CBE Training Manual

COMMERCIAL BANK OF ETHIOPIA
CUSTOMER ACCOUNTS AND

TRANSACTION SERVICE
TECHNICAL TRAINING MANUAL
May 2014
Commercial Bank of Ethiopia
Contents
PART I ............................................................................................................................................................ 1
Chapter one .................................................................................................................................................. 1
Introduction .................................................................................................................................................. 1
1.1 Overview ............................................................................................................................................. 1
1.2 History of Banking in Ethiopia ............................................................................................................. 2
1.3 CBEs Profile ........................................................................................................................................ 4
V I S I O N................................................................................................................................................... 4
MISSION .................................................................................................................................................... 4
List and discuss CBEs corporate values .................................................................................................... 4
1.4 General Learning Issues ...................................................................................................................... 7
Chapter two .................................................................................................................................................. 9
Types of Customers and Accounts ................................................................................................................ 9
2.1 Customers ........................................................................................................................................... 9
List of customer (A) ................................................................................................................................. 10
Indicate individual or corporate customers ............................................................................................ 10
Sole proprietor ........................................................................................................................................ 10
Labor unions............................................................................................................................................ 10
Private limited company ......................................................................................................................... 10
Idirs ......................................................................................................................................................... 10
Religious organizations ........................................................................................................................... 10
Minors (through parent/s/ or Guardians ................................................................................................ 10
Interdicted persons through Guardian ................................................................................................... 10
Federal and regional Governments ........................................................................................................ 10
Share companies ..................................................................................................................................... 10
Public Enterprises.................................................................................................................................... 10
Micro Finance institutes ......................................................................................................................... 10
2.2 Types of customer Accounts ............................................................................................................. 10
Saving /deposits / ....................................................................................................................................... 10
2.2.1 Saving account ........................................................................................................................... 12
A. Women saving Account .............................................................................................................. 13
B. Youth Teen Account .................................................................................................................... 13
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C. Youth Account ............................................................................................................................. 14
D. Mortgage/special / saving Account ............................................................................................ 14
2.2.2 Demand Deposit account............................................................................................................... 15
I. Special Demand Deposit Account ............................................................................................... 16
II. Ethiopian Commodity Exchange (ECX) related Accounts ........................................................... 16
2.2.3 Fixed Time Deposit......................................................................................................................... 17
2.2.4 Special types of accounts ............................................................................................................... 17
1. Joint accounts ............................................................................................................................. 17
2. Earmarked Accounts ................................................................................................................... 18
3. Accounts for interdicted persons................................................................................................ 18
4. Staff Accounts ............................................................................................................................. 18
5. Inactive Account.......................................................................................................................... 18
6. Blocked Account.......................................................................................................................... 18
2.2.5 Foreign Currency Accounts ............................................................................................................ 18
Chapter 3..................................................................................................................................................... 20
Customer Handling ..................................................................................................................................... 20
3.1 Customer service .............................................................................................................................. 20
3.2 Customer service in Banking ............................................................................................................. 20
Customer service skills in banking operations ........................................................................................ 21
USE INTERPERSONAL SKILLS TO IDENTIFY AND CLARIFY CUSTOMER NEEDS AND EXPECTATIONS ....... 23
Chapter 4..................................................................................................................................................... 25
Account opening ......................................................................................................................................... 25
4.1 Know your customer (KYC) Norms.............................................................................................. 25
4.2 Required Documents .................................................................................................................. 26
4.3 Customer creation and Account opening ................................................................................... 27
Exercise 1 ............................................................................................................................................ 32
Chapter Five ................................................................................................................................................ 33
Tickets, slips, Vouchers and Negotiable Instruments ................................................................................. 33
5.1 Types of Tickets, slips & Vouchers .............................................................................................. 33
5.2 Payment Instruments........................................................................................................................ 36
Exercise2 ............................................................................................................................................. 41
Chapter six .................................................................................................................................................. 42
