal Reserve Bank and to the sender and all prior
parties that its return of the item was timely; and (c) if a paying or
collecting bank, in accordance with applicable State law, makes a direct
return to the depositary bank of an unpaid cash item which it has received
from or through us or any other Federal Reserve Bank, any provisional
credit for the item between such paying or collecting bank and this Bank
or any other Federal Reserve Bank, between this Bank or any other
Federal Reserve Bank and the sender, and between this Bank and any
other Federal Reserve Bank shall become and remain final.
32. If we are once furnished with a cash item accompanied by a
statement, signed by an officer of a sender (other than a Federal Reserve
Bank), that, upon the information and belief of such sender, the paying
bank did not take all action necessary to entitle it to recover its payment
or remittance for such cash item within the times limited therefor by the
provisions of Regulation J , thereby causing loss to the sender, we shall,
on the basis of such statement, charge the amount of the item to the
account maintained or used by, and forward the item to, the collecting
bank or paying bank to which the item was originally presented, sent or
forwarded by this Bank and credit the account on our books of the sender
(or Federal Reserve Bank furnishing such item and statement) with that
amount; provided, however, that such credit to the sender shall be re­
voked if for any reason this Bank cannot obtain the amount of such credit
from the paying bank, and such credit to the sender shall be revoked if
this Bank subsequently receives—not later than fifteen (15) banking
days after this Bank forwarded the item to the collecting bank or paying
bank as provided in this paragraph—the same cash item accompanied by
a statement, signed by an officer of the paying bank, that the paying bank
took all action necessary to entitle it to recover its payment or remittance
within the times limited therefor by the provisions of Regulaion J, and
the paying bank (or collecting bank furnishing such item and statement)
will be credited accordingly. No Federal Reserve Bank shall have any
responsibility for determining whether the paying bank took all action
necessary to entitle it to recover such payment or remittance or whether
the return of the item to it by a collecting bank was timely.
33.

If a cash item is returned without entry, we will make refund to




9

the returning bank and charge the sender only if the latter specifically
authorizes us to do so.
Direct sending of cash items to other Federal Reserve Banks
34. Member banks and other senders maintaining or using accounts
with us which have a substantial volume or dollar amount of cash items
payable in any other Federal Reserve District which they wish to collect
through the Federal Reserve Banks are required to apply to us for
authority to send such items direct to the Federal Reserve Bank of the
District in which such items are payable for collection and credit to u s ;
provided, however, that we may, in our discretion, withdraw such author­
ity at any time. Appropriate instructions will be transmitted to the mem­
ber banks and other senders which are authorized to send direct.
35. In the event that any sender maintaining or using an account
with us has, in our judgment, a sufficient volume or dollar amount of
cash items payable in any other Federal Reserve District to justify direct
sending and this Bank authorizes such sender to send such items direct
to the Federal Reserve Bank of such other Federal Reserve District, we
reserve the right to decline to accept any such items from such sender.
Direct sending of cash items to other offices of this Bank
36. A sender may apply to us for authority to send cash items
directly to any office of this Bank other than the office with which it
maintains an account or participates in a regional check processing
center.
37. In the event that any sender maintaining or using an account
with an office of this Bank has, in our judgment, a sufficient volume or
dollar amount of cash items drawn on paying banks served by another
office of this Bank to justify direct sending and this Bank authorizes
such sender to send such items direct to such other office of this Bank,
we reserve the right to decline to accept any such items from such sender
unless the items are sent direct.
Reimbursement of transportation costs
38. Each sender approved by us which sends cash items diret to
other Federal Reserve offices will be reimbursed by us at first class air­
mail or common carrier rates, whichever is usually lower, but not for in­
surance, on all such items sent direct under our authority. Similar reim­
bursements may be made for cash items sent direct to other offices of this
Bank. In the interest of expeditious and economical handling, those
senders that by arrangement deliver cash items payable in other Federal
Reserve Districts to this Bank or any other designated location for con­
solidated shipment should not deviate from this arrangement except upon
prior approval of this Bank. Transportation costs of such consolidated
shipments will be paid by us, but senders will not be reimbursed by us for




10

transportation costs and consolidation costs associated with moving directsend cash items to a designated consolidated shipping point. A sender
which has an arrangement with this Bank for consolidated shipment from
an office of this Bank located in the same city as the sender, or from any
other designated consolidated shipping point, will not normally be reim­
bursed by us when cash items are sent direct outside of the consolidated
shipment, except on Sundays and holidays.
39. Claims for reimbursement of transportation costs should be sub­
mitted monthly on our forms, a supply of which will be furnished upon
request. A member bank should submit its claims to the office of this
Bank with which it maintains its reserve account. Upon approval of the
claim, the reserve account of the member bank will be credited with the
amount thereof.
40. Each direct-sending member bank should give constant atten­
tion to methods of shipment and should change the method in any case
in which shipment can be made by another method at a lower cost and
without loss of time in presentment. In cases in which we pay the trans­
portation costs, we reserve the right to require a change in method of
shipment in any situation where, by the use of another method, a more
efficient handling by the receiving Federal Reserve Bank will result, or
presentment can consistently be made more promptly, or at a lower cost
and without loss of time.
Standardization, sorting, routing, and mechanized processing
41. To facilitate the sorting, routing, and mechanized processing
of cash items, and thereby promote earlier presentment and earlier
return of unpaid items, it is urged that:
(a ) In conformity with the A.B.A. Magnetic Ink Character Rec­
ognition Program, the routing symbol and the suffix of the A.B.A.
number be encoded on all cash items in magnetic ink in E-13B type
in the manner prescribed, and at the location assigned, by the A.B.A.
(b) The appropriate fractional routing number be clearly im­
printed in the upper right corner of all cash items payable by or
through all par-remitting banks, preferably in Gothic type, the face of
which measures at least 8 points vertically or 1/9 of an inch from the
top to the bottom of the individual characters.
(c) Cash items be otherwise conformed to the standards pre­
scribed by the A .B.A., including a minimum width of 2^4 inches, a
maximum width of 3^4 inches, a minimum length of 6 inches, and a
maximum length of 8^4 inches, and be restricted to a single thick­
ness of card or paper.
42. If, in our judgment, the processing of any cash item by us
requires the inscription thereon in magnetic ink, or otherwise, of the
A.B.A. number, the routing symbol, or both, of the paying bank (or




