Cash Transactions and Factors to be Considered in Cash Transactions 

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In this article we discuss about the concept of cash transactions and the factors that banks should consider while doing cash transaction.  

 

 What is Cash transaction?

Cash transaction refers to the transaction in which immediate cash is transferred to the seller or service provider while purchasing goods or services. The transaction in which cash is transferred after some period of time is not considered as cash transaction. In cash transaction, the money can be transferred physically or electronically. The main matter is that the money should be transferred immediately after the purchase of goods or services from the seller.  

The transaction through debit card also be considered as cash transaction because when you make payment through debit card, amount is immediately deducted from your bank account. But in the case of credit card, it does not happen rather you pay to the bank later for your transaction.

 

Example of Cash transaction

If you buy groceries items from retailer shop by paying physical cash or through mobile banking, mobile wallet, internet banking etc., then this is the cash transaction.

 

Factors to be considered in cash transactions in Banks

There are various factors that bank's staffs should consider while doing cash transactions with the customers. The major factors to be considered in cash transactions are as follows:

Identification and documentation

Banks should take identification proof issued by the government before giving cash to the person other than the own customer. Also, while taking cash from the customer as a deposit, it is necessary to fill the bank voucher.

Transaction limit

Bank should be aware about the transaction limit of one person in a day. The bank shouldn’t give the money or accept the deposit beyond the transaction limit.

Security

The transaction of the bank should be captured by the CCTV cameras. It helps to maintain security in bank transaction.

Daily cash requirement

The bank should estimate the daily cash requirement for a particular branch of the bank. It helps to build trust among the customer because they are convinced that they can withdraw their money anytime.

Bank policies

The bank should also consider the provisions relating to cash transaction mention on its policy or framework. Also, bank should consider regulator's policy regarding cash transactions.

Fake currency

The bank should be aware about fake currency. Every bank should install fake currency identifier machine in its all branches.

Report suspicious transaction

The bank should comply with the Anti Money Laundry (AML) act because it is the global issue. The bank should report about any suspicious transaction to the concerned authority.  

Suspend account

The bank should not make any transaction with suspended account. The account may be suspended due to various reasons such as black listing of the person. Blacklisted persons are restricted from the banking activities.

  In conclusion, the banks are licensed financial institutions. It is the duty of bank to protect the interest of depositors and shareholders. For this ethical banking practice is necessary. So, bank should be aware about above mentioned factors while doing the cash transactions which ultimately helps bank to maintain ethical banking practice and safeguard the interest of depositors and shareholders.

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Prudential Norms