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Collection and payment processing ............................................................................................................ 42
6.1 Collection .................................................................................................................................... 42
6.1.1 Cash Collection ............................................................................................................................... 42
Foreign Currencies acceptable for collection ......................................................................................... 42
Collection of Cash for Deposit ................................................................................................................ 43
6.1.2 Collection of Cash for Money Transfer ................................................................................... 44
Outgoing Local Money Transfer /between on line branches / ........................................................... 44
Demand Draft and Cash Payment Order (CPO) ...................................................................................... 45
Foreign Money Transfer...................................................................................................................... 46
Sales foreign currency cash notes........................................................................................................... 48
Collection of Negotiable Instruments for Deposit .................................................................................. 48
Foreign Checks ........................................................................................................................................ 51
6.2 Payment ...................................................................................................................................... 52
6.2.1Payment from a Current Account ............................................................................................... 52
6.2.2 Withdrawal from Savings Accounts ........................................................................................... 53
6.2.3 Payment against Local Money Transfer ..................................................................................... 53
6.2.4 Payment through Blocking ......................................................................................................... 54
6.2.5 Cashier Payment Order (CPO) .................................................................................................... 55
Payment of a Lost CPO and Demand Draft ......................................................................................... 55
Exercise 3 ............................................................................................................................................ 57
Chapter seven ............................................................................................................................................. 58
Daily Cash management ............................................................................................................................. 58
7.1 Important precaution in daily cash operations................................................................................. 58
7.2 Opening of daily cash operation ....................................................................................................... 60
7.3 During the daily cash operation ........................................................................................................ 61
7.4 Closing of daily cash operation ......................................................................................................... 62
Other issues in cash operations .......................................................................................................... 63
Exercise 4 ............................................................................................................................................ 65
PART II ......................................................................................................................................................... 66
Chapter Eight .............................................................................................................................................. 67
Internal Account and Entry Management .................................................................................................. 67
8.1 Internal Accounts .............................................................................................................................. 68
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8.1.1 Account Receivable .................................................................................................................... 68
STOCK ACCOUNTS ............................................................................................................................... 68
ACCOUNT Receivables ........................................................................................................................ 69
Foreign receivables ............................................................................................................................. 71
Branch /Head office Receivables ........................................................................................................ 72
Inter-branch Account .......................................................................................................................... 78
8.1.2 Account payable Account .............................................................................................................. 80
Margin Accounts ................................................................................................................................. 80
Blocked Account.................................................................................................................................. 81
8.1.3 Profit and Loss Accounts ................................................................................................................ 85
Product related ................................................................................................................................... 86
Non product related PL ..................................................................................................................... 88
Employee salaries ............................................................................................................................... 88
Employee Benefit ................................................................................................................................ 88
Allowances .................................................................................................................................................. 89
Other Expenses ................................................................................................................................... 90
8.2 Suspense Account Management ...................................................................................................... 97
Activity 13 ........................................................................................................................................... 98
Suggestion for timely suspense clearance .................................................................................................. 99
Write off and Write Back .................................................................................................................. 100
8.3 Head office Reconciliation .............................................................................................................. 101
Activity 15 ......................................................................................................................................... 107
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PART I
Chapter one
Introduction
1.1 Overview
There seem to be no uniformity about the origin of the word bank amongst economist. It has
been believed that the word bank has been derived from the Germen word Bank, which
means Joint stock of firm or from Italian word Banko which means a stack or a pile.
The most frequently used definition of bank is, Bank is a lawful organization, which accepts
deposits that can be withdrawn on demand. It also lends money to individuals and business
houses that need it. It can also be defined as an a financial institution which accepts money
from the public for the purpose of lending or investment repayable on demand or otherwise
withdrawable by cheques, drafts order or otherwise.
The word banking has been defined as accepting deposits from the public for the purpose of
lending and investing. The money deposited should be withdrawn on demand and or on notice
as case may be. Withdrawals on demand means the bank is obliged to pay the money
deposited with it at the time the depositors request.
With regard to the commercial banking, the conventional definition states that, A commercial
bank is a profit-seeking business firm, dealing in money and credit. It is a financial institution
dealing in money in the sense that it accepts deposits of money from the public to keep them in
its custody for safety.
In a modern business environment Commercial banks do perform a number of functions which