11

nonbank payor) or requires the inscription thereon in magnetic ink of
the amount of such item, we may so inscribe the item and present, send,
or forward it accordingly; and the sender of such item shall be deemed
to assume the risk of loss resulting from delay caused by the act of
inscribing such amount or such number, symbol, or both.
43. This Bank may present, send, or forward any cash item, in
accordance with the provisions of Section 210.6 of Regulation J, on
the basis o f :
(a) Any A.B.A. number or routing symbol appearing thereon at
the time of its receipt by us, whether inscribed by magnetic ink or by
any other means, and whether or not such A .B.A. number or routing
symbol is consistent with each other form of designation of the paying
bank (or nonbank payor) then appearing thereon; or
(b ) Any other form of designation of the paying bank (or non­
bank payor) then appearing thereon, whether or not consistent with
any A.B.A. number or routing symbol then appearing thereon.
44. The attention of senders is called to the provisions of our Oper­
ating Circular No. 6, entitled “ Instructions to Collecting Banks and Pay­
ing Banks” to the effect th at:
“ Cash items returned by collecting banks and paying banks should
not bear on the back the endorsement, paid or other identifying stamp
of the paying bank unless that stamp has been cancelled. This Bank
or another Reserve Bank which has handled an item shall not assume
any responsibility to the sender, to any other owner or holder of the
item, or to any other person, for any delay resulting from action taken
by a Reserve Bank in returning an item on the basis of the uncan­
celled endorsement, paid or other identifying stamp of the paying
bank on the back of the item.”
Missing or destroyed cash item s; Photographic copies
45. We will charge back to the sender the credit given tor a cash item
which (i) is discovered to be missing by a Federal Reserve Bank, (ii) is
known to be missing or destroyed in transit to a subsequent collecting
bank or the paying bank, or (iii) is discovered to be missing during the
initial proving of an incoming cash letter by a subsequent collecting bank
or the paying bank and which is reported to this Bank as missing or
destroyed in accordance with our Operating Circular No. 6, “ Instructions
to Collecting Banks and Paying Banks.”
46. We will handle as a cash item a properly prepared photographic
copy of a cash item if—
(a )
(i) the credit given for the original cash item was charged
back by this or a prior collecting Federal Reserve Bank as provided
in paragraph 41, and (ii) such copy, together with a copy of the
advice of chargeback, is received by this Bank, or by the prior col­




12

lecting Federal Reserve Bank which forwards such copy and advice
to us when received). within thirty (30) business days from the date
the amount of such cash item was charged back by the first collecting
Federal Reserve Bank, or
(b)
(i) the original cash item was contained in an entire ship­
ment of cash items which is known to be missing or destroyed in
transit to the first collecting Federal Reserve Bank, (ii) the sender
has determined that several items contained in the original shipment
remain unpaid, and (iii ) the photographic copy is received in a
photocopy cash letter identified as containing nonmachineable photo­
graphic copies of a portion of a lost or destroyed shipment of cash
items.
47. The attention of senders is called to our Operating Circular No.
6, “ Instructions to Collecting Banks and Paying Banks,” to the effect
that we will present, send or forward a photographic copy subject to all
the rules as to payment or remittance for, and return of, cash items, other
than instructions regarding protest and wire advice of nonpayment, and
subject also to the right of a paying bank to return the photographic copy
for credit or refund within twenty (20) business days from the banking
day of its receipt by such paying bank if—
(a) the copy is accompanied by a statement, signed by an author­
ized representative of the paying bank, that the drawer of the original
cash item has refused to authorize payment of the photographic copy
or that the paying bank has been unable to contact such drawer, or
(b) the copy is accompanied by a photographic copy of both
front and back of the original paid cash item together with a state­
ment, signed by an authorized representative of the paying bank,
that such original has been paid and giving information as to the
receipt of such original bv the paying bank.
48. No Federal Reserve Bank shall have any responsibility for deter­
mining whether the paying bank took all action necessary to entitle it to
recover its payment or remittance for a photographic copy of a cash item
or whether the return of the copy to it by a subsequent collecting bank
was timely. Nor shall a Federal Reserve Bank have any responsibility
for determining whether a report of a missing or destroyed cash item by
a subsequent collecting bank or the paying bank, or whether a statement
with respect to the handling of a photographic copy of a cash item by
the paying bank, is correct.
49. A properly prepared photographic copy must bear a current
endorsement of the sender and the following legend, or one of the equiva­
lent effect, signed by or in behalf of the sender:
“ This is a photographic facsimile of the original check which was
endorsed by the undersigned and reported missing or destroyed while
in the regular course of bank collection. All prior and any missing




