Full text of Federal Reserve Bank of New York Circulars : 8953. New Operating Circular on Collection of Cash Items

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FEDERAL RESERVE BANK
OF N EW YORK

r Circular No. 8 9 5 3 "1
November 13, 1980

N E W OPER ATING CIRCULAR ON
COLLECTION OF CASH ITEMS

To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
Enclosed is this Bank’s new Operating Circular No. 4, entitled “Col
lection of Cash Items,” effective November 13, 1980.

The new circular

replaces both existing Operating Circular No. 4, entitled “Collection of
Cash Items,” and existing Operating Circular No. 6, entitled “Instructions
to Collecting Banks and Paying Banks.”
The new circular was extensively revised to complement the recent
revision of Subpart A of Regulation J. The regulatory and operating cir
cular revisions have been designed to clarify Subpart A and the circulars
by restating them in plain English. In addition to the simplifying changes,
however, a number of substantive amendments were made. Finally, appen
dices have been added to Operating Circular No. 4 setting forth the terms
under which we provide our various collection services.
Branches and agencies o f foreign banks are eligible for our cash-item
collection services beginning N ovem ber 13, 1980. O ther nonm em ber d e
pository institutions are currently scheduled for access to these services,
under the M onetary C ontrol A ct of 1980, in April 1981.

Substantive changes
In addition to restating many of our operating procedures in plain
English, six substantive changes were made in the new Operating Circular
No. 4. The changes involve the late return procedure, notices of delays
in transit, missorted return items, tender of defense, postdated items, and
recordkeeping requirements.
The current late return procedure allows a sending bank that believes
a cash item was returned late by the paying bank to challenge the time
liness of the return and allows the paying bank to answer the challenge.
Paragraph 38 of the new Operating Circular No. 4 amends this procedure

by changing the forms that the sending and paying banks use in the pro
cedure and makes use of the forms mandatory. The text of the new forms
is enclosed.

Banks using the procedure should submit the information

required by the forms.
Our policy on giving notice of delay in presentment and return of
cash items has been added to paragraph 11 of Operating Circular No. 4.
Such delay might be caused by adverse weather conditions or other factors.
W e do not give notice unless the delay is expected to affect at least ten pay
ing banks and to last at least three business days.
If we send a return item to the wrong bank, we require that bank to
return the item to us promptly. The new requirement is in paragraph 40.
Under Section 210.5 of Regulation J, a Reserve Bank may tender
defense of certain actions brought against it to its sending bank.

The

Reserve Bank may charge the amount of any judgment against it to the
account of the sender. Paragraph 31 of Operating Circular No. 4 makes
clear that this right applies whether or not the sending bank actually
undertakes the defense.
Some question has arisen whether postdated checks qualify as cash
items. An amendment to paragraph 4 of Operating Circular No. 4 makes
it clear that they do.
Finally, paragraph 50 reminds banks that Treasury regulations require
banks to keep records of many items.

Agreements contained in appendices
Operating Circular No. 4 contains in Appendices D, E, F, and G the
texts of the agreements that we now enter into with banks using our col
lection services.

Following each agreement are form letters that banks

using that service would return to us showing their agreement to the terms.
W e anticipate that this procedure will ease the task of obtaining agreements
from the users of our services, and simplify the process of making any
amendments to the terms that may be necessary.
Appendix D is the Immediate Settlement Agreement.

Under this

agreement, as required by Section 210.9 of Regulation J, a paying bank
agrees to make payment for a cash item by the close of the banking day on
which the item is presented. W e require that every bank to which we
send cash items complete this agreement. If the paying bank makes pay
ment for cash items by a charge to its own account, it agrees to the terms
by executing a letter in the form shown in Appendix D -l. If the charge for
cash items is to be made to the account of a correspondent, the paying bank
and the correspondent execute a letter in the form shown in Appendix D-2.
Additional information about the immediate settlement procedure is con
tained in Appendix D-3, “Operating Instructions for Settlement of Our
Cash Letter Sendings Under the Immediate Settlement Agreement.”

Appendix E is the Intercept Agreement, which contains the terms
under which we present cash items to a bank at a location other than the
premises of the bank. A paying bank that wants us to present cash items
payable by, at, or through it to a processor or correspondent must agree to
these terms by sending us a letter in the form contained in Appendix E -l.
This form must also be signed by the institution to which we deliver the
cash items.
Appendix F contains the terms of the Manhattan, Bronx and Brooklyn
Collection Arrangement.

Banks participating in the arrangement send a

messenger to the Head Office to receive items payable by, at, or through
the paying bank.

More detailed information about the arrangement is

contained in a pamphlet available from the Check Processing Department
at the Head Office. A bank that maintains an account with us agrees to
these terms by executing a letter in the form of Appendix F -l. A bank that
does not have an account with us must arrange to have charges made to
the account of a correspondent and would agree to these terms by execut
ing, and having the correspondent execute, a letter in the form of Appendix
F-2.
Appendix G contains the terms of the Thrift Institution Collection
Arrangement. Under this arrangement, a paying bank arranges to have a
messenger call at the Head Office for cash items payable by, at, or through
the paying bank. A paying bank having an account with us must agree
to these terms by executing a letter in the form of Appendix G -l. A pay
ing bank not having an account with us must arrange to have the charges
posted to the account of a correspondent and must execute, and have the
correspondent execute, a letter in the form of Appendix G-2.
E ffective N ovem ber 13, 1980, all institutions using these services for
the first tim e will b e required to execu te agreem ents in the form contained
in the appendices.

For institutions already using our services, w e will

continue to rely on the agreem ents already in place and not require agree
m ents in the n ew form at this time.

Other authorizations
A number of specific service arrangements are available with the prior
authorization of this Bank.

Such arrangements include mixed/unsorted

cash letter (Operating Circular No. 5, f 7 ), direct sending (Operating
Circular No. 4, f 17), consolidated check shipment (Operating Circular
No. 4, f 18), RCPC package/group sort (Operating Circular No. 5, f 9 ),
and city-on-city cash letter deposits (Operating Circular No. 4, 51 14).
These arrangements may be made by sending a letter to the local Reserve
Bank offices (Head Office, Buffalo Branch, or Cranford, Jericho, or Utica
Office) outlining the arrangements desired. Brochures are available more
fully describing the direct send and consolidated shipment arrangements.

Inquiries
If you have any questions regarding the foregoing procedures, please
contact:
H ead Office
Janet L. Wynn, Manager, Check Processing Department
(Tel. No. 212-791-5321)
Buffalo Branch
Robert J. McDonnell, Operations Officer
(Tel. No. 716-849-5022)
Cranford O ffice
Fred A. Denesevich, Regional Manager
(Tel. No. 201-272-9000, Ext. 500)
Jericho O ffice
Joseph M. O ’Connell, Regional Manager
(Tel. No. 516-997-4569)
Utica Office
Edward H. Denhoff, Operations Officer
(Tel. No. 315-736-8321, Ext. 55)

A nth ony

So l o m o n ,

President.

SENDER’S LA T E RETURN IT E M C L A IM
( Prepare and submit in duplicate )
D a te..................................................
TO:

FEDERAL RESERVE RANK OF NEW YORK
[BUFFALO BRANCH] [ ..............................OFFICE]

The returned cash item described below and attached is being delivered to you because of
LATE RETURN:
1. Amount......................................
2. D ated..........................................
3. Drawn by (D raw er).............................................................................
4. Payable to ( Payee) ................................................................................
5. Check No........................................
6. Our bank sent this cash item to ..............................................................
in a cash letter dated..................................................................................
totaling $ ..................................... , tape total $ .......................................,
listed between items for $ ..........................................................................
and $ ......................................
7. This item was apparently returned by the paying bank on ..........................................................
[Date]
8. We received the return item o n ..................................... from your bank in a return item letter
[Date]
dated .....................................

totaling $ .............................., tape total $ ......................., listed

between items for $ ........................................ and $ .................................
We claim that, according to our records and the indorsements and stamps on the item, the paying
bank did not take all action necessary to recover its payment within the time limits of Regulation J
and we certify that, as to wire advice of nonpayment for the item, we received
[CHECK ONE]
□

Wire or phone advice o n .................................................................
[Date]

Q No advice other than the returned item.
This late return caused us to incur financial loss, because of lack of authority to charge the item back
to our customer, or for other reasons.
Please credit our account provisionally and advise.
[Sending Bank]
By

.......................................................................................

[Authorized Signature]
Knowingly making a false statement on this form to influence the action of a Federal Reserve Bank
in granting a credit may subject the signing party to criminal penalties under Federal or State law.
[Enc. Cir. No. 8953]

ted

F e d e r a l Re s e r v e Ba n k
OF NEW YORK
Circular No. 4
[ RevisedOperating
effective November 13, 1980

COLLECTION OF CASH ITEMS
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:

CONTENTS
Topic

Paragraph No.

General

.......................................................................................

1-3

Items that we handle as cash ite m s ....................................

4-5

Items that we do not handle as cash items .....................

6-9

Collection and presentment .................................................

10-11

Preparation of cash letters .....................................................

12-14

Indorsements ................................................

15-16

Direct sending to other Reserve offices ...........................

17-20

Time schedules and availability of credit .......................
Immediate credit
Deferred credit

21-23

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

24-25

Differences and adjustments .................................................
Return items ......................................................................
Returns without e n tr y .....................................................
Preparation of return items ..........................................

26-27
28-40
30-31

Disputed returns .............................................................

38-40

32-37

Uniform instructions on protest and advice of nonpayment

41-45

Charges for communications .................................................

Size; routing numbers; records ............................................

47-50

[Enc. Cir. No. 8953]

Paragraph No.

Topic

Missing or destroyed items; Photocopies .........................
Mutilated cash letters .....................................................

51-58
51

Items discovered missing or destroyed.....................

52-53

Handling of photocopies of cash items ...................

54-58

Right to amend ..................................................................