are classified into two major parts, i.e primary functions and secondary functions.
Primary or principal functions are three types:
Acceptance of Deposit
Lending
Investment
Secondary or Ancillary functions are two types:
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Agency Services like collection and payment of checks, standing instruction, collecting
electricity, gas, telephone bills
Miscellaneous or General Services: safe custody, remittances, advisory roles, opening LCS other
services like Debit card, credit card etc.
1.2 History of Banking in Ethiopia
The agreement that was reached in 1905 between Emperor Minilik II and Mr.Ma Gillivray,
representative of the British owned National Bank of Egypt marked the introduction of modern
banking in Ethiopia. Following the agreement, the first bank called Bank of Abyssinia was
inaugurated in February 16, 1906 by the Emperor. The Bank was totally managed by the
Egyptian National Bank operates until its liquidation in 1931.
Thus by 1931 Bank of Abyssinia was legally replaced by Bank of Ethiopia shortly after Emperor
Haile Selassie came to power. The new Bank, Bank of Ethiopia, was a purely Ethiopian
institution and was the first indigenous bank in Africa and established by an official decree on
August 29, 1931 with capital of 750,000. Bank of Ethiopia took over the commercial activities
of the Bank of Abysinia and was authorized to issue notes and coins. During the invasion, the
Italians established branches of their main Banks namely Banca dItalia, Banco di Roma, Banco
di Napoli and Banca Nazionale del lavoro and started operation in the main towns of Ethiopia.
However, they all ceased operation soon after liberation except Banco di Roma and Banco di
Napoli which remained in Asmara. In 1941 another foreign bank, Barclays Bank, came to
Ethiopia with the British troops and organized banking services in Addis Ababa, until its
withdrawal in 1943. In April 1943, the State Bank of Ethiopia commenced full operation and
acted as the central Bank of Ethiopia and had a power to issue bank notes and coins as the
agent of the Ministry of Finance. The Bank also functioned as the principal commercial bank in
the country and engaged in all commercial banking activities.
The Ethiopian Monetary and Banking law that came into force in 1963 separated the function
of commercial and central banking creating National Bank of Ethiopia and give birth to
commercial Bank of Ethiopia. Moreover it allowed foreign banks to operate in Ethiopia limiting
their maximum ownership to be 49 percent while the remaining balance should be owned by
Ethiopians.
The National Bank of Ethiopia with more power and duties started its operation in January
1964. Following the incorporation as a share company on December 16, 1963 as per
proclamation No.207/1955 of October 1963, Commercial Bank of Ethiopia took over the
commercial banking activities of the former State Bank of Ethiopia. It started operation on

January 1, 1964 with a capital of Eth. Birr 20 million. In the new Commercial Bank of Ethiopia, in
contrast with the former State Bank of Ethiopia, all employees were Ethiopians.
The first privately owned bank, Addis Ababa Bank Share Company, was established on
Ethiopians initiative and started operation in 1964 with a capital of 2 million. There were two
other banks in operation namely Banco di Roma S. C and Bank o di Napoli S.C. that later
reapplied for license according to the new proclamation each having a paid-up capital of Eth.
Birr 2 million.
Following the declaration of socialism in 1974 the government extended its control over the whole
economy and nationalized all large corporations. Organizational setups were taken in order to create
stronger institutions by merging those that perform similar functions. Accordingly, the three private
owned banks, Addis Ababa Bank, Banco di Roma and Banco di Napoli Merged in 1976 to form the
second largest Bank in Ethiopia called Addis Bank. Consequently Addis Bank and Commercial Bank of
Ethiopia S.C. were merged by proclamation No.184 of August 2, 1980 to form the sole commercial bank
in the country till the establishment of private commercial banks in 1994.
There were other financial institutions operating in the country like the Imperial Savings and Home
Ownership public Association (ISHOPA) which specialized in providing loans for the construction of
residential houses and to individuals under the guarantee of their savings. There was also the Saving and
Mortgage Corporation of Ethiopia whose aims and duties were to accept savings and trust deposits
account and provide loans for the construction, repair and improvement of residential houses,
commercial and industrial buildings and carry out all activities related to mortgage operations, until its
changed to its current name ,Construction and Business Bank. On the other hand, there was a bank
called Agricultural Bank that provides loan for the agricultural and other relevant projects established in
1945 and operated until it was replaced by its successor Ethiopian Agriculture and commerce bank in
1950.In 1979, Ethiopian Agriculture and commerce bank was replaced by Agriculture and industry
development bank, which was then renamed to the present ,Development Bank of Ethiopia with new
objectives enacted as per proclamation number 25/1991 and Councils of Ministries regulation no.
83/2002.
Subsequent to the demise of the Dergue regime in 1991, EPRDF declared a liberal economy
system. In line with this, Monetary and Banking proclamation of 1994 laid down the legal basis
for investment in the banking sector. Consequently, the first private bank, Awash International
Bank was established in 1994. On December 31, 2013, there were 16 private and 3
government-owned banks operating in Ethiopia.