13

endorsements and the validity of this facsimile are hereby guaranteed
and, upon payment hereof in lieu of the original check, the under­
signed will hold each collecting bank and the payor bank harmless
from any loss suffered, provided the original check is unpaid and pay­
ment is stopped thereon.”
50. If a returned photographic copy or a report of a missing or de­
stroyed cash item is received without entry from the paying bank or
subsequent collecting bank, we will credit or make refund to the paying
bank or subsequent collecting bank and charge the sender only if the
latter specifically authorizes us to do so.
Right to amend
51. The right is reserved to withdraw, to add to, or to amend, at
any time, any of the provisionsof this operating circular and of our time
schedules.
Effect of this circular on previous circular
52. This circular and its appendices supersede our Operating Cir­
cular No. 4, Revised effective July 1, 1974; the First through Eighth
Supplements thereto, dated January 1, 1975, May 21, 1975, February 2,
1976, November 9, 1976, April 1, 1977, May 13, 1977, March 28, 1978,
and December 20, 1978, respectively; and the September 1978 revision of
Appendix A to Operating Circular No. 4.




T h o m a s M. T i m l e n ,

First Vice President.

14

APPENDIX A
GOVERNM ENT CH ECKS
1. Government checks drawn on the United States Treasury will be
handled by us as cash items in accordance with, and subject to, the
provisions of Treasury Department Circular No. 21 (31 Code of Federal
Regulations, Part 240). Copies of that circular will be furnished upon
request. With respect to matters not covered by that circular, the terms
and conditions of Regulation J applicable to cash items, of this operating
circular, and of our time schedules shall be applicable to all such
Government checks.
2. We will give immediate credit, subject to payment in actually and
finally collected funds, for Government checks as provided in our time
schedules. Such checks, after handling by us as fiscal agent of the United
States in accordance with requirements of the United States Treasury,
shall be subject in all cases to examination and payment by the United
States Treasury. Under Treasury Department Circular No. 21, the United
States Treasury has reserved the right to examine and to refuse payment
of all Government checks handled by the Federal Reserve Banks.
3. Section 210.12 of Regulation J, relating to the return of cash items
by paying banks, is not applicable to Government checks. In the event that
the United States Treasury refuses payment of any Government check
upon first examination and such check, or photographic copy thereof, is
returned to this Bank as outlined in Treasury Department Circular No.
21, the amount of such check will be charged back to the account of the
sender and simultaneously credited to the account of the United States
Treasury. This Bank shall have no responsibility to the sender of any
Government check, or any other owner or holder thereof, with respect
to the nonpayment of any such check and return by the United States
Treasury of any such check or photographic copy thereof.
4. The attention of senders is directed to 31 U.S.C. §§ 122 and 129,
to the effect that ( a ) claims on a Government check which appears on
record to have been paid, must be made within six years after the date of
issuance of the check and (b ) an action to enforce liability upon a forged
or unauthorized signature or endorsement or alteration of any Govern­
ment check must be commenced within six years after the presentment
of the check, or written notice of such a claim given within that period,
provided that, if a claim is made upon an apparently paid check, the sixyear period with respect to the commencement of an action or the giving
of written notice will be extended an additional 180 days.




Rev. 9/78
15

APPENDIX B
PO STA L MONEY O RDERS
1. Postal money orders (United States postal money orders, United
States international postal money orders, and domestic-international
postal money orders) will be handled by
as cash items in accordance
with an agreement between the United States Postal Service and the
Federal Reserve Banks as depositaries and fiscal agents of the United
States pursuant to authorization of the Secretary of the Treasury. With
respect to matters not covered by that agreement, the terms and condi­
tions of Regulation J applicable to cash items, of this operating circular,
and of our time schedules shall be applicable to all such postal money
orders.
2. We will give immediate credit for postal money orders received
from a sender maintaining or using an account with us as provided in
our time schedules. Simultaneously with such credit, we will debit the
amount of such money orders against the general account of the United
States Treasury under such symbol numbers as may be assigned by the
United States Treasury; and such credit to the account of the sender
shall then become final as between us and the sender.
3. The agreement between the United States Postal Service and
the Federal Reserve Banks provides, in effect, that no claim for refund
or otherwise with respect to any postal money order debited against the
general account of the United States Treasury and delivered to the
representative of the United States Postal Service as provided in said
agreement (other than a claim based upon the negligence of a Federal
Reserve Bank) shall be made against or through any Federal Reserve
B an k ; that, if the United States Postal Service makes any such claim
with respect to any such money order, such money order will not be
returned or sent to a Federal Reserve Bank, but the United States Postal
Service will deal directly with the bank or the party against which such
claim is m ade; and that the Federal Reserve Banks will assist the United
States Postal Service in asserting such claim, including making their
records and any relevant evidence in their possession available to the
United States Postal Service. Section 210.12 of Regulation J , relating
to the return of cash items by the paying banks, is not applicable to
postal money orders.




