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FED ER AL RESERVE BANK
O F NEW YORK
April 26, 1968
AUTOMATIC CHARGE PLAN
To the Member and Nonmember Banks of the
Second Federal Reserve District:
Our Operating Circular No. 6, entitled “ Instructions to Collecting Banks and Paying
Banks,” dated September 1, 1967, provides in paragraph 6 that payment for cash letters may
be made by cash or any one of the following four methods that is in a form acceptable to this
Bank :
(a) Authorization to charge an account on our books of a member or nonmember clearing bank.
(b) Bank draft.
(c) Cash letter agreement plan (automatic charge).
(d) Other forms where special arrangements have been made.
In order to facilitate the automation of accounting procedures and to simplify payment
procedures for collecting banks and paying banks, this Bank recommends the use of the auto
matic charge procedure referred to in (c) above and urges banks in the Second Federal
Reserve District to adopt this method.
Cash letter agreement plan (automatic charge)
Under the automatic charge arrangement, payment for cash letters will be made on an
automatic basis by a charge to the reserve or other account of the paying bank on the books
of the Head Office or Buffalo Branch of this Bank.
This charge will be made on the first
banking day of this Bank following the paying bank’s first banking day after the dispatch of
the cash letter, that is, on the day on which payment is now normally due. A nonmember bank
having no account with us, or any other bank desiring to do so, may arrange to have the
automatic charge made to the reserve account on our books of a correspondent member bank.
An advice of the automatic charge will be sent to the paying bank so as to arrive on the
same day that the charge is being made. If the charge is to be made to the reserve account of
a correspondent member bank, an advice will be sent to the correspondent member bank
as well.
The advice of charge will contain a request that the paying bank prove the dollar amounts
listed thereon against the dollar amounts of the applicable cash letters received from us. If
they do not agree, or if the cash letters are not received, the paying bank should immediately
notify, by collect telephone or telegraph message, the Accounting Department at the appro
priate office of this Bank. Adjustments for differences of $1,000 or over will be made in the
( over )
reserve or other account on our books, as of the automatic charge date. Adjustments for other
differences will be made as we receive appropriate notice of them. Adjustments also will be
made in the event that our cash letters are received late.
Implementation of cash letter agreement plan (automatic charge)
W e request that you communicate with the Head Office or Buffalo Branch of this Bank as
soon as you are prepared to proceed with the implementation of the automatic charge
arrangement. W e will then send you the appropriate form of letter agreement; specimens
marked Standard F orm and Correspondent F orm are enclosed. If the charges are to be
made to a bank’s own account, a letter agreement substantially in the form of the Standard
Form will be forwarded to you for official signature and return to this Bank. If a member
bank or nonmember bank wishes to arrange for its automatic charges to be made to the reserve
account of its correspondent member bank, a letter agreement substantially in the form of the
Correspondent F orm will be forwarded to you for official signature and return; and, in such
correspondent situation, we shall also wish you to arrange for the correspondent member bank
to furnish us with a letter of authorization substantially in the form enclosed, marked Corre
spondent Authorization Letter.
Upon receipt by us of the appropriate signed letter agreement, we shall notify you of the
date on which the automatic charge arrangement shall become effective.
*
*
*
Inquiries regarding this circular should be directed, at the Head Office, to John E.
Flanagan, Manager, Accounting Department, or James H. Booth or Emil J. Riccardi of that
Department, or, at the Buffalo Branch, to Ronald B. Gray, Assistant Cashier, or Mrs. Evalyn
E. Joyce of the Accounting Division.
A
lfred
H
ayes,
President.
F e d e r a l R e s e r v e Ba n k
N ew
Y ork,
AREA
CODE
N.Y.
212
of
N
ew
York
10045
732-5700
Standard. Form
(Date)
(Name and address of Bank)
Gentlemen:
This letter sets forth the terms and conditions of the Automatic
Charge Agreement between us providing.an arrangement for the payment of
cash letters sent to you by the Head Office and Buffalo Branch of this Bank
by means of a debit to your account on our books at our Head Office or
Buffalo Branch on a specified date after dispatch of the cash letter, and
constitutes your authorization to us to make all debits and credits to your
account under the arrangement referred to.
1. We shall debit on the automatic charge date to your account on
our books the full amount of each cash letter we send you containing items
payable by or through you.
The automatic charge date for each such cash
letter shall be our first banking day next following your first banking day
after the date of dispatch of the cash letter.