1.3 CBEs Profile
It has more than 800 branches stretched across the country as of March 31, 2014
A bank with assets of Birr 228 billion as on March 31, 2014.
A bank has a total deposit of Birr 182 billion as on March 31, 2014.
Plays a catalytic role in the economic progress & development of the country.
The first bank in Ethiopia to introduce ATM service for local users
CBE has more than 7.7 million Account holders as at March 31, 2014.
It has strong correspondent relationship with more than 50 renowned foreign banks and
a SWIFT bilateral arrangement with financial institutions
CBE combines a wide human capital base with more than 18,000 skilled and committed
employees.
Pioneer to work with Western Union Money Transfer Services in Ethiopia.
The authorized capital of the Bank is birr 4 billion (Councils of Ministries regulation
no.137/2007)
VISION
TO BECOME A WORLD CLASS COMMERCIAL BANK BY THE YEAR 2025.
MISSION
WE ARE COMMMITED TO BEST REALIZE STAKHOLDERS' NEEDS THROUGH ENHANCED

FINANCIAL INTERMEDIATION GLOBALLY AND SUPPORTING NATIONAL DEVELOPMENT
PRIORITIES, BY DEPLOYING HIGHLY MOTIVATED, SKILLED AND DISCIPLINED EMPLOYEES AS
WELL AS STATE-OF-THE-ART TECHNOLOGY. WE STRONGLY BELIEVE THAT WINNING THE PUBLIC
CONFIDENCE IS THE BASIS OF OUR SUCCESS
Activity 1
List and discuss CBEs corporate values
GOVERNANCE STRUCTURE

CBE is managed by Board of Directors. The board of directors who comprise
representatives of various stakeholders give guidance and leadership in key strategic
issues
The overall management of the Bank is entrusted to the President.
After the successful implementation of BPR, the banks follow a process oriented
corporate structure. This orientation differ from functional structure previously
followed ,in way it gives more emphasis on what need to be done instead of
overemphasizing on who needs to do something . To further simplify the distinction
between functional and process orientation; A functional orientation organizes a
company along functional lines such as sales, marketing, production..., While process
orientation means that the company focuses on business process such as order process
and strategic planning. The main difference is that optimizing one functional unit may
harm another function, but optimizing the business process across organizational lines
helps the whole organization.
As per the structure of the CBE, there are core processes and support processes. Core
process can be simply defined those fundamental process or group activities, which
ought to be performed for the accomplishment of the organization key mission. In the
other hand, support process are process that are performed for effective execution of
the core process.
Core and Support Processes of the CBE
Core processes
Customer Accounts and Transaction Services(CATS)

Credit
Trade Service
Interest Free banking
Support Processes
Human Resource Management

Information Systems
Facilities Management
Finance
Business Development
Risk and Compliance Management
Internal Audit
Legal and Loan Recovery

Office of strategy management
E-Payment Process
The following are the sub process and administrative units Under CATS process;
CATS CPC- A sub process which is responsible for coordinating interbank relations as
well as branch to branch transactions and relations. In addition, the sub process has a
unit which serves as a cash custodian and distribution for four districts under Addis
Ababa Area. The following units are found under this process
Automated Transfer System (ATS) This unit is responsible for facilitating payment and
transactions to or from other local financial institutions via the National bank of
Ethiopia.
Customers Accounts and operation (CAO)- This unit is responsible for facilitating branch
to branch transactions and coordination of branch relations.
Cash Custody and Issue This unit is responsible for collecting cash in excess of cash
holding limit and availing same for those branches, which need cash.(Currently it serve
Addis Ababa Area branches)
Districts A management unit which is responsible for a coordinating and supervising
the process and functions of branches under its domain. Currently there are 15 districts.
Branch the customer point of contact, which are designated to provide the banks
product and services.
Organizational structure of CATs process
BOD
President
VP CATs
Director CATs
Districts
CPC
CASH Authomated
Branches CAO CUSTODY Transfer
AND ISSUE System(ATS)