Rev. 1/75
16

APPENDIX C
FOOD COUPONS
1. Food coupons will be handled by us as cash items in accordance
with an agreement made by the Secretary of Agriculture, in behalf of
the United States, and by the Federal Reserve Banks as depositaries
and fiscal agents of the United States pursuant to authorization of the
Secretary of the Treasury. With respect to matters not covered by such
agreement, the terms and conditions of Regulatioh J applicable to cash
items, of this operating circular, and of our time schedules shall be
applicable to such coupons. We will receive food coupons only from
member banks, other senders that maintain accounts with us, and nonmember banks which have arranged with us to send coupons to us for
collection for credit to the account of a member bank on our books. All
such banks sending coupons to us should follow the instructions set forth
in an outline of procedures for commercial banks in handling such
coupons under the current Food Stamp Program, prepared by the United
States Department of Agriculture.
2. We will accept food coupons received by us in accordance with
the following terms and conditions:
(a) Redeemed food coupons should be forwarded to the office of
this Bank maintaining the reserve account or other account to which
the proceeds of the coupons are to be credited. We will give immediate
credit for deposits of redeemed food coupons as provided in our time
schedules. Such credit will not be final and will be subject to reclama­
tion and adjustment.
(b) Food coupons should be separately sorted by denomination
and should be deposited in a separate cash letter. The sending bank’s
transmittal letter should be clearly stamped or marked “ FO O D
C O U P O N S.” The transmittal letter should show the total number
of, and the total amount of, each denomination of coupons enclosed.
Food coupons should be forwarded to us by the means ordinarily
used by the sender for checks and other cash item s; such shipments
will be at the risk of the Department of Agriculture, only to the
extent and under the conditions stated in 7 Code of Federal Regula­
tions, Chapter II, Section 272.5(c). Sending banks should retain
customers’ deposit slips and any other pertinent records which would
assist in substantiating reimbursement claims against the Depart­
ment of Agriculture for coupons lost in transit.
(c) In accordance with the regulations of the United States De­
partment of Agriculture (7 Code of Federal Regulations, Chapter
I I ) , a portion of a food coupon consisting of less than three fifths
of a whole coupon shall not be accepted for redemption. Any coupon
accepted for redemption shall show on its back either (i) the
A U T H O R IZ A T IO N N U M B E R or (ii) the name of the author­
ized retail food store and, if involved, the authorized wholesale food
concern. Each coupon shall also be cancelled by the first bank which




17

receives it by indelibly marking “ P A ID ” or “ C A N C E L L E D ,” to­
gether with the name of the hank or its A.B.A. number, on the face
of the coupon by means of an appropriate stamp. No coupon should
he endorsed by any bank.
(d )
Additional information concerning the collection of food
coupons will be furnished by us upon request.
3.
Nonmember hanks which do not maintain accounts with this
Bank and which have not arranged with us to deposit food coupons for
collection for credit to an account of a member bank on our books should
forward redeemed food coupons through ordinary collection channels.




Rev. 5/77
18

FEDERAL RESERVE BANK
OF N E W YO R K
r
Operating: Circular No. 6
~1
L Revised September 18, 1979 J

INSTRUCTIONS TO COLLECTING BANKS
AND PAYING BANKS

To All Member Banks in the Second Federal
Reserve District, and Others Concerned:

CONTENTS

T opic

Paragraph
Number

General .......................................................................................................... 1-3
Presentment for payment ..........................................................................

4

Endorsements ...............................................................................................

5

Payment for cash letters ............................................................................

6

Collecting banks ...........................................................................................

7

Differences and adjustments .................................................................... 8-9
Return items ................................................................................................ 10-19
Uniform instructions regarding protest and advice of
nonpayment ..............................................................................................20-23
Standardization, sorting, routing, and mechanized processing ........24-26
Cash letters received in mutilated condition ..........................................

27

Missing or destroyed cash item s; photographic copies....................... 28-33
Right to am en d..............................................................

34

Effect of this circular on previous circular..............................................

35

Section 210.12 of Regulation J ( “ Return of cash items” ) ........Appendix

[Enc. Cir. No. 8642]




General
1. This operating circular contains instructions to be followed in
the handling of, and payment or remittance for, checks and other cash
items contained in cash letters received from this Bank.
2. This operating circular, our Operating Circular No. 4, entitled
“ Collection of Cash Items,” and our time schedules are issued pursuant
to the provisions of Sections 4, 13, 14(e), and 16 of the Federal Reserve
Act and the provisions of related statutes and in conformity with the
provisions of Regulation J of the Board of Governors of the Federal
Reserve System (hereinafter referred to as Regulation J ) . All terms
defined in Regulation J and used herein have the meanings stated in
that regulation.1 The attention of collecting banks, paying banks, and
nonbank payors is also directed to the fact that Section 210.3 of Regu­
lation J provides that the provisions of that regulation and of the operat­
ing circulars of the Federal Reserve Banks shall be binding upon each
collecting bank, paying bank, and nonbank payor to which the Federal
Reserve Bank, or any subsequent collecting bank, presents, sends, or
forwards a cash item received by the Federal Reserve Bank.
3. Unless otherwise stated, all references to the Federal Reserve
Bank of New York, or “ this Bank,” will include the Head Office, its
Buffalo Branch, and its Cranford, Jericho and Utica Offices.
Presentment for payment
4. A s contemplated by Section 210.7 of Regulation J , any cash item
may be presented for payment by a Federal Reserve Bank or a subse­
quent collecting bank, may be sent by a Federal Reserve Bank or a sub­
sequent collecting bank for presentment and payment, or may be for­
warded by a Federal Reserve Bank to a subsequent collecting bank with
authority to present it for payment or to send it for presentment and
payment.
Endorsements
5. The attention of paying banks and collecting banks is called to the
fact that, in the event a cash item is received by a Federal Reserve Bank
from a sender without the endorsement thereon of such sender, the
Federal Reserve Bank may present, send, or forward the item as if it
bore such endorsement, or place on the item the name of such sender
and the date of its receipt by the Federal Reserve Bank, or return the
item to the sender for proper endorsement by the sender. This Bank
makes the warranties stated in Section 210.6 ( b) of Regulation J by
presenting, sending, or forwarding a cash item or an instrument which
it handles as a cash item pursuant to paragraph 4 of our Operating Cir­
1 For the purposes of this operating circular as well as for the purposes of Regu­
lation J, the Virgin Islands and Puerto Rico shall be deemed to be in or of the
Second Federal Reserve D istrict; and Guam and American Sam oa shall be deemed
to be in or of the Twelfth Federal Reserve District. See Regulation J, note 1.