The- date shown on the cash
letter shall be deemed to be the date of dispatch.
2. Promptly after dispatch of a cash letter, we shall send you an
advice of automatic charge, specifying the automatic charge date of the cash
letter.
Such advice should be received by you not later than the applicable
automatic charge date.
3. When you receive the advice of automatic charge, you should
promptly prove such advice against the cash letters being dharged for.
If
the dollar amounts on the advice and those of the cash letters do not prove,
or if you have not received any cash item listed in a cash letter or in an
advice, or if you object to the automatic charge for any other reason, it
will be understood that you will immediately notify us. However, you need not
give us immediate notice of any such difference of less than $1 ,000.
In instances in which you have given us such immediate notice of
a difference of $1,000 or over in the advice of charge (including the amounts
of any missent items included in the advice), we shall make the appropriate
credit or debit to your account on, or as of, the automatic charge date by
separate entry.
We shall make the appropriate debit or credit to your account for
any other difference of which you have notified us on the banking day on
which we receive notice of such difference or on the automatic charge date
whichever is later.
2
4. All unpaid cash items returned by you shall be accompanied by
a separate return item cash letter form for credit to your account on our
books by separate entry. We shall give such credit on the day of receipt by
us of any unpaid return item received before the close of business on a bank
ing day for us; otherwise, credit will be given on the banking day following
such receipt.
You may also return, without entry, a cash item which you have paid
hereunder, but which you have not returned on time.
Such items will be
handled by us for refund from our sending bank in accordance with the pro
visions of our Operating Circular No. 6 .
5. If you have not received a cash letter listed in an advice of
automatic charge before the automatic charge date, it is understood that you
will immediately notify us of that fact.
In instances in which you have given us such immediate notice, we
shall credit the amount of that cash letter to your account on, or as of, the
automatic charge date by separate entry.
Otherwise, we shall credit the
amount of the missing cash letter on the banking day on which we receive
notice of its nonreceipt or on the automatic charge date, whichever is later.
If you thereafter receive a cash letter which was
which has not been listed in a subsequent advice of charge,
immediately notify us of its receipt and we shall debit the
delayed cash letter to your account on, or as of, our first
following your banking day of receipt of the cash letter.
6.
so credited and
you shall
amount of such
banking day next
Under this Automatic Charge Agreement:
(a) The term "banking day" shall mean, in respect of either
party hereto, any calendar day during which an office of that
party is open to the public for carrying on substantially all its
banking functions; any other calendar day shall be deemed to be
a day of closing.
In this connection it is understood that you
will furnish us with a current list of your days of closing and
that any day (other than Sunday) not so reported shall be deemed
a banking day for you.
(b) All automatic charges will be for the full amount of our
cash letters on the applicable automatic charge date.
(c) We shall .make all necessary debits and credits to effect
adjustments hereunder, including credits for return items, by
separate entry.
Such entries may be made on an "as-of" basis as
specifically provided above or as may be mutually agreed upon from
time to time. We shall mail you an advice of debits and credits to
your account hereunder.
(d) You will be deemed to have immediately notified us here
under if you communicate the relevant facts to the Accounting
Department at the office of this Bank at which your account is main
tained on the same day that you learn of them, if that day is a bank
ing day for you, or, if it is not, on your next following banking day.
3
You should communicate with such Accounting Department, during
banking hours of a banking day for us, by collect telephone call,
and, at any other time, by collect telegram.
(e)
Any notice under this agreement which is received by us
before the close of business on a banking day for us will be deemed
to have been received on that day; notice received by us after the
close of business on such a day or on a day which is not a banking
day for us will be deemed to have been received by us on our next
following banking day.
If you have requested us, under a separate agreement, to deliver cash
letters to your agent for processing, you hereby appoint such processing agent
as your agent who may give the notices called for hereunder and who may forward
return items to us as provided above. Receipt of cash letters by your process
ing agent shall be deemed to be the receipt of such cash letters by you.
This agreement may be terminated at any time by either of us by written
or telegraphic notice of termination.
The agreement shall terminate five days
after receipt of such notice or at such later time as may be stated in the notice.
If the above provisions are agreeable to you, please sign the enclosed
copy of this letter in the space provided therefor and return such copy to us,
together with a list of your days of closing.