1.4 General Learning Issues
The General objectives of this training manual are;
Introduce to the trainees the way various tasks are organised and how they are
performed
To let trainees know the CATS process from end- to -end.
To improve performers skills in CATS process
Through improving performers skill lowering waiting time and enhancing customer
satisfaction
To strength internal control in CATS process


Chapter two
Types of Customers and Accounts
Chapter objective
At the end of the chapter, trainees will able to;
Correctly identify the various type of customers

Define and distinguish the types of customer accounts
Clearly understand features and Advantages of various customer accounts
The aim of this chapter is to create consistency and at most professionalism in identifying
different type of customers and differentiating the various account types.
2.1 Customers
A Customer shall be defined as any legal entity (individual or corporate) with whom the bank
agrees to conduct business. A customer can be current and saving account holders,
correspondent banks, borrowers, guarantors and the like.
According to CATS procedure, the types of customers are;
a) Prospect customer- is a proposed (potential) customer in which the bank assumes to

deal with business. Such type of customers may be recruited during cross selling or any
other marketing activities until the customer fulfill the eligibility criteria. Both individual
and corporate entities can be considered as prospect customers until they actually open
bank account.
b) Individual customers- are an individual (natural) person who has a given name.
c) Corporate customers- it is any firm; organization, enterprise, associations, government

office and the like which the bank is dealing with.

Activity 2
1. Please identify individual and corporate customers
List of customer (A) Indicate individual or corporate customers
Sole proprietor
Labor unions
Private limited company
Idirs
Religious organizations
Minors (through parent/s/ or Guardians
Interdicted persons through Guardian
Federal and regional Governments
Share companies
Public Enterprises
Micro Finance institutes
2.2 Types of customer Accounts
Saving /deposits /
The existence of most financial institutions namely commercial banks is tied to financial
resource they mobilized. Hence, it is very imperative to define and highlight issues concerning
deposit (saving), before proceeding to various products that are designed to mobilize these
financial resources.

Since saving denotes both economic choice of people and that of a deposit product available in
most banks; it is important to note we are referring the earlier in this part.
Various scholars endeavor to define savings so that it gives meaningful sense. Savings is all
income not spent on goods and services which are used for current consumption (Dictionary of
Modern Economics, David W. Pearce, Fourth Edition, Macmillan). It is not only the individuals
that save but companies also save.
Personal saving is the part of personal income, which is neither paid out in taxes nor spent on
goods and services. In addition it is considered as forgone consumption that is saved for a later
date. Company savings is the part of a firms profit, which is neither paid out in the form of
taxes nor distributed to shareholders as dividends. In a more concise word saving is total
income less consumption and taxes. Mathematically S= Y- (C+T)
Where, S= denotes saving
Y= income
C = consumption
I = tax
In general savings is curtailment of consumption and postponing it for future use or for capital
formation
Activity 3
Think about your experience and workplace answer the following questions
1. What are the most important saving motives?
2. What are the advantages of saving in formal institutions?

As a financial intermediation business ventures, banks use the motive of savers in maximizing
their profit by providing customer account services which are dedicated for people and
companies interested in such act.
Currently the following major types of customers accounts are active at Commercial bank of
Ethiopia.
Saving deposit
Demand deposit
Time deposit account
2.2.1 Saving account

Features
No restrictions on the number and amount of deposit

Withdrawal allowed subject to certain restrictions
The money usually withdrawn by withdrawal slip
It is interest bearing (currently the rate is 5%)
Saving account is a continue nature
A minimum amount has to be kept on saving account to keep the account functioning
(at present birr 25)
Usually operated by passbook and ATM
Advantages
Encourages saving habits

Enables the depositor to earn income /interest /
Helps the depositor to make account to account transfer
It provides a facility for paying beneficiaries through internet, mobile, visa and etc
It provides immediate cash as and when required
It gives record of all transactions
There are also other special saving accounts with additional features and advantages
differentiated to serve target groups Hence ,in addition to the features stated above the
following additional features differentiate these product from that of the ordinary saving
accounts,

A. Women saving Account

Features
The account is provided only for women.