2

cular No. 4. These warranties arise whether or not such item bears the
endorsement of this Bank. Reserve Banks handle end-point sorted cash
letters received from senders without endorsing the items in the cash
letters. Collecting banks and paying banks should maintain records to
enable them to identify the source of receipt of such items. In addition,
Treasury Regulations (31 Code of Federal Regulations, Part 103) re­
quire that banks maintain legible records of many items. These regula­
tions apply whether or not the item is capable of being photocopied.
Payment for cash letters
6.
Payment or remittance for our cash letter must be made by a
paying bank for all accompanying cash items which shall not have been
returned by said bank prior to the close of its banking day on which such
cash items are received.*12 Such payment or remittance shall be made at
par and in the manner hereafter provided:
(a ) Debit to an account on the books of this B an k ;
(b ) Cash; or
(c ) In the discretion of this Bank, any other form of payment or
remittance.
The proceeds of any such payment or remittance in any form herein
stated shall be available to this Bank not later than the close of the
banking day for this Bank on which such items were so received by the
paying bank. If the banking day on which such items are received by a
paying bank is not a banking day for this Bank, any payment or remit­
tance made hereunder shall be effected on the next banking day of both
this bank and such paying bank next following the day of receipt of
such item. If payment or remittance for an item is effected by means of
a debit to an account on the books of this or another Federal Reserve
Bank on a banking day for such Federal Reserve Bank following the
banking day of receipt of the item by the paying bank because such day
of receipt was not a banking day for such Federal Reserve Bank, this or
such other Federal Reserve Bank may make appropriate adjustments as
of such day of receipt (unless such day is a Saturday) for purposes of
computation of reserves under Regulation D of the Board of Governors
of the Federal Reserve System.
2 A cash item received by a paying bank shall be deemed to have been received
by the bank on its next banking day if the item is received under one of the follow­
ing circumstances:
(1) On a day other than a banking day for it, or
(2 ) On a banking day for it, but
(a ) After its regular banking hours, or
(b) After a “cut-off hour” established by it in accordance with applicable
state law, or
(c) During afternoon or evening periods when it is open for limited func­
tions only.




3

Collecting banks
7. A subsequent collecting bank (other than a Federal Reserve Bank)
to which the paying bank has paid or remitted for a cash item as herein
provided shall pay or remit the proceeds to the Federal Reserve Bank
which forwarded the item to it in such fashion that the proceeds thereof
will be available to such Federal Reserve Bank not later than the close of
the hanking day, for such Federal Reserve Bank, on which the proceeds
were received by such subsequent collecting bank.
Differences and adjustments
8. Unless a paying bank has otherwise agreed with this Bank, when
a paying bank pays or remits for our cash letter in an amount not in
agreement with the total of the cash letter because the accompanying cash
items do not prove to the amount of the cash letter, a complete explana­
tion of the difference should be furnished on the appropriate form (B K
166) provided by this Bank. Paying banks are requested to refrain from
reporting adjustments of $1.00 or less.
9. We will send to member banks and other depositors maintaining
an account on our books statements of account, which may be supported
by advices, with respect to entries in such an account made by us in
accordance with the provisions of Regulation J and our operating circu­
lars. If, within one calendar year from the date of an entry in such an
account, such a depositor fails to advise us in writing of its objection to
such an entry, the depositor, and any sender, collecting bank or paying
bank using the account maintained by the depositor which has handled
the item to which the entry relates, shall be deemed to have approved the
entry and the statement of account shall be deemed finally adjusted. The
foregoing shall not relieve such a depositor from the duty of exercising
due diligence to examine statements of account sent to it and of notifying
us immediately upon discovery of any error, nor shall it apply to claims
based upon the breach of a warranty in respect of an item to which an
entry relates by a Federal Reserve Bank.
Return items
10. If a paying bank returns to us an unpaid cash item in accordance
with the provisions of Section 210.12 of Regulation J , 3 it may recover
any payment or remittance theretofore made by it for such item by
requesting a credit therefor to an account on our books; and paying banks
are urged to follow this procedure to the extent practicable. However, any
such paying bank may return any such unpaid item to us for refund.
11. Any collecting bank which receives an unpaid cash item from a
paying bank for return to us is hereby directed to forward the return item
to us before midnight of its next banking day following the banking day
of its receipt of the return item, or as such time may be extended by opera­
tion of the provisions of Section 210.14 of Regulation J. A collecting bank
which takes or receives a credit or obtains a refund for the amount of any
remittance made by it in respect of a cash item forwarded to it by us and
returned to us by it thereby (a ) warrants to us and to the sender of the