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

Appendix A — Government Checks
Appendix B — Postal Money Orders
Appendix C — Food Coupons
Appendix D — Immediate Settlement Agreement

and Correspondent Authorization
Appendix E — Intercept Agreement for Off-Premises

Presentment of Cash Items
Appendix F — Manhattan, Bronx, and Brooklyn

Collection Arrangement
Appendix G — Thrift Institution Collection Arrangement

General
1. Subpart A of Regulation J ( “Regulation J ”) of the Board of
Governors of the Federal Reserve System ( “Board”), this operating
circular, and our time schedules apply to the handling of all checks
and other cash items that we accept for collection and all bank drafts
and other forms of payment that we receive for such items. This cir
cular also contains instructions to paying and collecting banks for
handling and paying checks and other cash items contained in cash
letters received from this Bank. This circular is issued pursuant to
Sections 4, 13, 1 4 (e), and 16 of the Federal Reserve Act and related
statutes in conformity with Regulation J. It is binding on the sender,
on each collecting bank, paying bank and nonbank payor to which we
or a subsequent collecting bank present or send a cash item, and on
other parties interested in the item, including the owner.
2. Each Reserve Bank has issued a circular substantially similar
to this one. When we send a cash item to another Reserve Bank, that
Reserve Bank handles the item subject to its operating circular and
time schedules. We give credit to the sender for the item in accord
ance with our time schedules.
3. All terms defined in Regulation J have the same meaning in
this circular. Many terms used in this circular, including terms not
defined in Regulation J, have specialized meanings that have developed
through law, custom and commercial usage. Unless otherwise stated,
all references to this Bank include our Head Office, our Buffalo
Branch, and our offices at Cranford, Jericho, and Utica.
Items that we handle as cash items
4. A sender may send the following items to us for handling as
cash items, unless otherwise provided in this circular:
(a ) Checks, including postdated checks, except checks drawn on
a bank included in the Board’s current “Memorandum on
Exchange Charges” indicating banks not paying checks at par;
(b ) Government checks, postal money orders, and food coupons;1
and
1 Provisions governing the collection of Government checks, postal money orders
and food coupons are contained in Appendices A, B, and C of this circular.

( c ) other demand items, collectible at par in funds acceptable to
the Reserve Bank of the Federal Reserve District ( “District” )23
in which the items are payable, that we are willing to accept
as cash items.
5. When we accept an instrument for credit to our own account,
the account of another Reserve Bank, or any account on our books,
we handle the instrument as a cash item if it qualifies as a cash item
even though it is sent to us by one other than a “sender,” as defined
in § 210.2 of Regulation J.
Items that we do not handle as cash items
6.

We do not handle any item as a cash item if:

(a ) A passbook, certificate, or other document is attached to the
item;
(b ) Special instructions, including a request for special advice of
payment or dishonor, accompany the item;
(c ) The item consists of more than a single thickness of paper,
except as provided in paragraphs 52 and 53 of this circular
regarding photocopies, but we do handle as a cash item a
mutilated, erroneously-encoded, or other cash item contained
in a carrier that qualifies for handling by high-speed check
processing equipment; or
(d ) Except as provided in paragraphs 52 and 53 of this circular
regarding photocopies, the item has not been preprinted or
postencoded, as prescribed by the American Bankers Associa
tion, before we receive it with (1 ) the Federal Reserve rout
ing symbol and the suffix of the institutional identifiers of the
paying bank (or nonbank payor), and (2 ) the dollar amount of
the item. We handle these items as cash items, however, when
we judge that special circumstances justify such handling.
These items should be sent to us for collection only as noncash items
under our Operating Circular No. 6, “Collection of Noncash Items.”
7. We do not handle an item payable by or through one office of
a bank that is sent by another office of the same bank.
8. We do not handle an item that has been dishonored two or
more times. We reserve the right to return an item or to handle it as
2 The Virgin Islands and Puerto Rico are deemed to be in the Second District,
and Guam and American Samoa in the Twelfth District. Regulation J, Note 1.
3 The terms “routing number,” “routing symbol,” and “institutional identifier”
have the meanings given by the Routing Number Task Force of the American
Rankers Association and the Federal Reserve System.

a noncash item if it has been dishonored once, or if we judge that
special conditions require that it be so handled.
9.
If an item that we do not handle as a cash item is sent to us
in a cash letter, we will charge it back and return it to the sender.
In addition, we reserve the right to return and charge back a cash
letter that does not conform to the sorting requirements of this
circular and our time schedules.
Collection and presentment
10. Under Section 4-204(1) of the Uniform Commercial Code, a
collecting bank must send items by reasonably prompt methods.
Accordingly, we discourage indirect routing of cash items. Senders
should not send to us, or to other Reserve Banks for our account,
items that are payable in other Districts and that bear the indorse
ments of banks located in other Districts if it is evident that the items
have been routed indirectly.
11. We do not by this operating circular, or otherwise, agree to
present, or cause presentment of, an item earlier than is required by
State law. We have no responsibility for giving notice to senders of
anticipated delays in presentment, or return of cash items, unless
the delay is expected to involve at least ten paying banks and at
least three banking days. A paying bank may request off-premises
presentment pursuant to the terms of Appendix E to this circular.
We reserve the right to return without presentment an instrument
payable by or through a bank that is designated in the Board’s
“Memorandum on Exchange Charges” or that has been reported
closed.
Preparation of cash letters
12. All cash items sent to us, or to another Reserve Bank direct
for our account, may be listed by amount without further description
in tape listings accompanying cash letters. All cash letters and tape
listings should be dated and identified with the sender’s name and
nine-digit routing number, if any.
13. Each sender should keep records that permit it to identify its
depositors or indorsers on items so that the sender can take appropriate
action if an item is lost or destroyed. We do not generally keep
copies or descriptions of items. We do not keep any records of

items in end-point-sorted cash letters that we handle without our
indorsement. We have no responsibility for describing a lost or
destroyed item that we charge back to a sender, or for obtaining
from another person reimbursement or insurance for a sender’s costs
or other loss, except as provided in Appendix A concerning Govern
ment checks.
14.
We strongly urge direct exchange of cash items among banks
located in the same city, town, metropolitan or similar area. We
reserve the right to require such banks to sort, list, and package
these items according to the office of the paying bank where the
items are payable. We also reserve the right to require separate
sorts of cash items, and separate sorts of Government checks, postal
money orders, and food coupons. Our time schedules contain other
instructions for sorting and listing cash items.
Indorsements
15. All cash items sent to us, or to another Reserve Bank direct
for our account, should be indorsed: ( a ) without restriction to, or to
the order of, the Reserve Bank to which sent, (b ) to, or to the order
of, any bank, banker, or trust company, or ( c ) with equivalent words
or abbreviations. The sender’s indorsement should be dated and
should show its institutional identifier, if any, in prominent type on
both sides of the indorsement.
16. If we receive a cash item without the sender’s indorsement,
we may (a ) present or send the item as if it bore the sender’s
indorsement, (b ) place on the item the sender’s indorsement and
the date we received it, or (c ) return the item to the sender for
proper indorsement. We make the warranties stated in Section
210.6(b) of Regulation J by presenting or sending a cash item (or
an instrument that we handle as a cash item under paragraph 5 of
this circular), whether or not the item bears our indorsement.
Direct sending to other reserve offices
17.
We may permit or require a sender that maintains or uses an
account with us and that has a substantial volume or dollar amount
of cash items payable in another District, or in the territory of another
office of this Bank, to send the items directly to the Reserve office

of that District or territory. We will give additional instructions to
a sender authorized to send direct. We may at any time withdraw
authority to send direct. If we authorize a sender to send items direct,
we may refuse to accept these items from the sender. Under Sec
tion 210.4 of Regulation J, items sent direct under our authority are
deemed to have been handled by us.
18. We reimburse an authorized sender for transportation costs of
cash items sent direct to other Reserve offices or other offices of this
Bank at First Class Airmail or common carrier rates, whichever is
usually lower, but not for insurance. Senders that by arrangement
deliver cash items payable in other Districts to us or to another
designated location for consolidated shipment should not deviate
from the arrangement except with our prior approval. We pay trans
portation costs of the consolidated shipments but do not reimburse
senders for transportation costs and consolidation costs of moving
direct-send cash items to a consolidated shipping point. If a sender
has an arrangement with us for consolidated shipment, we do not
normally reimburse the sender when cash items are sent direct out
side of the consolidated shipment, except on Saturdays, Sundays, and
holidays.
19. Claims for reimbursement of transportation costs should be
submitted monthly on our forms, a supply of which will be furnished
upon request. A 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 bank will be credited with the
amount.
20. A sender sending direct should change its methods of ship
ment whenever this would result in presentment at a lower cost
without loss of time. In cases where we pay transportation costs,
we reserve the right to require a change to another method of ship
ment that would result in more efficient handling by the receiving
Reserve Bank, or presentment that is consistently more prompt or
that is at a lower cost without loss of time.
Time schedules and availability of credit
21. We give immediate or deferred credit for all items that we
accept as cash items in accordance with our published time schedules.
For cash letters containing items unsorted as to credit availability,
we may defer credit for the longest period prescribed in our time
schedules for any item enclosed.

22. Because in many instances our time schedules do not show
the actual time required for collection, our advices cannot be con
sidered advices of actual payment on the dates we make credit
available. Credit is in all instances subject to our receipt of payment
in actually and finally collected funds. We reserve the right to refuse
to permit a sender to withdraw or otherwise use any credit (imme
diate or deferred) until we receive payment in actually and finally
collected funds.
23. We enter credit at full face value in the reserve account or
other appropriate account on the day we receive a cash item as
follows:
Im m ediate credit
Immediate credit at once qualifies as reserves for purposes of
Regulation D and is available for use by the sender.
D eferred credit
The amount entered as deferred credit does not qualify as re
serves for purposes of Regulation D and is not available for use by
the sender until the time specified in our time schedules. At that
time we will transfer credit from the deferred account to the reserve
account or other appropriate account.
Payment for cash letters
24. A paying bank must pay for all cash items that it has not
returned prior to the close of its banking day of receipt.4 Payment
shall be made at par and by:
( a ) Debit to an account on our books;
(b ) Cash; or
( c ) In our discretion, any other form of payment.*1
4 A paying bank is deemed to receive a cash item on its next banking day if it
receives the item:
( 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;
(b ) after a “cut-off hour” established by it in accordance with State
law; or
( c ) during afternoon or evening periods when it is open for limited
functions only.