Very truly yours,
Vice President
Enclosure
Accepted:
(Name of bank)
By
(Signature)
(Title)
(Signature)
(Title)
By
F e d e r a l R e s e r v e Ba n k
of
N ew
10045
York,
AREA
CODE
N.Y.
212
N
ew
York
732-5700
Correspondent Form
(Date)
(Name and address of Bank)
Gentlemen:
This letter sets forth the terms and conditions of the Automatic
Charge Agreement between us providing an arrangement for the payment of cash
letters sent to you by the Head Office and Buffalo Branch of this Bank by
means of a debit to the account on our books at our Head Office or Buffalo Branch
of a Correspondent Bank appointed by you pursuant to paragraph J hereof on
a specified date after dispatch of the cash letter, and constitutes your author
ization to us to make all debits and credits to the account of Correspondent Bank
under the arrangement referred to.
1. We shall debit on the automatic charge date to the account on our
books of Correspondent Bank the full amount of each cash letter we send you con
taining items payable by or through you. The automatic charge date for each such
cash letter shall be our first banking day next following your first banking day
after the date of dispatch of the cash letter. The date shown on the cash letter
shall be deemed to be the date of dispatch.
2. Promptly after dispatch of a cash letter, we shall send to you and
to Correspondent Bank an advice of automatic charge, specifying the automatic
charge date of the cash letter. Such advice should be received by you not later
than the applicable automatic charge date.
3. When you receive the advice of automatic charge, you should promptly
prove such advice against the cash letters being charged for. If the dollar
amounts on the advice and those of the cash letters do not prove, or if you have
not received any cash item listed in a cash letter or in an advice, or if you
object to the automatic charge for any other reason, it will be understood that
you will immediately notify us. However, you need not give us immediate notice
of any such difference of less than $1,000.
In instances in which you have given us such immediate noti'ce of a dif
ference of $1,000 or over in the advice of charge (including the amounts of any
missent items included in the advice), we shall make the appropriate credit or
debit to the account of Correspondent Bank on, or as of, the automatic charge
date by separate entry.
We shall make the appropriate debit or credit to the account of
Correspondent Bank for any other difference of which you have notified us on the
banking day on which we receive notice of such difference or on the automatic
charge date, whichever is later.
2
4. All unpaid cash items returned by you shall be accompanied by
a separate return item cash letter form for credit to the account of Correspondent
Bank on our books by separate entry. We shall give such credit on the day of
receipt by us of any unpaid return item received before the close of business on
a banking day for us; otherwise, credit will be given on the banking day following
such receipt.
You may also return, without entry, a cash item which you have paid here
under, but which you have not returned on time.
Such items will be handled by us
for refund from our sending bank i>n accordance with the provisions of our
Operating Circular No. 6.
5. If you have not received a cash letter listed in an advice of
automatic charge before the automatic charge date, it is understood that you will
immediately notify us of that fact.
In instances in which you have given us such immediate notice, we shall
credit the amount of that cash letter to the account of Correspondent Bank on, or
as of, the automatic charge date by separate entry.
Otherwise, we shall credit
the amount of the missing cash letter on the banking day on which we receive
notice of its nonreceipt or on the automatic charge date, whichever is later.
If you thereafter receive a cash letter which was so credited and which
has not been listed in a subsequent advice of charge, you shall immediately notify
us of its receipt and we shall debit the amount of such delayed cash letter to the
account of Correspondent Bank on, or as of, our first banking day next following
your banking day of receipt of the cash letter.
6.
Under this Automatic Charge Agreement:
(a) The term "banking day" shall mean, in respect of either party
hereto, any calendar day during which an office of that party is open
to the public for carrying on substantially all its banking functions;
any other calendar day shall be deemed to be a day of closing.
In this
connection it is understood that you will furnish us with a current list
of your days of closing and that any day (other than Sunday) not so
reported shall be deemed a banking day for you.
(b) All automatic charges will be for the full amount of our cash
letters on the applicable automatic charge date.
(c) We shall make all necessary debits and credits to effect
adjustments hereunder, including credits for return items, by separate
entry.
Such entries may be made on an "as-of" basis as specifically
provided above or as may be mutually agreed upon from time to time.
We shall mail to you and to Correspondent Bank an advice of debits and
credits to its account hereunder.
(d) You will be deemed to have immediately notified us hereunder
if you communicate the relevant facts to the Accounting Department at
the appropriate office of this Bank on the same day that you learn of
them, if that day is a banking day for you, or, if it is not, on your
next following banking day. You should communicate with such
3
Accounting Department, during banking hours of a banking day for us,
by collect telephone call, and, at any other time, by collect
telegram.