4

item and all prior parties thereon that its return of the unpaid item to us
was timely, and (b) agrees to indemnify us for any loss or expense sus­
tained ( including but not limited to attorneys’ fees and expenses of litiga­
tion) resulting from its breach of such warranty.
12. In accordance with paragraph ( b) of Section 210.12 of Regula­
tion J, each paying bank which takes or receives a credit or obtains a
refund in respect of a cash item received by it from or through us warrants
to us, to any subsequent collecting bank, and to the sender and all prior
parties that it took all action necessary to entitle it to recover such pay­
ment within the times limited therefor.
13. A collecting bank or paying bank sending to this Bank a return
item that does not bear our endorsement thereby warrants to us and to
the sender of the item and all prior parties that the item was presented,
sent or forwarded by us to the collecting or paying bank and that the
collecting or paying bank will provide source of receipt information on
request.
14. A paying bank, or a collecting bank, may return to us without
entry a cash item which the paying bank or collecting bank did not return
on time, with a request that we ask our sender to make refund therefor,
in which event we shall make refund to the paying bank or collecting
bank and charge our sender only if the latter specifically authorizes us to
do so.
15. Each cash item returned unpaid should bear a notation clearly
indicating the reason for nonpayment.
16. If the cash item is being dishonored and returned for the first
time, the paying bank is urged to stamp a symbol in the form of a fivepointed star (e.g., ★ ) in the upper right hand area of the face of the item.
If the cash item is being dishonored and returned for the second time, the
paying bank should invalidate the M IC R routing number on the face of
the item in such a manner that the item will no longer qualify for han­
dling by high-speed automated check processing equipment. No Federal
Reserve Bank shall have any responsibility for handling as a cash item an
item whose M ICR routing number has not been invalidated as required.
17. If we are once furnished with a cash item accompanied by a state­
ment, signed by an officer of a sender (other than a Federal Reserve
Bank), that, upon the information and belief of such sender, the paying
bank did not take all action necessary to entitle it to recover its payment
or remittance for such cash item within the times limited therefor by the
provisions of Regulation J, thereby causing loss to the sender, we shall,
on the basis of such statement, charge the amount of the item to the ac­
count maintained or used by, and forward the item to, the collecting bank3
3 The provisions of Section 210.12 of Regulation J are set forth in the Appendix
to this operating circular.




5

or paying bank to which the item was originally presented, sent or for­
warded by this Bank and credit the account on our books of the sender
(or Federal Reserve Bank furnishing such item and statement) with that
amount; provided, however, that such credit to the sender shall be re­
voked if for any reason this Bank cannot obtain the amount of such credit
from the paying bank, and such credit to the sender shall be revoked if
this Bank subsequently receives—not later than fifteen (15) banking days
after this Bank forwarded the itemsto the collecting bank or paying bank
as provided in this paragraph—the same cash item accompanied by a
statement, signed by an officer of the paying bank, that the paying bank
took all action necessary to entitle it to recover its payment or remittance
within the times limited therefor by the provisions of Regulation J , and
the paying bank (or collecting bank furnishing such item and statement)
will be credited accordingly. No Federal Reserve Bank shall have any
responsibility for determining whether the paying bank took all action
necessary to entitle it to recover such payment or remittance or whether
the return of the item to it by a collecting bank was timely.
18. For its own protection each paying bank and collecting bank
returning cash items to us for any reason should maintain adequate rec­
ords to permit the reproduction or tracing of any items lost or destroyed
in transit.
19. If a paying bank or a collecting bank makes, in accordance with
applicable State law, a direct return to the depositary bank of an unpaid
cash item which it has received from or through us or any other Federal
Reserve Bank, any provisional credit for the item between such paying
bank or collecting bank and this Bank or any other Federal Reserve Bank,
between this Bank or any other Federal Reserve Bank and the sender,
and between this Bank and any other Federal Reserve Bank shall become
and remain final.
Uniform instructions regarding protest and advice of nonpayment
20.
Except as provided in paragraph 21 hereof, all paying banks and
collecting banks must receive, handle, and forward cash items subject to
the following uniform instructions regarding protest and wire advice4 of
nonpayment, except that Government checks will not be protested; and
any contrary or special instructions noted on cash letters or otherwise
transmitted with cash items will be disregarded:
(a ) P R O T E S T any dishonored item of $2,500 or over:
(i) which appears on its face to have been drawn at a place
which is not within any State,5 unless it bears on its face the
A .B.A. no-protest symbol of a Federal Reserve Bank or of a
preceding bank endorser, or
4 For the purposes of this operating circular, the term “wire” includes telephone,
telegraph, cable, or other form of electronic telecommunications.




6

(ii) which bears on its face the legend, “ P R O T E S T R E ­
Q U IR E D ,” of a Federal Reserve Bank or of a preceding bank
endorser.
(b ) DO N O T P R O T E S T :
(i) any item of less than $2,500, or
(ii) any item of $2,500 or over unless it is protestable under
subparagraph (a ).
(c) W IR E A D V IC E of nonpayment of any item of $2,500 or
over, unless it has not been paid because of a missing, irregular, or
unsatisfactory endorsement or unless it bears on its face the legend,
“ DO N O T W IR E N O N P A Y M E N T ,” of a Federal Reserve Bank
or of a preceding bank endorser. Include in the advice of nonpayment
the amount of the item, the reason for nonpayment, the date of our
cash letter, the name of the drawer or maker, and the names of all
endorsers preceding the Federal Reserve Bank or their routing num­
bers, if any.
(d ) DO N O T W IR E A D V IC E of nonpayment of:
(i) any item of less than $2,500, or
(ii) any item of $2,500 or over unless such advice is required
by subparagraph (c ).
21. DO N O T P R O T E S T A N D DO N O T W IR E A D V IC E of
nonpayment of any cash item, regardless of amount, endorsed by the
United States Treasury, or endorsed for credit to the United States
Treasury, or bearing on its face or in an endorsement the legend “ This
check is in payment of an obligation to the United States and must be
paid at par. N.P. Do not wire nonpayment” or words of similar import.
22. The paying bank shall be responsible for making or providing
for any protest of a cash item protestable under the provisions of this
operating circular and for giving any wire advice of nonpayment required
by the provisions hereof, except as may be otherwise provided by the
rules or practices of any clearing house through which the item was pre­
sented or by agreement between this Bank and the paying bank.
23. This Bank shall have no responsibility for determining whether
any other bank responsible therefor has (a) made or provided for the
protest of any cash item protestable hereunder or (b) given any wire
advice of nonpayment required hereunder, nor shall this Bank have any
responsibility for giving wire advice of nonpayment unless a wire advice5
5 The term “ State” is defined in Section 210.2( h ) of Regulation J to .mean any
State of the United States, the District of Columbia, or Puerto Rico, or any terri­
tory, possession, or dependency of the United States.