The proceeds of any payment shall be available to us by the close of
our banking day on the banking day of receipt of the item by the
paying bank. If the paying banks banking day of receipt is not a
banking day for us, payment shall be made on the next day that is a
banking day for both this Bank and the paying bank; we may make
appropriate adjustments as of the day of receipt (unless that day
is a Saturday) for purposes of computing reserves under the Board’s
Regulation D. Our terms for immediate settlement for cash items
are contained in Appendix D to this circular.
25.
A subsequent collecting bank (other than a Reserve Bank)
that is paid for a cash item shall make the proceeds available to us
not later than the close of our banking day on the day the subsequent
collecting bank receives the proceeds.
Differences and adjustments
26. Unless a paying bank has otherwise agreed with us, a
paying bank may pay for our cash letter in an amount different from
the total of the cash letter if the accompanying cash items do not
prove to the amount of the cash letter. The bank should furnish
at the time of payment a complete explanation of the difference on
the form we provide. We request that paying banks not report
adjustments of $1.00 or less.
27. A member bank or other account holder must promptly
advise us in writing of an objection to an entry in our statement of
its account. An account holder that fails to advise us of its objection
within one calendar year of the date of the entry (and any sender,
collecting bank, or paying bank that has used the account and has
handled the item to which the entry relates) is deemed to have
approved the entry, and the statement of account is deemed, finally
adjusted. This paragraph does not relieve an account holder from
the duty of using due diligence in examining statements of account
sent to it and of notifying us immediately on discovery of an error.
Further, this paragraph does not relieve a Reserve Bank from liability
for breach of warranty on an item to which an entry relates.
Return items
28.
A paying bank may return to us with entry ( that is, for credit
or refund) a cash item for which it has previously made payment only

if it returns the item within the time limits of Section 210.12 of Regu
lation J. We urge that a paying bank recover its payment by request
ing a credit to an account on our books, but a paying bank may return
an item to us for refund.
29. A collecting bank that receives a cash item from a paying
bank for return to us shall send the return item to us before midnight
of its banking day next following the banking day it received the
return item. A collecting bank that receives a credit or refund from
us for an item it returns to us (a ) warrants to us and to the sender
and all prior parties that its return of the item was timely, and (b )
agrees to indemnify us for any loss or expense sustained (including
attorneys’ fees and expenses of litigation) resulting from its breach
of this warranty.
Returns without entry
30. A paying or collecting bank may return a cash item to us
after the time limits described in paragraphs 28 and 29 of this
circular only on a without entry basis (that is, with a request for
credit or refund). Items returned without entry may include returns
because of a missing or erroneous indorsement or because of a claim
of breach of warranty, including a claim of forged indorsement with
affidavit of forgery. We make refund to the paying or collecting bank
and charge our sender for a without entry return only if the sender
specifically authorizes us to do so.
31. Under Section 210.5 of Regulation J, we may charge the
account maintained or used by the sender of an item for the amount
of any judgment, and of any attorneys’ fees and expenses incurred,
in certain actions against us or another Reserve Bank, including
actions alleging breach of warranty, if we have tendered defense of
the action to the sender. We assume no responsibility for defending
the action if the sender does not itself undertake the defense.
Preparation o f return item s
32. A cash item returned unpaid should bear a notation clearly
indicating the reason for nonpayment.
33. If a cash item is being dishonored and returned for the first
time, we urge the paying bank to stamp a star: + on the upper right
area of the face of the item. If a cash item is being dishonored and

returned for the second time, the paying bank shall invalidate the
MIGR routing number on the face of the item so that the item no
longer qualifies for handling by high-speed automated check proces
sing equipment. We assume no responsibility for handling as a cash
item an item whose MICR routing number has not been invalidated
as required.
34. The paying bank shall cancel an indorsement, “paid,” or
other identifying stamp of the paying bank on the back of a cash
item before returning the item to us. We assume no responsibility for
any delay resulting from our handling an item on the basis of an
uncancelled stamp.
35. For its own protection, each paying or collecting bank that
returns a cash item to us should keep records that permit it to repro
duce or trace the item if it is lost or destroyed in transit or afterwards.
36. If a paying or collecting bank, in accordance with State law,
returns direct to the depository bank an unpaid item that it has
received directly or indirectly from us or another Reserve Bank, the
provisional credits become final between the paying or collecting
bank and the Reserve Bank, between the Reserve Bank and the
sender, and between us and the other Reserve Bank.
37. We handle end-point-sorted cash letters without indorsing
the items in the cash letters. Each collecting and paying bank should
keep records that permit it to identify the source of receipt of items.
By sending to us as a return item an item that does not bear our
indorsement, a collecting or paying bank (a ) warrants to us and to
the sender and prior parties that we presented or sent the item to the
collecting or paying bank, and (b ) agrees to provide source of
receipt information on request.
D isputed returns
38.
If a sender (other than a Reserve Bank) believes that a
paying bank has returned a cash item late, the sender may dispute
the return one time by the following procedure:
(a) The sender may furnish us with the item and, on a form pre
scribed by us, a signed statement that the sender believes
that the paying bank did not take all action necessary to
recover its payment within the time limits of Regulation J.

We will credit the amount of the item to the sender’s account
(or the account of the forwarding Reserve Bank). We will
charge that amount to the account of (and send the item and
statement to) the collecting or paying bank to which we had
originally presented or sent the item.
(b) We will revoke the credit given to the sender and recredit the
collecting or paying bank if:
(i) for any reason we cannot obtain the amount of the credit
from the paying bank; or
(ii) we (or another Reserve Bank) receive the item with a
properly executed statement from the paying or collecting
bank within fifteen (15) banking days after we (or the
other Reserve Bank) sent the item and the sender’s state
ment to the collecting or paying bank.
(c) A properly executed paying bank’s statement must:
(i) be on a form prescribed by us;
(ii) be signed by an officer of the paying bank;
(iii) show the banking day of receipt and the date of return of
the item by the paying bank, and explain any difference
in dates exceeding one banking day; and
(iv) state that the paying bank took all action necessary to
recover its payment within the time limits of Regulation J.
39. We assume no responsibility for determining whether the
paying bank took all action necessary to recover its payment for an
item within the time limits of Regulation J or whether a collecting
bank returned the item within the time limits of this circular.
40. If we send to a bank in error as a return item an item that the
bank did not send to us for collection, the bank is instructed to send
the item back to us promptly on a without entry basis with a request
for credit or refund, and we will promptly grant the credit or' refund.
The bank should not send the item to us in a cash letter or return
letter.
Uniform instructions on protest and advice of nonpayment
41.
All Reserve Banks and collecting and paying banks shall han
dle cash items in accordance with the following uniform instructions
regarding protest and wire5 advice of nonpayment, except as provided
5 For purposes of this circular, “wire” includes telephone, telegraph, cable, and
other forms of electronic telecommunications.

in paragraph 42 and except that Government checks shall not be pro
tested. All Reserve Banks and collecting and paying banks shall dis
regard any contrary or special instructions noted on cash letters or
otherwise transmitted with cash items.
(a) PROTEST a dishonored item of $2,500 or over:
(i) that appears on its face to have been drawn at a place not
within a State,6 unless the item bears on its face the
American Bankers Association no-protest symbol of a
Reserve Bank or a preceding bank indorser; or
(ii) that bears on its face the legend, “PROTEST REQU IRED,”
of a Reserve Bank or a preceding bank indorser.
(b) DO NOT PROTEST any other item.
(c ) W IRE ADVICE of nonpayment of an item of $2,500 or over,
unless it has not been paid because of a missing, irregular, or
unsatisfactory indorsement or unless it bears on its face the
legend, “DO NOT W IRE NONPAYMENT,” of a Reserve Bank
or a preceding bank indorser. Include in the advice of non
payment (1) the amount of the item, (2) the reason for non
payment, (3) the date of the cash letter, (4) the name of the
drawer or maker, and (5) the names or institutional identifiers
of all indorsers preceding the Reserve Bank.
(d) DO NOT W IRE ADVICE of nonpayment of any other item.
42. DO NOT PROTEST AND DO NOT W IRE ADVICE of
nonpayment of a cash item indorsed by or for credit to the United
States Treasury, or bearing on its face or in an indorsement 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.
43. A sender may instruct a Reserve Bank to handle an item
( other than a Government check, postal money order, or food coupon)
under instructions differing from these uniform instructions, only if
the sender sends the item to us for collection and credit as an indivi
dual noncash item with the instructions noted in the letter of trans
mittal.
44. The paying bank is responsible for making any protest and
for giving any wire advice of nonpayment, except as otherwise pro
6 Under Section 210.2 of Regulation J, “State” means a State of the United States,
the District of Columbia, Puerto Rico, or a territory, possession or dependency
of the United States.

vided by the rules or practices of any clearing house through which
the item is presented or by agreement between us and the paying bank.
45. We assume no responsibility for:
(a ) determining whether another bank has made a protest or
given a wire advice of nonpayment;
(b ) making a protest if a required protest has not been made by
another bank; or
(c ) giving wire advice of nonpayment, unless we receive wire
advice of nonpayment from another bank.

Charges for communications
46.
We do not charge sending banks for communications pertain
ing to payment, nonpayment, or tracing of cash items, or containing
information or instructions with respect to cash items.

Size; routing numbers; records
47. We urge paying banks to imprint the routing number in
fractional form in the upper right comer in at least 8 point Gothic
type and to conform cash item dimensions to American Bankers Asso
ciation standards — between 2% and 3% inches in width, and 6 and
83/4 inches in length.
48. We may present or send a cash item, under Section 210.6(a)
(2 ) of Regulation J, on the basis of any routing number or other
designation of a paying bank appearing on the item when we receive
it. We are not responsible for any delay resulting from our acting
on a designation of a paying bank, whether inscribed by magnetic
ink or other means, and whether consistent with any other designation
of the paying bank on the item.
49. If in our judgment processing requires it, we may inscribe
on an item, in magnetic ink or otherwise (a ) the amount of the item,
or (b ) the Federal Reserve routing symbol or the suffix of the
institutional identifier, or both, of the paying bank ( or nonbank payor).
The sender assumes the risk of loss resulting from any delay caused
by our inscribing the item and presenting or sending it accordingly.