(e)
Any notice under this agreement which is received by us
before the close of business on a banking day for us will be deemed to
have been received on that day; notice received by us after the close
of business on such a day or on a day which is not a banking day for
us will be deemed to have been received by us on our next following
banking day.
7. You hereby now designate_____________________________as
Correspondent Bank. You may change the appointment of the Correspondent Bank here
under by designating to us in writing a member bank which maintains an account with
us. Any appointment of a Correspondent Bank hereunder shall be subject to our
receipt of an undertaking from Correspondent Bank satisfactory to us, authorizing
us to make such debits and credits to its account on our books as are provided for
herein. It is understood that we assume no responsibility for any obligation of
you to Correspondent Bank which may arise out of this agreement.
If you have requested us, under a separate agreement, to deliver cash
letters to your agent for processing, you hereby appoint such processing agent as
your agent who may give the notices called for hereunder and who may forward return
items to us as provided above. Receipt of cash letters by your processing agent
shall be deemed to be the receipt of such cash letters by you.
This agreement may be terminated at any time by either of us by written
or telegraphic notice of termination. The agreement shall terminate five days
after receipt of such notice or at such later time as may be stated in the notice.
If the above provisions are agreeable to you, please sign the enclosed
copy of this letter in the space provided therefor and return such copy to us, to
gether with a list of your days of closing.
Very truly yours,
Vice President
Enclosure
Accepted:
______________________ , 19
(Name of bank)
By________ _________ __________
(Signature)(Title)
By
(Signature)
(Title)
Correspondent authorization letter
(LETTERHEAD OF CORRESPONDENT MEMBER BANK)
Federal Reserve Bank of New York
33 Liberty Street
New York, N. Y. 10045
or
Buffalo Branch of Federal Reserve
Bank of New York
160 Delaware Avenue
Buffalo, N. Y. 14240
Gentlemen:
This letter confirms our arrangement with
and with you, whereby you will charge our reserve account on your books
with the amount of the cash letters containing cash items payable by or
through that bank which the New York Head Office and Buffalo Branch of
your Bank sends to that bank in accordance with the terms of your Automatic
Charge Agreement with them.
We accept appointment by
as
Correspondent Bank pursuant to paragraph J of said Automatic Charge
Agreement, and we will pay you for all such cash letters so sent.
You are
hereby authorized and requested to charge our reserve account with the full
amounts thereof and to make such other debits and credits to our reserve
account by separate entry, including credit for return items, as said
Automatic Charge Agreement provides in respect of Correspondent Bank and
at such times as it provides.
We further agree to maintain to our credit
in our reserve account on your books a balance of actually and finally
collected funds sufficient to cover all such debits to our account under
said Agreement.
It is understood that you assume no responsibility for
any obligations of______________________________________ to us which may
arise out of charges to our reserve account pursuant to this arrangement.
2
The authority contained herein may be terminated at any time
in writing; however, such termination shall not affect your right to
make all debits or credits required by, or incidental to, said Automatic
Charge Agreement relating to any cash letter dispatched by you prior to
the effective date of the termination.
Very truly yours,
By
__________ ______ ______
(Signature)
(Title)
By
(Signature )
(Title)
Change in designation
of Correspondent Bank
(LETTERHEAD OF B A M DESIGNATING A NEW CORRESPONDENT BANK)
Federal Reserve Bank of New York
33 Liberty Street
New York, N. Y. 10045
or
Buffalo Branch of Federal Reserve
Bank of New York
160 Delaware Avenue
Buffalo, N. Y. 14240
Gentlemen:
Pursuant to paragraph 7 of our Automatic Charge Agreement, we
hereby designate
as Correspondent
Bank thereunder; and we have arranged with that bank to authorize you to
charge its reserve account on your books with the amounts of your cash
letters containing cash items payable by or through us which the New York
Head Office and Buffalo Branch of your Bank have sent us and to make such
other debits and credits, including credits for return items, to its
account on your books as said Automatic Charge Agreement provides in
respect of the Correspondent Bank and at such times as it provides.
Upon appointment of
as
Correspondent Bank under said Automatic Charge Agreement, the appointment
of
thereunder shall terminate.
Very truly yours,
By
(Signature)
(Title)
(Signature)
("Title)
By
@FedFRASER