7

of nonpayment required hereunder is received from the paying bank or
any other bank.
Standardization, sorting, routing, and mechanized processing
24. To facilitate the sorting, routing, and mechanized processing of
cash items, and thereby promote earlier presentment and return of un­
paid items, paying banks are urged :
(a ) In conformity with the A .B.A. Magnetic Ink Character
Recognition Program, to preprint the routing symbol and the suffix
of the A.B.A. number on all cash items in magnetic ink in E-13B
type in the manner prescribed, and at the location assigned, by the
A.B.A.
(b ) To clearly imprint the appropriate routing number in frac­
tional form in the upper right corner of all cash items payable by or
through such paying banks, preferably in Gothic type, the face of
which measures at least 8 points vertically or 1/9 of an inch from
the top to the bottom of the individual characters.
^
(c) To conform cash items to the standards prescribed by the
A .B.A., including a minimum width of 2^4 inches, a maximum width
of 3^4 inches, a minimum length of 6 inches, and a maximum length
of 8H inches, and to restrict cash items to a single thickness of card
or paper.
25. The attention of paying banks and collecting banks is called to
the provisions of our Operating Circular No. 4, entitled “ Collection of
Cash Items,” to the effect that:
(a) This Bank may present, send, or forward any cash item, in
accordance with the provisions of Section 210.6 of Regulation J,
on the basis o f :
(i) Any A.B.A . number or routing symbol appearing
thereon at the time of its receipt by us, whether inscribed by mag­
netic ink or by any other means, and whether or not such A.B.A .
number or routing symbol is consistent with each other form of
designation of the paying bank (or nonbank payor) then appear­
ing thereon; or
(ii) Any other form of designation of the paying bank (or
nonbank payor) then appearing thereon, whether or not consis­
tent with any A .B.A. number or routing symbol then appearing
thereon; and
(b) If, in our judgment, the processing of any cash item by us
requires the inscription thereon in magnetic ink, or otherwise, of the
A .B.A. number, the routing symbol, or both, of the paying bank
(or nonbank payor) or requires the inscription thereon in magnetic
ink of the amount of such item, we may so inscribe the item and
present, send, or forward it accordingly; and the sender of such item




a

shall be deemed to assume the risk of loss resulting from delay caused
by the act of inscribing such amount or such number, symbol, or both.
26. Cash items returned by collecting banks and paying banks should
not bear on the back the endorsement, paid or other identifying stamp of
the paying bank unless that stamp has been cancelled. This bank or an­
other Reserve Bank which has handled an item shall not assume any
responsibility to the sender, to any other owner or holder of the item, or
to any other person, for any delay resulting from action taken by a Re­
serve Bank in returning an item on the basis of the uncancelled endorse­
ment, paid or other identifying stamp of the paying bank on the back of
the item.
Cash letters received in mutilated condition
27. In the event that our cash letter is received in a mutilated
condition, please telephone this Bank before attempting to function any
portion thereof. Under certain conditions when the cash letter is re­
turned intact, tracing and identification of mutilated or destroyed cash
items is expedited.
Missing or destroyed cash item s; photographic copies
28. We will credit or refund the amount paid or remitted for a cash
item which is discovered to be missing during the initial proving of an
incoming cash letter by a subsequent collecting bank or the paying bank,
or which is known to be missing or destroyed in transit to a subsequent
collecting bank or the paying bank, if we, or a subsequent collecting Fed­
eral Reserve Bank (which sends such report to us when received), re­
ceive a report from the subsequent collecting or paying bank within five
(5 ) of its business days from the date of the cash letter which listed the
missing or destroyed item.
29. In the event we receive a properly prepared photographic copy
of a cash item in accordance with our Operating Circular No. 4, “ Collec­
tion of Cash Items,” we will present, send or forward such copy as a
cash item subject to all the rules as to payment or remittance for, and
return of, cash items, other than the instructions regarding protest and
wire advice of nonpayment. Such a photographic copy will also be pre­
sented, sent or forwarded subject to the right of a paying bank to return
the copy for credit or refund within twenty (20) business days from the
banking day of its receipt by such paying bank, provided—
(a ) the copy is accompanied by a statement, signed by an author­
ized representative of the paying bank, that the drawer of the original
cash item has refused to authorize payment of the photographic copy
or that the paying bank has been unable to contact such drawer, or
(b) the copy is accompanied by a photographic copy of both front
and back of the paid original cash item together with a statement,