The account can be opened individually, jointly or cooperatively
ATM card separately designed for holders of women Saving Account will be provided so
that the customer(s) can purchase the type of goods/services she/they need from the
selected suppliers or can use it for cash withdrawal from ATMs.
Benefits
Account holders enjoy higher interest rate of 5.125%

Account holder gets discount on goods and services from the suppliers.
Develop saving habits of women and the general public
It build up future planning habit
It gives financial independency for the women
B. Youth Teen Account

Features
The account is opened for youth-teen below the age of 18

The account is opened jointly with parents/guardians if the youth is below the age of 14;
and can be opened independently by the youth if the youth is above 13 years old and
has his/her own income;
Advantages
Gain higher interest rate compared to ordinary saving account (currently 5.125)
Develop saving habits of minors and the general public
It builds up future planning habit
It gives financial independency for the teen youth
It gives control for young account holders who generate their own income

C. Youth Account
Feature
The account is opened for persons whose age is between the ages of 18-24
Advantages
Gain higher interest rate compared to ordinary saving account (currently 5.125)
Develop saving habits of the youth
It build up future planning habit
It gives financial independency for the youth
It gives control to young account holders of their financial resource
D. Mortgage/special / saving Account

Feature
A special saving account for the purpose of purchasing residential house

The account is opened by customer filling pre contract form intended for the
purpose
Account opening was only made during the registration campaign period.
Customers need to fulfill additional requirements/like not having residential house
in their name, resident of certain place/like in this occasion A.A/ /
No withdrawals are allowed from the special saving account unless the depositor
willingly cancels the contract and notify this for the branch manager in writing /if the
customer wishes to withdraw from the project ,he/she will forfeit the higher interest
rate and will paid with ordinary saving interest rate/
No withdrawals are allowed from the special saving account unless the depositor
willingly cancels the contract and notify this for the branch manager in writing /if the
customer wishes to withdraw from the project ,he/she will forfeit the higher interest
rate and will paid with ordinary saving interest rate/
It is linked to 40/60 and 20/80 government housing projects
Account holders need to place a regular deposit or make pre/post compensating
deposit within the specified time period
Advantage
Gain higher interest as compared to the ordinary saving account /currently 5.5%/
Develop saving habit
It builds of future planning habit
Will serve as an equity contribution for the final price of housing

2.2.2 Demand Deposit account
Features
It is a non interest bearing bank account

It needs higher minimum balance to be maintained as compared to saving account
(currently it requires birr 500 and birr 1000 for individual and corporate customers
respectively )
Penalty is charged if minimum balance is not maintained ( a charge of birr 10 is levied
semiannually on the balance maintained below 100 birr)
It is of a continuing nature
It requires KYC norms to be completed before opening (because it allows third party
involvement)
No restrictions on the number and amount of deposits
No restrictions on the number and amount of withdrawal as long as the account have
sufficient balance
Advantages
It facilitates business transactions

It enables account holders to carry out their transactions properly and promptly
The account holders withdraw without any limit
It helps to make a direct payment to their creditors by issuing checks
It enables the bank to collect money on behalf of its customers
It enables the account holders to obtain overdraft facilities /after approval of credit
request/
The bank can get credit worthiness information (swing and turn over)
It facilitates electronic banking like internet and mobile banking
Multi location fund transfers
Overdraft facility- it is a credit arrangement whereby current account holders allowed to

withdrawing funds above their balance up to the limit approved by the bank .Interest is charged
on the amount withdrawn above their credit balance.