50.
In addition to the recordkeeping requirements of this circular,
Treasury regulations (31 Code of Federal Regulations, Part 103)
require that banks keep legible records of many items. These regula
tions apply whether or not the item is capable of being photocopied.
Missing or destroyed items; Photocopies
M utilated cash letters
51.
A paying or collecting bank that receives from us a cash letter
in a mutilated condition should telephone us before attempting to
process any part of it. Sometimes tracing and identification of muti
lated or destroyed cash items can be expedited when the cash letter
is returned to us intact.
Item s discovered missing or destroyed
52. We credit or refund the amount paid for a cash item if (a)
a subsequent collecting bank or the paying bank reports that it
discovered during initial proving that the item is missing, or (b )
a subsequent collecting bank reports that it knows the items to be
missing or destroyed in transit to a subsequent collecting bank or the
paying bank. We will credit or refund the amount only if we (or a
subsequent collecting bank that promptly sends the report to us)
receive the report within five (5 ) banking days from the date of the
cash letter that listed the item. This time is measured by the banking
days of the paying or collecting bank.
53. We charge back to the sender the amount of a cash item (a)
that we or another Reserve Bank discover to be missing, or (b ) that
a subsequent collecting bank or paying bank reports to be missing or
destroyed as provided in paragraph 52 of this circular.
H andling o f p hotocopies o f cash items
54.
We handle a correctly prepared photocopy as a cash item
through our adjustment department if we (or a prior collecting
Reserve Bank) receive the photocopy and a copy of the advice of
chargeback within thirty (30) banking days from the day we (or the
prior Reserve Bank) charged back the original item. The prior Reserve
Bank should send the photocopy and advice to us when received.

55. If a shipment of cash items is lost or destroyed in transit to
the first collecting Reserve Bank, we handle correctly prepared photo
copies of the items as cash items through our cash item department
if (a ) the sender determines that at least several items in the original
shipment remain unpaid, and (b ) the photocopy cash letter is identi
fied as containing nonmachineable photocopies of items from a lost or
destroyed shipment.
56. We present or send a photocopy as a cash item subject to all
the rules as to payment and return of cash items, other than the
instructions regarding protest and wire advice of nonpayment. A pay
ing bank has the right to return a photocopy through our adjustment
department within twenty (20) banking days from its banking day of
receipt if:
( a ) the drawer has refused to authorize payment of the photocopy,
or the paying bank has been unable to contact the drawer, and
the paying bank returns a signed statement to that effect; or
( b ) the original item was paid and the paying bank returns a copy
of the front and back of the paid original cash item and a
signed statement that the original was paid and giving source
of receipt information. The information required is the name
and routing number, if any, of the bank or person from which,
and the date on which, the original was received. If the origi
nal was received from us, include the date of the cash letter
and the amounts of the items listed before and after the
original, the total of the cash letter, the batch or package that
contained the original, and the sequence number of the
original.
57. A correctly prepared photocopy must bear the sender’s current
indorsement and the following or equivalent signed legend:
This is a photocopy of the original check which we indorsed and
which was reported missing or destroyed in the regular course of
bank collection. We guarantee all prior and any missing indorse
ments and the validity of this copy. Upon payment of this copy in
lieu of the original check, we agree to hold each collecting bank
and the payor bank harmless from any loss suffered, if payment is
stopped on the original check and it is unpaid.
58. We assume no responsibility for determining whether a return
of a photocopy is timely. Nor do we assume any responsibility for
determining whether a report of a missing or destroyed cash item or a
statement regarding the handling of a photocopy is correct. We

handle, on a without entry basis, return photocopies received by us or
a subsequent collecting Reserve Bank within nine (9 ) months of the
banking day of receipt by the paying bank. We also handle without
entry a late report of a missing or destroyed cash item.
Right to amend
59.

We reserve the right to amend this circular at any time.

Effect of this circular on previous circulars
60. This circular supersedes our Operating Circulars Nos. 4 and 6,
both revised effective September 18, 1979.

Anthony M. Solomon,

President.

APPENDIX A
GOVERNMENT CHECKS
1. We handle checks drawn on the United States Treasury ( “Gov
ernment checks”) as cash items under Treasury Department Circular
No. 21 (31 Code of Federal Regulations, Part 240). Copies of that
Circular will be furnished on request. As to matters that Circular
does not cover, Regulation J, this circular, and our time schedules
apply.
2. We give immediate credit, subject to payment in actually and
finally collected funds, for Government checks as provided in our time
schedules. After we handle Government checks as fiscal agent of the
United States under Treasury requirements, the checks are subject
to examination and payment by the United States Treasury. W e may
reimburse a sender for its reasonable costs of reconstructing a Gov
ernment check cash letter lost or destroyed in transit between Federal
Reserve offices.
3. Section 210.12 of Regulation J, relating to the return of cash
items by paying banks, does not apply to Government checks. If the
United States Treasury refuses payment of a Government check upon
first examination and returns the check, or a photocopy, to us as out
lined in Treasury Department Circular No. 21, we charge back the
amount of the check to the sender and credit that amount to the
United States Treasury. We have no responsibility to the sender or
another owner or holder for the nonpayment and return by the United
States Treasury of a Government check or photocopy.4
4. Under Federal statute, 31 U.S.C. §§ 122 and 129: (a ) a claim
on a Government check that appears of record to have been paid must
be made to the Government within six years after the date of issuance
of the check and (b ) an action by the Government to enforce liability
on a forged or unauthorized signature or indorsement or alteration of
a Government check must be commenced within six years after pre
sentment of the check, or written notice of such a claim must be given
within that period, but if a claim is made on an apparently paid check,
the six-year period is extended an additional 180 days.

APPENDIX B
POSTAL MONEY ORDERS
1. We handle postal money orders (United States postal money
orders; United States international postal money orders; domesticinternational postal money orders) as cash items under an agreement
between the United States Postal Service and the Reserve Banks as
depositaries and fiscal agents of the United States pursuant to authori
zation of the Secretary of the Treasury. As to matters that agreement
does not cover, Regulation J, this circular, and our time schedules
apply.
2. We give immediate credit for postal money orders as provided
in our time schedules. The credit becomes final as between us and the
sender when we debit the amount of the money orders against the
general account of the United States Treasury under symbol numbers
assigned by it.
3. The agreement between the United States Postal Service and
the Reserve Banks provides that: (a) the United States Postal Service
may make no claim against or through a Reserve Bank for refund or
otherwise with respect to a postal money order debited against the
general account of the United States Treasury (other than a claim
based on the negligence of a Reserve Bank); (b ) the United States
Postal Service will deal directly with the bank or the party against
which the claim is made; and (c ) the Reserve Banks will assist the
United States Postal Service in asserting the claim, including making
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 paying banks, does not apply to postal money orders.

APPENDIX C
FOOD COUPONS
1. We handle food coupons as cash items under an agreement
between the Secretary of Agriculture, in behalf of the United States,
and the Reserve Banks as depositaries and fiscal agents of the United
States pursuant to authorization of the Secretary of the Treasury. As
to matters that agreement does not cover, Regulation J, this circular,
and our time schedules apply. We receive food coupons only from
banks that maintain accounts with us and nonmember banks that have
arranged with us to send coupons to us for credit to the account of a
member bank. Other nonmember banks should forward food coupons
through ordinary collection channels. All banks sending coupons to
us should follow the instructions for handling food coupons of the
United States Department of Agriculture.
2. Banks should send redeemed food coupons to the office of this
Bank that maintains the account to which the proceeds are to be
credited. We give immediate credit for redeemed food coupons as
provided in our time schedules. This credit is not final and is subject
to reclamation and adjustment.
3. Banks should separately sort food coupons by denominations
and deposit them in a separate cash letter. The transmittal letter
should be clearly marked “FOOD COUPONS” and should show the
total number and amount of each denomination of coupons enclosed.
Food coupons should be sent to us by the means ordinarily used for
cash items. Shipments are at the risk of the Department of Agri
culture only to the extent stated in 7 Code of Federal Regulations,
Chapter II, Section 272.5(c). Sending banks should retain customers’
deposit slips and other pertinent records to assist in substantiating
reimbursement claims against the Department of Agriculture for
coupons lost in transit.4
4. Under the regulations of the Department of Agriculture (7
Code of Federal Regulations, Chapter II, Section 2 7 2 .5 (a )), banks
must not accept for redemption a portion of a food coupon consisting
of less than three-fifths of the whole coupon. Any coupon accepted
for redemption must show on its back either (i) the AUTHORIZA-

TION NUMBER, or (ii) the name of the authorized retail food store
and of the authorized wholesale food concern, if any. Each coupon
must also be cancelled by the first bank that receives it, by indelibly
marking “PAID” or “CANCELLED” and the bank’s name or institu
tional identifier on the face of the coupon. No coupon should be
indorsed by a bank. We furnish additional information about the
collection of food coupons on request.

APPENDIX D
IMMEDIATE SETTLEMENT AGREEMENT
AND
CORRESPONDENT AUTHORIZATION

Introduction

The Federal Reserve Bank of New York ( “Reserve Bank”) pre
sents or sends for presentment cash items to a payor depository insti
tution ( “paying bank”) under Regulation J of the Board of Governors
of the Federal Reserve System (12 C.F.R. Part 210), our applicable
operating circulars, and our agreement with the paying bank per
mitting immediate setlement of these items by a charge to an account
on the books of the Reserve Bank. Cash items may be presented or
sent for presentment by our Head Office, our Buffalo Branch, or our
Cranford, Jericho, or Utica Offices. If the charge is to be posted to
the paying bank’s own account, the paying bank agrees to the terms
of this Immediate Settlement Agreement by sending to the Reserve
Bank a letter in the form attached as Appendix D -l. If the charge is
to be posted to the account of another depository institution ( “Cor
respondent”) on the Reserve Bank’s books, the paying bank must
agree to the terms of this Immediate Settlement Agreement and
designate a Correspondent, as provided in paragraph 7, and the Cor
respondent must agree to the terms of the Correspondent’s Authoriza
tion, both by executing and sending to the Reserve Bank a letter in
the form attached as Appendix D-2.
B.