9

signed by an authorized representative of the paying bank, that such
original has been paid and giving (i) the name and routing number,
if any, of the bank or other person from which such original was re­
ceived and (ii) the date on which such original was received by the
paying bank or, in the event such original was received from this
Bank, the date of the cash letter that contained such original and the
dollar amounts of the items listed prior and subsequent to such origi­
nal in such cash letter, together with the total amount of the cash
letter and of the batch or package therein which contained the original
cash item and the sequence number of the original cash item, if any.
30. Any subsequent collecting bank which receives an unpaid photo­
graphic copy from a paying bank for return to us should forward the
return copy to us before midnight of its next banking day following the
banking day of its receipt of the return copy.
31. No Federal Reserve Bank shall have any responsibility for deter­
mining whether the paying bank took all action necessary to entitle it to
recover its payment or remittance for a photographic copy of a cash item
within the times limited therefor by the provisions of paragraph 29 or
whether any subsequent collecting bank returned the copy to it within the
time limited therefor by paragraph 30. Nor shall a Federal Reserve Bank
have any responsibility for determining whether a report of a missing or
destroyed cash item by a subsequent collecting bank or the paying bank,
or whether a statement with respect to the handling of a photographic
copy of a cash item by the paying bank, is correct.
32. A properly prepared photographic copy will bear a current en­
dorsement of the sender and the following legend, or one of the equivalent
effect, signed by or in behalf of the sender:
“ This is a photographic facsimile of the original check which was
endorsed by the undersigned and reported missing or destroyed while
in the regular course of bank collection. All prior and any missing
endorsements and the validity of this facsimile are hereby guaranteed
and, upon payment hereof in lieu of the original check, the under­
signed will hold each collecting bank and the payor bank harmless
from any loss suffered, provided the original check is unpaid and
payment is stopped thereon.”
33. A paying bank, or a subsequent collecting bank (a ) may return
without entry, with appropriate documentation, a photographic copy
which the paying bank or subsequent collecting bank did not return
within the time provided in paragraph 29 provided such return is made
within nine (9 ) calendar months from the banking day of its receipt by
such paying bank, and (b) may report without entry as missing or de­
stroyed a cash item which it discovered to be missing or destroyed after
the time provided in paragraph 28. In the event we receive such a without
entry return or report with a request that we ask our sender to make
refund therefor, we shall credit or make refund to the paying bank or
subsequent collecting bank and charge our sender only if the latter spe­
cifically authorizes us to do so.




10

Right to amend
34. The right is reserved to withdraw, to add to, or to amend, at
any time, any of the provisions of this operating circular.
Effect of this circular on previous circular
35. This circular supersedes our Operating Circular No. 6, Revised
effective September 21, 1972, and the First through Ninth Supplements
thereto, dated July 1, 1974, January 1, 1975, February 2, 1976, Novem­
ber 9 1976, April 1, 1977, March 15, 1977, July 1, 1977, March 28, 1978,
and December 20, 1978, respectively.




T h o m a s M. T i m l e n ,

First Vice President.

11

APPENDIX
R ET U R N OF CASH ITEM S
Section 210.12 of Regulation J, captioned “ Return of Cash Items,”
provides as follows:
“ (a) A paying bank that receives a cash item from or through
a Federal Reserve Bank, otherwise than for immediate payment over
the counter, and that pays or remits for such item as provided in
§ 210.9(a) of this part shall have the right to recover any payment
or remittance so made if, before it has finally paid the item, it returns
the item before midnight of its banking day next following the bank­
ing day of receipt or takes such other action to recover such payment
or remittance within such time and by such means as may be pro­
vided by applicable State law : Provided, that the foregoing provi­
sions shall not extend, nor shall the time herein provided for return
be extended by, the time for return of unpaid items fixed by the rules
and practices of any clearing house through which the item was pre­
sented or fixed by the provisions of any special collection agreement
pursuant to which it was presented.
“ (b) Any paying bank which takes or receives a credit or ob­
tains a refund for the amount of any payment or remittance made
by it in respect of a cash item received by it from or through a
Federal Reserve Bank shall be deemed (1 ) to warrant to such Fed­
eral Reserve Bank, to a subsequent collecting bank, and to the sender
and all prior parties that it took all action necessary to entitle it to
recover such payment or remittance within the time or times limited
therefor by the provisions of this part, by the applicable rules and
practices of any clearing house through which the item was pre­
sented, by the applicable provisions of any special collection agree­
ment pursuant to which it was presented, and, except as a longer
time may be afforded by the provisions of this part, by applicable
State law; and (2 ) to agree to indemnify such Federal Reserve
Bank for any loss or expense sustained (including but not limited
to attorneys’ fees and expenses of litigation) resulting from its action
in giving such credit or making such refund, or in making any charge
to, or obtaining any refund from, the sender. No Federal Reserve
Bank shall have any responsibility to such paying bank or any sub­
sequent collecting bank or to the sender of the item or any other
prior party thereon for determining whether the action hereinabove
referred to was timely.”




12

FEDERAL RESERVE BANK
OF N EW YORK

F ifth Supplement to
Operating Circular No. 6
(Revised effective July 1, 1974)
Effective August 15,1979

TIME SCHEDULES
AVAILABILITY OF CREDIT FOR CASH ITEMS

To A ll Member Banks in the Second Federal
Reserve District, and Others Concerned:

Subparagraph (c) of paragraph 9 of Operating Circular No. 5,
Revised effective July 1, 1974, is amended to read as follows:
(c )

All tape listings and recaps should be clearly identified and dated;


fEnc. Cir. No. 8642]


T h o m a s M. T i m l e n ,

First Vice President.