In addition the following are special categories in demand deposit;
I. Special Demand Deposit Account
A special-demand deposit account is a non-interest-bearing account that is opened to fulfill the

requests of those customers who, for one reason or another, do not want their deposits to
accrue them any interest and payable on demand.
II. Ethiopian Commodity Exchange (ECX) related Accounts
The Ethiopia Commodity Exchange (ECX) is a commodities exchange established April 2008 in
Ethiopia. Proclamation 2007-551 states ECX objective is to ensure the development of an
efficient modern trading system" that would "protect the rights and benefits of sellers, buyers,
intermediaries, and the general public. The goal of the ECX is to provide a marketplace where
buyers and sellers can come together to trade and be assured of quality, quantity, and
payment.
The ECX central depository issues electronic receipts that serve as legal title to the stored
commodities and are transferable on the exchange. Similarly funds are deposited in members
bank account for trading. Thus, the role of banks is facilitating payment for the trading of
commodities throughout the country. Trading members who trade in behalf of their own
account and those intermediary members (earn service charge) who trade in behalf of other
clients are the main actors in the commodity exchange.
Therefore the following ECX related accounts are commonly maintained in CBE branches;
1. Member Pay in: an account maintained by trading members of ECX, who trade in
their own account. This account serve of as payment guarantee to the buyer and
eventually will be used for payment against the sales agreement between buying and
selling parties (Traders ).Members can only deposits in this account .
2. Member pay-out: an account maintained by trading members of ECX, who trade in
their own account. This account is used to receive payment from the trading and the
member account holder has an exclusive right on the account .( can withdraw and
deposit funds)
3. Client pay-in: an account maintained by members in behalf of their client. Similar to
member pay in account it serves as depository account, for which debit entries should
be instructed by ECX.
4. Client pay-out: an account maintained by members in behalf of their client. Like
member pay out account the account ownership rests with the member account holder.
In summary, branches are not allowed to debit the various pay-in accounts listed above
without the explicit approval and instruction of ECX .Pay -in accounts are only used for deposits

of members and clients (for trading), while pay-out accounts are intended to serve the account
holders to receive proceeds /funds from the trading . Opening and closing of ECX accounts are
performed only in CATS CPC.
2.2.3 Fixed Time Deposit

It is opened for a particular fixed period (time) by depositing particular amount or money. The
term Fixed deposit means deposit repayable after the expiry of a specified period.
Features
The amount deposited only once

The period of fixed deposit is greater than or equal to 3 months
Withdrawal are not allowed prior to the maturity date , however if customer request
any withdrawal before the maturity date ,he or she forfeits the higher interest rate
which is currently 5.125% on the amount of withdrawn and she/he will paid with
normal saving interest rate of 5 %
The deposit can be renewed for further period, by concluding new contract for the
purpose
Ideal when the depositor have idle fund
Advantages
It encourages saving habits for a longer period of time

Enables the depositors to earn higher interest rate
The depositor can get loan facility from the bank by using the certificate of deposit as a
collateral
On maturity the amount can be used for planned expenditure
The bank can get the fund for a longer period of time, it indirectly boost current
development
The bank can also invest such funds in long term areas
2.2.4 Special types of accounts

These types of accounts are not considered as product by their own merit rather they designed
to meet special circumstances and customer requests .The following are examples;
1. Joint accounts
Joints accounts are maintained in the name of two or three individuals to jointly operate the
account. Joint accounts can be And Account and And/or Account. The nature of And
Account is that all the parties should be present at the counter of the bank and give consent of

payment by their signature. No payment will be effected, if any of the party is missing. Whereas
And/or account type allow to withdraw money unilaterally.
2. Earmarked Accounts
Earmarked accounts are special purpose accounts opened with other descriptions after the
name or names of the account holder or holders such as club account, business account,
workshop account, private account, official account, etc. Such accounts should be kept
in the name or names of the individual/s concernednot in impersonal names or in the names
of other persons, as they are personal accounts opened for special funds or purposes.
3. Accounts for interdicted persons
A person may be designated by a court of law as being incapable of discharging her/his legal
rights, or be interdicted. Following such a ruling, the court normally appoints a guardian for the
incapable or interdicted person. Thus, this account refers to the type of account opened and
operated by the guardian appointed by the court on behalf of the interdicted person/s.
4. Staff Accounts
A staff of CBEs can open both savings and current accounts. A staffs account should be treated
like all other individual accounts. No staff should be authorized to handle any transactions
related to their own account(s).
5. Inactive Account
Current and savings accounts, which remain idle or dormant with no movement for a period of
six and twelve consecutive months respectively, should be changed by the system to Inactive
accounts, regardless of their balances.
6. Blocked Account
An account could be blocked if and when the customer lodges a request for blocking, or based
on a courts ruling to that end, or as collateral of a loan to be extended to her or him. Interest
will not be paid for accounts which are blocked as result of court order.
2.2.5 Foreign Currency Accounts
A foreign-currency account is an account in which the source of fund is overseas and can be
maintained in hard currency or in Birr. Persons residing abroad can open such accounts in