Im m ediate Settlem ent A greem ent

1.
Reserve Bank will debit paying bank’s or its Correspondent’s,
account on Reserve Bank’s books on the “immediate settlement date”
for the full amount of each cash letter sent to the paying bank here
under containing cash items payable by, at, or through the paying
bank. The “immediate settlement date” for each such cash letter is
the banking day for the paying bank on which it receives the cash
letter; however, if that day is not a banking day for Reserve Bank,
the immediate settlement date is the day next following the banking
day the paying bank receives the cash letter that is a banking day
for the paying bank and Reserve Bank.

2. Promptly after dispatch of a cash letter, Reserve Bank will
send the paying bank and the Correspondent an advice of charge,
specifying the immediate settlement date of the cash letter.
3. When the paying bank receives the advice of charge, it should
promptly prove the advice against the cash letters being charged for.
The paying bank agrees to notify Reserve Bank immediately if:
(1) the dollar amounts on the advice and those of the cash letters
do not prove;
(2) the paying bank has not received a cash letter listed in an
advice or any cash item listed in a cash letter;
(3) the paying bank has received a cash item payable by, at, or
through it that is not listed in a cash letter; or
(4) it objects to the charge for any other reason. However, the
paying bank need not give Reserve Bank immediate notice
of any such difference of less than $1,000.
If the paying bank gives Reserve Bank such notice, in timely
fashion, of a difference of $1,000 or over in the advice of charge
(including the amounts of any missent items included in the cash
letter), Reserve Bank will make the appropriate credit or debit to the
paying bank’s, or its Correspondent’s, account and make such “as-of”
adjustments as are appropriate for reserve purposes.
If the paying bank thereafter receives a cash letter or a cash item
that was so credited and that has not been listed in a subsequent
advice of charge, the paying bank will immediately notify Reserve
Bank of its receipt, and Reserve Bank will debit the amount of such
delayed or missing cash letter or cash item to the paying bank’s, or its
Correspondent’s, account. If this notice is not timely, Reserve Bank
reserves the right to make such as-of adjustments as are appropriate
for reserve purposes.
Reserve Bank may make the appropriate debit or credit to the
paying bank’s, or its Correspondent’s, account for any other difference
of which the paying bank has notified Reserve Bank on the banking
day on which Reserve Bank receives notice of such difference.4*
4. All unpaid cash items returned by the paying bank must be
accompanied by a separate return item cash letter form for credit
to the paying bank’s, or its Correspondent’s, account. Reserve Bank

will give such credit on the day of receipt by it of any unpaid return
item received during its business hours; otherwise, credit will be
given on the banking day next following such receipt.
The paying bank may also return, without entry, a cash item that
it has paid hereunder, but which it has not returned within the time
limits necessary to revoke a provisional settlement. This Bank handles
such an item in accordance with the provisions of its operating
circulars.
5.

Under this Immediate Settlement Agreement:

(a ) The paying bank will furnish Reserve Bank with its
cut-off hour and a current list of its days of closing, and any day,
other than Sunday, not so reported shall be deemed to be a bank
ing day for it.
(b ) Reserve Bank will make all necessary debits and credits
to effect adjustments hereunder by separate entry. Reserve Bank
will send the paying bank and its Correspondent advices of debits
and credits hereunder.
(c ) The paying bank will be deemed to have immediately
notified Reserve Bank hereunder if it communicates the relevant
facts to the appropriate location (the Check Adjustment Division
at the Head Office, Buffalo Branch, or our Cranford, Jericho, or
Utica Office) of this Bank on the same day that it learns of them,
if that day is a banking day for it, or, if it is not, on its next follow
ing banking day. The paying bank should communicate with the
appropriate location during Reserve Bank’s business hours, by
collect telephone call (telephone numbers are listed in Appendix
D-3) and, at any other time, by collect telegram.
(d ) Any notice under this Immediate Settlement Agreement
that is received by Reserve Bank during its business hours will be
deemed to have been received on that banking day; notice received
after those business hours or on a day that is not a banking day
for Reserve Bank will be deemed to have been received on
Reserve Bank’s next following banking day.6
6. This Immediate Settlement Agreement may be terminated at
any time by either Reserve Bank or the paying bank by written or
telegraphic notice of termination and will terminate five days after
receipt of such notice or at such later time as may be stated in the
notice.

7. The paying bank may designate a Correspondent and may
change the Correspondent hereunder by advising Reserve Bank in
writing of its intention to do so and by designating and appointing
another depository institution that maintains an account with this
Reserve Bank as Correspondent. Any designation and appointment
of a Correspondent hereunder shall be subject to Reserve Bank’s
receipt of a duly executed Immediate Settlement Agreement and
Correspondent’s Authorization in the form attached as Appendix
D-2. It is understood that Reserve Bank assumes no responsibility
for any obligation of Correspondent to the paying bank that may
arise out of this Agreement or that Authorization.
8. Detailed instructions, including telephone numbers that may
be called collect, entitled “Operating Instructions for Settlement of
Reserve Bank Cash Letter Sendings under the Immediate Settlement
Agreement” are attached as Appendix D-3.
9. Terms defined in Subpart A of Regulation J and the applicable
operating circulars have the same meanings in this Immediate Settle
ment Agreement unless otherwise stated.
10. Reserve Bank reserves the right to amend any portion of this
Immediate Settlement Agreement on seven days’ notice to each
paying bank or Correspondent that has agreed to its terms.
C.

Correspondent's Authorization

1.
To implement the paying bank’s Immediate Settlement Agree
ment, the Correspondent authorizes the Reserve Bank to charge to
the Correspondent’s account on Reserve Bank’s books the amount of
cash items payable by, at, or through the paying bank sent to it
pursuant to the paying bank’s Immediate Settlement Agreement.
Reserve Bank is authorized to make all such debits and credits to the
Correspondent’s account and to make such other adjustments as are
appropriate for reserve purposes, as may be necessary to give effect
to the provisions of the paying bank’s Immediate Settlement Agree
ment. The Correspondent agrees to maintain in its account on Reserve
Bank’s books, in actually and finally collected funds, balances suffi
cient to cover all debits to that account in connection with such cash
items. It is understood that Reserve Bank assumes no responsibility
for any obligations of the paying bank to the Correspondent that

may arise out of charges to the Correspondent’s account pursuant to
that Agreement or this Authorization.
2.
The authority contained in this Authorization may be ter
minated at any time in writing to the applicable office (the Check
Adjustment Division at the Head Office of the Federal Reserve Bank
of New York, the Buffalo Branch, or the Cranford, Jericho, or Utica
Offices); however, such termination shall not affect Reserve Bank’s
right to make all debits or credits required by, or incidental to, the
paying bank’s Immediate Settlement Agreement relating to any cash
letter Reserve Bank dispatches prior to the effective date of the
termination.

APPENDIX D-l
PAYING BANK’S
IMMEDIATE SETTLEMENT AGREEMENT
[To be typed on paying bank’s letterhead]
[Date]
or

Federal Reserve Bank
of New York
33 Liberty Street
New York, New York 10045

Jericho Office
Federal Reserve Bank
of New York
113 South Service Road
Jericho, New York 11753

or
Buffalo Branch
Federal Reserve Bank
of New York
160 Delaware Avenue
Buffalo, New York 14240

or
Utica Office
Federal Reserve Bank
of New York
Oneida County Airport
Oriskany, New York 13424

or
Cranford Office
Federal Reserve Bank
of New York
2 Jackson Drive
Cranford, New Jersey 07016
Attention:

Manager, Check Processing Department

Gentlemen:
We hereby agree to the terms of the paying bank’s Immediate
Settlement Agreement set forth in Appendix D of your Operating Cir
cular No. 4. We authorize you to charge or credit our account on your
books and to make other appropriate adjustments in connection with
settlement of cash items as provided by that Agreement.

[Name o f payor depository
institution]

By: ........................................
[Authorized signature ( s ) ]
[Title]

APPENDIX D-2
PAYING BANK’S AGREEMENT
AND CORRESPONDENT’S AUTHORIZATION
[To be typed on paying bank’s letterhead]

[Date]

Federal Reserve Bank
of New York
33 Liberty Street
New York, New York 10045

or
Jericho Office
Federal Reserve Bank
of New York
113 South Service Road
Jericho, New York 11753

or
Buffalo Branch
Federal Reserve Bank
of New York
160 Delaware Avenue
Buffalo, New York 14240

or
Utica Office
Federal Reserve Bank
of New York
Oneida County Airport
Oriskany, New York 13424

or
Cranford Office
Federal Reserve Bank
of New York
2 Jackson Drive
Cranford, New Jersey 07016
Attention:

Manager, Check Processing Department

Gentlemen:
A.

Paying Bank Agreem ent

We hereby agree to the terms of the paying bank’s Immediate
Settlement Agreement set forth in Appendix D of your Operating Cir
cular No. 4. Effective ..................., . , . , we designate .........................
[N am e of

.................................... as correspondent against whose account on your
correspondent ]

books credits and debits and other appropriate adjustments may be

entered in connection with the settlement of cash items as provided
by that Agreement.

[Name o f paying bank]
By:

...............................................
[Authorized signature ( s )]

[Title]

C orrespondent Authorization

As provided in paragraph 7 of Reserve Bank’s Immediate Settle
ment, we agree to act as Correspondent f o r ..............................................
[Name of payor depository institution]

We authorize Reserve Bank to charge or credit our account on its
books and to make other appropriate adjustments in connection with
the settlement of items f o r ......................................................... as provided
[Name of payor depository institution]

in that Agreement.

[Name o f correspondent]
By:

................................................
[Authorized signature(s)]

[Title]

APPENDIX D-3
OPERATING INSTRUCTIONS FOR SETTLEM ENT
OF OUR CASH LETTER SENDINGS UNDER
THE IMMEDIATE SETTLEMENT AGREEMENT
These operating instructions explain how transactions should be
handled in connection with cash letters sent to you by the Head Office
of this Bank or any of its Offices in the Head Office territory. They
are intended for the use of your personnel who are responsible for
the day-to-day operations under the agreement. In compiling this
information, we have tried to include all situations that might arise.
See “Where to Call,” Section VIII.2., which follows for telephone
numbers.
In connection with the following appropriate categories it is impor
tant that you contact the Office from which you received (or did not
receive) our cash letter so that action can be taken with the records
on hand at that Office.
I.

D ate o f C harge

On the immediate payment date we will debit your account or, if
a correspondent agreement is in use, your correspondent’s account on
our books for the total amount of the cash letter(s) we send you. The
immediate payment date will be the banking day for you on which
you receive the cash letter(s). However, if that day is not a banking
day for us, the immediate payment date will be the next banking day
for you and for us.
II.

A dvice o f C harge

Promptly after dispatch of the cash letter(s), we will send you
an advice of charge showing the immediate payment date, the
amount(s) of the cash letter(s), and the total charged. If, on any
day, you have questions regarding the charge to be made, you should
contact the Check Adjustment Division of this Bank by collect tele
phone call.
When you receive the advice of charge, you should promptly prove
the amounts shown on such advice against the total of the cash letters
actually received by you. The date the cash letters were sent ^vill
appear on the advice of charge and on each cash letter.

NOTE:

III.

TH E INSTRUCTIONS IN SECTIONS III AND IV FO L
LOWING APPLY ONLY TO THE ADJUSTMENT OF
AND THE ACCOUNTING FOR EN TIR E CASH LETTERS
SENT FROM THIS BANK OR ITS O FFICES.

Cash Letters Listed — Not R eceived

If you have not received a cash letter listed in an advice of charge,
please notify the Check Adjustment Division of this Bank by collect
telephon e call immediately. Upon such notice, we will credit the
amount of the cash letter(s) not received to your account or, if a cor
respondent agreement is in use, to your correspondent’s account.
Such credit will be made on our books by separate entry on the bank
ing day on which we receive such notice.
If you thereafter receive a cash letter that was so credited and has
not been listed in a subsequent advice of charge, notify us of its
receipt and we will debit the amount of such delayed cash letter to
your account or, if a correspondent agreement is in use, to your cor
respondent’s account. An advice of such entry will be sent to you and
to your correspondent, if applicable. “As of” adjustments for reserve
purposes will be made when appropriate.
Do not list missing cash letters in any amount on the cash letter
error form; they should be advised missing by telephone only.
IV.

Cash Letters R eceived — Not L isted

If you receive a cash letter containing an item payable by or
through you that is not listed in an advice of charge, please notify the
Check Adjustment Division of this Bank immediately by collect
telephon e call. Upon such notice, we will debit the amount of the
item to your account or, if a correspondent agreement is in use, to
your correspondent’s account. Such debit will be made on our books
by separate entry on the banking day on which we receive such
notice. An advice of such entry will be sent to you and to your
correspondent, if applicable. “As of” adjustments for reserve purposes
will be made when appropriate.
NOTE:

TH E INSTRUCTIONS IN SECTION V [NOS. 2 AND 3]
FOLLOWING APPLY ONLY TO INDIVIDUAL ERRORS
( ARITHEM ETICAL, MISSING CHECKS, OVER CHECKS,
E TC .) IN CASH LETTERS SENT FROM THIS BANK.

Errors In Cash Letters

1. When reporting errors in cash letters in the Head Office ter
ritory, use an “Errors in Cash Letters” form. In the Buffalo Branch
territory use an “Advice of Cash Letter Adjustment” form. Please be
sure that data called for is supplied when the form is submitted.
2. Errors o f $1,000 or over — Do not list an error of $1,000 or
over on the cash letter error form. Such an error should be reported
immediately by collect telephon e call to the Check Adjustment Divi
sion of this Bank. Upon notification of such errors, we will make
the appropriate entry to your account or, if a correspondent agree
ment is in use, to your correspondent’s account. An advice of such
entry will be sent to you and to your correspondent, if applicable.
“As of” adjustments for reserve purposes will be made when appro
priate.
3. Errors o f less than $1,000 — Errors of less than $1,000 should
be listed in the appropriate section on the “Errors in Cash Letters” (or
“Advice of Cash Letter Adjustment”) form, which should then be
forwarded to the Check Adjustment Division of this Bank. W e will
make the appropriate adjustment entry as advised (net debit or
credit). Such adjustment entry for a member bank will be made
only to its account even though the member bank is operating under
a correspondent agreement; and for a nonmember institution to its
correspondent’s account. A nonmember institution must insure that
it forwards a copy of the completed form to its correspondent member
bank.
4. Errors o f less than $1.00 — Errors (debits or credits) of less
than $1.00 need not be shown on the cash letter error form if the pay
ing bank has advised this Bank or its Offices that it will follow this
procedure.
5. Time limit fo r entries — Adjusting entries on the cash letter
error form should not be for cash letters whose dates are more than
five business days old. Such uncurrent errors should be reported to
the Check Adjustment Division, using a “Check Adjustment Request”
form.
VI.

Sent W rong and Free Item s

1.
Sent W rong Item s — Items that are listed and charged ih our
cash letters to your institution but are not drawn on or payable

through your institution should be returned to this Bank with other
unpaid items in our “Return Items Cash Letter” form for credit.
Advise the Return Items Division of this Bank of items $2,500 and
over by collect telephon e call, so that we can advise our endorser
of the delay in presentation.
2. F ree Item s — Items that are neither listed nor charged in our
cash letters and are neither drawn on nor payable through your insti
tution should be listed on the reverse side of the “Errors in Cash
Letters” form. The items should accompany the form when sub
mitted to the Check Adjustment Division of this Bank and a descrip
tion given as to paying bank, amount, maker and our indorser.
If an entire bundle or package of checks under one total is
received free, only the total of the package need to be shown on
copy # 2 of the form and a notation made “All drawn on ...................
.............................................. ” or “Drawn on and endorsed by various
institutions.”
3. Under no circumstance should sent wrong or free items be
“recleared” by inclusion in outgoing cash letters.
VII.

Return Item s

1. Cash items returned unpaid (except “free” items) must be
listed on and be returned with a “Return Item Cash Letter” form.
A member bank will be credited by separate entry to its reserve
account whether or not it is operating under a correspondent agree
ment. A nonmember institution will be credited by separate entry
to its correspondent’s account. In such instances, the nonmember
institution must send the appropriate copy of the “Return Item Cash
Letter” to its correspondent. We will give credit for the total of any
unpaid return items received by us before the close of business on a
banking day for us.
2. Items that are returned and charged to you by us in error
should be returned to us for credit. Such items should be listed
on a separate “Return Item Cash Letter” form and the form should be
inscribed, “Returned by you in error.” Do not include these items on
the form used for unpaid items.
3. Refer to Operating Circular No. 4, paragraph 41, for instruc
tions regarding advice of nonpayment of items $2,500 or over.

4.
Cash items that are not returned on time (by midnight of
the business day following the day of receipt) should not be included
in a “Return Item Cash Letter” for credit. Such items must be sent
to the Check Adjustment Division with a request that they be re
turned on a without entry basis for refund. Refer to paragraph 30 of
our Operating Circular No. 4.
VIII.

M iscellaneous

1.
Supply o f Form s — Additional “Errors in Cash Letters,” “Advice
of Cash Letter Adjustment,” and “Return Item Cash Letter” forms
may be obtained by contacting the office shown below. Please antici
pate your needs and allow two weeks for preparation of the forms.
2. W here to Call —
F ed eral Reserve Bank o f N ew York — H ead Office:
Division

Telephone No.

Check Adjustment
( Cash letter charges and errors
$1,000 and over)

(212) 269-5278

(Miscellaneous and requests
for “Errors in Cash Letters
and “Check Adjustment
Request” forms)

(212) 791-8980

Return Items
(Request for “Return Item
Cash Letter” forms)
(Unpaid and sent wrong
items $2,500 and over)

(212) 791-5252
(212 ) 791-5255-57

Buffalo Branch

Check Adjustment

(716 ) 849-5040-49

Return Items

(716) 849-5057

Cranford Office:

(201) 272-9000

(All inquiries)
Jericho Office:

(All inquiries)

(516) 997-4500

Utica Office:

(315) 736-8321

(All inquiries)

3.. M isencoded C hecks — When a check is received in our cash
letter and it is determined upon first handling that the M ICR encod
ing amount differs from the amount for which the check was drawn,
the difference should be included on the cash letter error form to
adjust, and a photocopy of the check (front and back) should
accompany the form sent to us along with the items placement in
our cash letter (tape total, riding items, etc.).

APPENDIX E
INTERCEPT AGREEMENT
FOR OFF-PREMISES PRESENTMENT OF CASH ITEMS
The Federal Reserve Bank of New York ( “Reserve Bank”), at the
request of a payor depository institution ( the “paying bank”), presents
or sends for presentment cash items payable in the Second Federal
Reserve District and by, at, or through the paying bank to a location
other than the premises of the paying bank. Reserve Bank makes such
off-premises presentment under the terms of this Agreement.
1.
The paying bank agrees to perform all necessary steps to com
plete due presentment of cash items other than those effectively pre
sented hereunder.
(a ) If the cash items are delivered to another depository institu
tion, corporation, or other firm ( “designated institution”), that
designated institution and the paying bank must execute and
deliver to Reserve Bank a letter in the form attached as
Appendix E -l.
(i) Presentment will be effected during the ordinary hours of
business on the day on which the cash items requiring
such presentment have been delivered to the designated
institution at the designated location, provided that day
is a business day for the paying bank; or
(ii) If, in accordance with Federal Reserve cross-zone pre
sentment policy, the cash items are to be delivered bv an
Office of this Bank to a designated institution outside of
such Office’s territory, presentment shall be deemed to
have been effected during the ordinary hours of business
on the day on which the cash items requiring such pre
sentment have been dispatched to the designated institu
tion at the designated location, provided that day is a
business day for the paying bank.
(b ) If the cash items are delivered to the messenger of a desig
nated institution, presentment will be effected during the
ordinary hours of business on the business day of delivery to
the messenger.
(c ) It is understood that the time for determining whether the
paying bank may return an item and revoke a provisional pay
ment for a cash item begins to run at the time of presentment
as provided in this Agreement.

2. Loss of, or damage to, a cash item occurring after delivery to
the designated institution or its messenger, but prior to the return of
the cash item by the paying bank to the Reserve Bank, shall be at the
risk of the paying bank.
3. The paying bank agrees to comply with the provisions of
Reserve Bank’s Operating Circular No. 4 to the same extent as if a
cash item presented hereunder had been presented to the office of the
paying bank by, through, or at which the cash item is payable.
4. The paying bank agrees to hold Reserve Bank harmless from
(a ) any losses or costs arising out of any delivery to a designated
institution or its messenger, and ( b ) any losses or costs arising out of
the paying bank’s failure to perform any of its obligations hereunder.
5. This Appendix E to Operating Circular No. 4 shall remain in
effect as to any paying bank until the Reserve Bank receives written
notice from the paying bank terminating the arrangement. The notice
shall not take effect, however, until 12:00 p.m. of the seventh business
day following the date Reserve Bank receives the notice, and, the
notice shall not affect any rights accruing to Reserve Bank and any
obligations incurred hereunder by the payor.
Reserve Bank reserves the right to amend any portion of this
Appendix upon seven calendar day’s prior notice to each paying bank,
or designated institution.

APPENDIX E-l
PAYING BANK’S AND
DESIGNATED INSTITUTION’S AGREEMENT
[To be typed on paying bank’s letterhead]

[Date]
or

Federal Reserve Bank
of New York
33 Liberty Street
New York, New York 10045

Jericho Office
Federal Reserve Bank
of New York
113 South Service Road
Jericho, New York 11753

or
Buffalo Branch
Federal Reserve Bank
of New York
160 Delaware Avenue
Buffalo, New York 14240

or
Utica Office
Federal Reserve Bank
of New York
Oneida County Airport
Oriskany, New York 13424

or
Cranford Office
Federal Reserve Bank
of New York
2 Jackson Drive
Cranford, New Jersey 07016
Attention:

Manager, Check Processing Department

Gentlemen:
A.

Paying, B an ks Agreem ent

We agree to the terms of Appendix E to Operating Circular No. 4,
regarding the presentment of cash items to a location other than the
premises of the payor depository institution.
In order to effect presentment, we hereby designate .......................
[Name of the

......................................................................................., to receive delivery of
institution to which items are to b e delivered]

cash items payable at our following offices:

[Name o f payor depository
institution]
By:
[Authorized signature(s)]

[Title]

D esignated Institutions Agreem ent
We agree to receive, as agent for .........................................................
[Name of payor depository

........................... , cash items delivered in accordance with the terms of
institution]

Appendix E of your Operating Circular No. 4. The Federal Reserve
Bank of New York shall deliver the cash items to (our messenger who
shall call at your [Head Office, Buffalo Branch, Cranford, Jericho,
Utica Office]) or ( our office at ................................................................... )

[Address of office of receiving institution]

[Name o f designated
institution]
By:
[Authorized signature(s)]

[Title]

APPENDIX F
MANHATTAN, BRONX AND BROOKLYN (“MB&B”)
COLLECTION ARRANGEMENT
The Federal Reserve Bank of New York ( “Reserve Bank”) presents
items to a paying depository institution ( “paying bank”) participating
in the MB&B Collection Arrangement under Subpart A of Regulation
J, our applicable operating circulars, and this Appendix F.
A depository institution that maintains an account with Reserve
Bank agrees to these terms by executing a letter in the form of the
“Paying Bank MB&B Agreement,” attached as Appendix F -l. If the
charge is to be posted to the account of another depository institu
tion (“Correspondent”), the paying bank and its Correspondent agree
to these terms by executing a letter in the form of the “Paying Bank’s
MB&B Agreement and Correspondent Authorization,” attached as
Appendix F-2.
Paying Bank Agreement
1. The paying bank will arrange to have its messenger, whose
authority shall be evidenced in such form as Reserve Bank may from
time to time request, call at Reserve Bank’s office each business day,
at an hour prescribed by Reserve Bank. The messenger will call for
and receive items payable by, at, or through the paying bank’s main or
any branch office as Reserve Bank may deliver to the messenger.
2. Delivery of items to the messenger shall constitute due present
ment by Reserve Bank of such items to the paying bank for payment,
with the same force and effect as though the items were presented by
Reserve Bank to the paying bank for payment at the paying bank’s
counter at the time of delivery.
3. The paying bank authorizes Reserve Bank, upon delivery of the
items to the messenger, to charge to the paying bank’s, or its Corre
spondent’s, account on Reserve Bank’s books, the total amount of the
items so delivered.
4. Items presented to the paying bank hereunder may be returned
unpaid only if they have been sorted, packaged, and listed as herein
after provided and are returned to Reserve Bank within the periods
prescribed by this paragraph.

(a ) Missent or ineligible items, demand notes, time notes and
other time items may be returned not later than 9:00 p.m. of
the day of presentment, provided that as to demand notes, time
notes, and other time items the paying bank has advised
Reserve Bank by telephone not later than 3:00 p.m. of that
day that such items are to be returned.
(b) A cash item drawn by the paying bank on itself to Reserve
Bank’s order may be returned not later than 3:00 p.m. of the
day of presentment, provided that any such cash item may be
returned not later than 9:00 p.m. of that day if, by 3:00 p.m.
of that day, the paying bank has notified Reserve Bank in
writing or by telephone of its intention to return the cash item
and, if such notice was by telephone, the paying bank con
firmed the notice to Reserve Bank in writing by 5:00 p.m. of
that day.
(c ) All other unpaid cash items may be returned not later than
9:00 p.m. of the business day next following the day of pre
sentment. The paying bank may, however, return to Reserve
Bank not later than 9:00 p.m. of the day of presentment, a cash
item that is otherwise returnable under this subparagraph ( c ).
(d) An item of $5,000 or over that was received by the pay’ng
bank from a New York Clearing House bank and that is
returned by the payng bank to Reserve Bank for endorsement
(including bank stamp) shall be certified by the paying bank
prior to its return.
5. Items not returned as provided in paragraph 4 shall be deemed
to be finally paid. For unpaid items (and protest fees) returned as
provided in paragraph 4, Reserve Bank will give credit on the appro
priate books of account as follows:
(a ) For items covered by paragraph 4 ( b ) , on the day of their
return to Reserve Bank provided they have been returned
not later than 3:00 p.m.
(b) For all other items, on the business day next following the
day of their return to Reserve Bank.6
6. The paying bank will return unpaid items to Reserve Bank
sorted, packaged, and listed and enclosed in sealed envelopes bearing
the names of the respective depository institutions from which Re
serve Bank received the items therein contained, except that all such
items that Reserve Bank received from depository institutions other
than (a) New York Clearing House Banks, and (b) the depository
institutions participating in the MB&B Collection Arrangement shall
be returned to Reserve Bank in sealed envelopes bearing Reserve

Bank’s name. The total amount of the items (including the amount
of any statutory protest fees charged for protesting any such items)
therein contained shall be indicated on the face of each return item
envelope.
7. In order to conform to Rule 9 of the New York Clearing
House “Rules Governing the Return of Items Received Through the
Exchanges” items that Reserve Bank received from New York Clear
ing House banks and that are returned to Reserve Bank on the day
of presentment shall be enclosed in a uniform return item envelope
of a distinctive blue color, marked “Return Items.” Reserve Bank
does not supply such envelopes.
8. Any item sent to the paying bank by Reserve Bank that is not
paid, and any notice or certificate of dishonor or protest thereof, may
be returned by Reserve Bank to the sending bank by delivering it to
a messenger sent by the paying bank to Reserve Bank’s office to
deposit items with Reserve Bank, to return dishonored items to Re
serve Bank, or to receive items delivered by Reserve Bank to such
messenger, and will, upon such delivery, be and be deemed to be so
returned with the same force and effect as though such items were
returned to and received by the paying bank at its counter, or were
mailed to the paying bank, at the time of such delivery.
9. Reserve Bank reserves the right to amend any portion of this
Agreement upon seven calendar days’ prior notice to each paying
bank that has agreed to its provisions.
Correspondent Authorization
1. Reserve Bank will charge the Correspondent’s account on Re
serve Bank’s books with the amount of the items delivered by Reserve
Bank daily to authorized messengers of the paying bank designated
in the Paying Bank MB&B Agreement and Correspondent Authoriza
tion in accordance with the Paying Bank Agreement.
2. The Correspondent authorizes Reserve Bank to charge its
account with the amount of the items delivered to the paying bank.
Later in the day, Reserve Bank will make available to the Correspon
dent, at the window of Reserve Bank’s Check Processing Department,
a debit advice showing the amount of the charge to its account or,
at its request, Reserve Bank will mail the debit advice to the Corres
pondent.

3. The Correspondent may terminate Reserve Bank’s authority
to charge its account by writing to the Accounting Department of
Reserve Bank. Termination will be effective upon receipt by Reserve
Bank, but Reserve Bank may make all charges or credits to the Cor
respondent’s account required by or incidental to the Paying Bank
MB&B Agreement relating to cash items delivered or received by
Reserve Bank prior to the time of the termination.
4. Reserve Bank will credit to the Correspondent’s account the
total amount of all items returned to Reserve Bank in accordance
with paragraph 4 of the Paying Bank Agreement by the paying bank
in accordance with paragraph 5 of the Paying Bank Agreement.
5. The Correspondent will indemnify Reserve Bank and hold it
harmless from any loss it may incur under this agreement except for
Reserve Bank’s own negligence.
6. Reserve Bank reserves the right to amend any portion of this
authorization upon seven calendar days’ prior notice to each Corres
pondent that has agreed to its provisions.

APPENDIX F-l
PAYING BANK MB&B AGREEMENT
[To be typed on payor depository institution’s letterhead]
[Date]
F ederal Reserve B ank of New Y ork

33 Liberty Street
New York, New York 10045
Attention:

Manager
C heck Processing D epartm ent

Gentlemen:
We agree to participate in your MB&B Collection Arrangement
and to the terms of the Paying Bank Agreement of Appendix F of
your Operating Circular No. 4. We authorize you to charge or credit
our account on your books and to make appropriate adjustments in
connection with the payment or return of items payable by, at, or
through us under that Arrangement.

[Name o f payor depository
institution]
By:
[Authorized signature(s)]

[Title]

APPENDIX F-2
PAYING BANK MB&B AGREEMENT AND
CORRESPONDENT AUTHORIZATION
[To be typed on payor depository institution’s letterhead]
[Date]

F ederal R eserve B ank of New Y ork

33 Liberty Street
New York, New York 10045
Attention:

Manager
C heck Processing D epartm ent

Gentlemen:
A.

Paying Bank Agreem ent

We agree to participate in your MB&B Collection Arrangement
and to the terms of the Paying Bank Agreement of Appendix F of
your Operating Circular No. 4. We designate ..........................................
[Name of correspondent ]

as correspondent against whose account on your books, credits, debits,
and appropriate adjustments may be entered in connection with the
payment or return of items payable by, at, or through us under that
Arrangement.

[Name of payor depository
institution]
By:
[Authorized signature(s)]

[Title]

Correspondent Authorization

We authorize you to charge or credit our account on your books
and to make appropriate adjustments in connection with the payment
or return of items payable by, at, or th rou g h .............................................
[Name of payor

..................................................... in accordance with the Correspondent
depository institution ]

Authorization in Appendix F of your Operating Circular No. 4.

[Name o f correspondent
depository institution]
By:
[Authorized signature(s)]

[Title]

APPENDIX G
THRIFT INSTITUTION
COLLECTION ARRANGEMENT (“TICA”)
The Federal Reserve Bank of New York ( “Reserve Bank”) pre
sents items to a payor depository institution ( “paying bank”) partici
pating in TICA under Subpart A of Regulation J, our applicable
operating circulars, and this Appendix G.
A depository institution that maintains an account with Reserve
Bank agrees to these terms by executing a letter in the form of the
“Paying Bank TICA Agreement,” attached as Appendix G-l. If the
charge is to be posted to the account of another depository institu
tion (“Correspondent”), the paying bank and its Correspondent agree
to these terms by executing a letter in the form of the “Paying Bank
TICA Agreement and Correspondent Authorization,” attached as
Appendix G-2.
Paying Bank Agreement
1. The paying bank shall arrange to have its messenger, whose
authority shall be evidenced in such form as Reserve Bank may from
time to time request, call at Reserve Bank’s office each business day,
at an hour prescribed by Reserve Bank. The messenger will call for
and receive items payable by, at, or through the paying bank’s main
or any branch office as Reserve Bank may deliver to the messenger.
2. Delivery of items to the messenger shall constitute due
sentment by Reserve Bank of the items to the paying bank for
ment, with the same force and effect as though the items were
sented by Reserve Bank to the paying bank for payment at the
ing bank’s counter at the time of delivery.

pre
pay
pre
pay

3. The paying bank authorizes Reserve Bank, upon delivery of
the items to the messenger, to charge to the paying bank’s, or a cor
respondent’s, account on Reserve Bank’s books, the total amount of
the items so delivered.
4. Items presented to the paying bank hereunder may be returned
unpaid only if they have been sorted, packaged, and listed as herein
after provided and are returned to Reserve Bank within the periods
prescribed by this paragraph.

(a ) A missent or ineligible item may be returned not later than
9:00 p.m. of the day of presentment.
(b ) A cash item drawn by the paying bank on itself to Reserve
Bank’s order may be returned not later than 3:00 p.m. of the
day of presentment, provided that any such cash item may be
returned not later than 9:00 p.m. of that day if, by 3:00 p.m.
of that day, the paying bank has notified Reserve Bank in
writing or by telephone of its intention to return the cash item
and, if such notice was by telephone, the paying bank con
firmed the notice to Reserve Bank in writing by 5:00 p.m.
of that day.
(c ) All other
9:00 p.m.
sentment.
Bank not
cash item
( c ).

unpaid cash items may be returned not later than
of the business day next following the day of pre
The paying bank may, however, return to Reserve
later than 9:00 p.m. of the day of presentment, a
that is otherwise returnable under this subparagraph

( d ) An item of $5,000 or over that was received by the paying
bank from a New York Clearing House bank and that is
returned by the paying bank to Reserve Bank for endorsement
(including bank stamp) shall be certified by the paying bank
prior to its return.
5. An item not returned as provided in paragraph 4 shall be
deemed to be finally paid. For an unpaid item (and protest fees)
returned as provided in paragraph 4, Reserve Bank will give credit on
the appropriate books of account as follows:
(a ) For an item covered by paragraph 4 ( b ) , on the day of its
return to Reserve Bank provided it has been returned not
later than 3:00 p.m.
(b ) For any other item, on the business day next following the
day of its return to Reserve Bank.
6. The paying bank shall return unpaid items to Reserve Bank
sorted, packaged, and listed and enclosed in sealed envelopes bearing
the names of the respective depository institutions from which Reserve
Bank received the items therein contained, except that all such items
that Reserve Bank received from depository institutions other than
(a ) New York Clearing House banks, and (b ) the depository insti
tutions participating in the TICA Collection Arrangement shall be
returned to Reserve Bank in sealed envelopes bearing Reserve Bank’s
name. The total amount of the items (including the amount of any
statutory protest fees charged for protesting any such items) therein
contained shall be indicated on the face of each return item envelope.

7. In order to conform to Rule 9 of the New York Clearing House
“Rules and Rulings on Items for the Exchanges” items that Reserve
Bank received from New York Clearing House banks and that are
returned to Reserve Bank on the day of presentment shall be enclosed
in a uniform return item envelope of a distinctive blue color, marked
“Return Items.” Reserve Bank does not supply such envelopes.
8. Any item sent to the paying bank by Reserve Bank that is not
paid, and any notice or certificate of dishonor or protest thereof, may
be returned by Reserve Bank to the paying bank by delivering it to
a messenger sent by the paying bank to Reserve Bank’s office to
deposit items with Reserve Bank, to return dishonored items to
Reserve Bank, or to receive items delivered by Reserve Bank to such
messenger, and will, upon such delivery, be and be deemed to be so
returned with the same force and effect as though such items were
returned to and received by the paying bank at its counter, or were
mailed to the paying bank, at the time of such delivery.
9. Reserve Bank reserves the right to amend any portion of this
Agreement upon seven calendar days’ prior notice to each paying
bank that has agreed to its provisions.
Correspondent Authorization
1. Reserve Bank will charge the Correspondent’s account on
Reserve Bank’s books with the amount of the items delivered by
Reserve Bank daily to authorized messengers of the paying bank
designated in the Paying Bank TICA Agreement and Correspondent
Authorization in accordance with the Paying Bank Agreement.
2. The Correspondent authorizes Reserve Bank to charge its
account with the amount of the items delivered to the paying bank.
Later in the day, Reserve Bank will make available to the Correspon
dent, at the window of Reserve Bank’s Check Processing Department,
a debit advice showing the amount of the charge to its account or, at
its request, Reserve Bank will mail the debit advice to the Corre
spondent.
3. The Correspondent may terminate Reserve Bank’s authority
to charge its account by writing to the Accounting Department of
Reserve Bank. Termination is effective upon receipt by Reserve Bank,
but Reserve Bank may make all charges or credits to the Correspon
dent’s account required by or incidental to the Paying Bank Agree

ment relating to cash items delivered or received by Reserve Bank
prior to the time of the termination.
4. Reserve Bank will credit to the Correspondent’s account the
total amount of all items returned to Reserve Bank in accordance
with pragraph 4 of the Paying Bank Agreement by the paying bank
in accordance with paragraph 5 of the Paying Bank Agreement.
5. The Correspondent will indemnify Reserve Bank and hold it
harmless from any loss it may incur under this agreement except for
Reserve Bank’s own negligence.
6. Reserve Bank reserves the right to amend any portion of this
Authorization upon seven calendar days’ prior notice to each Corres
pondent that has agreed to its provisions.

APPENDIX G-l
PAYING BACK TICA AGREEMENT
[To be typed on payor depository institution’s letterhead]

[Date]

Federal Reserve Bank of New York
33 Liberty Street
New York, New York 10045
Attention:

Manager
C heck Processing D epartm ent

Gentlemen:
We agree to participate in your Thrift Institution Collection
Arrangement and to the terms of the Paying Bank Agreement of
Appendix G of your Operating Circular No. 4. We authorize you to
charge or credit our account on your books and to make appropriate
adjustments in connection with the payment or return of items pay
able by, at, or through us under that Arrangement.

[Name o f payor depository
institution]
By:
[Authorize signature(s)]

[Title]

APPENDIX G-2
PAYING BANK TICA AGREEMENT AND
CORRESPONDENT AUTHORIZATION
[To be typed on payor depository institution’s letterhead]
[Date]
Federal Reserve Bank of New York
33 Liberty Street
New York, New York 10045
Attention:

Manager
C heck Processing D epartm ent

Gentlemen:
A.

Paying Bank Agreem ent

We agree to participate in your Thrift Institution Collection
Arrangement and to the terms of the Paying Bank Agreement of
Appendix G of your Operating Circular No. 4 We designate ..........
[Name

....................................

as correspondent against whose account on

of correspondent]

your books credits, debits, and appropriate adjustments may be
entered in connection with the payment or return of items payable
by, at, or through us under that Arrangement.

[Name o f payor depository
institution]
By:
[Authorize signature(s)]

[Title]

C orrespondent Authorization

We authorize you to charge or credit our account on your books
and to make appropriate adjustments in connection with the payment
or return of items payable by, at, or through ..........................................
[Name of payor depository

........................... in accordance with the Correspondent Authorization
institution]

in Appendix G of your Operating Circular No. 4.

[Name o f correspondent
depository institution]
By:
[Authorized signature(s)]

[Title]

Full text of Federal Reserve Bank of New York Circulars : 8953. New Operating Circular on Collection of Cash Items

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