person or by mail in their names. A foreign currency shall be credited to the account, through
direct crediting of the account from foreign sources via the banking system, travelers checks
brought by the account holder from abroad, money notes, provided that the account holder
presents a signed and sealed foreign-currency-declaration form from the Ethiopian Customs
Authority and Check deposits that originate from abroad.
The foreign-currency accounts are to be maintained in only currency types of
US Dollar,
Pound Sterling and
Euro.
Types of foreign currency account may include:

A. Non-Resident Transferable Foreign Currency Account (NRT FCY) - means an account
Maintained in foreign currency by the debit of which funds can be transferred abroad without
the necessity of obtaining foreign exchange permit
B. Non-Resident Transferable Birr Account (NRT) -means an account maintained in Birr by the
debit of which funds can be transferred abroad in foreign exchange without the necessity of
obtaining foreign exchange permit (all sources for deposits in this account should be in
foreign currency)
C. Non-Resident Non-Transferable Birr Account (NRNT) - eligible persons can open Non-
Transferable Birr Account to meet their local expenses. It should be understood, however, that
the account is designated as '' Non-Transferable Birr Account'' to indicate the fact that its
Convertibility is not automatic but must be approved. (All sources for deposits in this account
should be in foreign currency)
D.Foreign Exchange Retention Accounts - With a view to encouraging and supporting the
export sector and remittance inflow National bank of Ethiopia allow exporters and recipients of
foreign remittance to open a retention account to hold a specified amount of their foreign
earnings for a defined period and use their Forex holdings business promotion.
Eligible parties shall open two types of Forex retention accounts which shall be designated ' Forex
retention account A' and 'Forex retention account B'.
Forex retention account A: a type of Retention account which is used to deposit 10% of the
earned foreign currency .The amount will be used to settle account holder obligation through in
foreign currency or other ways converted to local currency ,when request by the account
holder.
Forex retention account B: a type of Retention account which is used to deposit 90% of the
earned foreign currency up to 28 days after which period any balance shall automatically be
converted in the next working day into local currency.
E. Foreign Currency accounts in the name of Ethiopian and foreign nationals of Ethiopian
origin (Diaspora a/c)

Chapter 3
Customer Handling
Chapter objective
At the end of this chapter, trainees will be able to;
Identify the key Customer service communication skills

Recognize the importance of displaying appropriate communication technique in
customer service
Develop and cultivate knowledge of professionalism in meeting customer needs and
expectations.
Though quality service has much greater dimensions and applicability, the action of employees
is an important factor that greatly affects customer perceptions. The purpose of this chapter is
to guide performers on effective customer service handling.
3.1 Customer service
Customer service means providing a quality product or service that satisfies the need/wants of
a customer and keeps them coming back.
Customer service refers to all features, acts and information that augment the customers
ability to realize the potential value of core product or service.
It results in continued success, increased profits, higher job satisfaction, improved company or
morale, better teamwork and market expansion of services /products.
3.2 Customer service in Banking

Customer service is an important, but broad concept in the banking industry. In essence, banks
are service-based businesses, so most of their activities involve elements of service. While they

do sell banking and financial products, there is often little tangible product variation among
their offerings.
Customer service skills in banking operations

Think about it places where you enjoy doing business Restaurants & Cafes, shops,
supermarkets etc. Why, aside from the actual product or service they provide, do you like doing
business with them? You probably find them courteous, timely, friendly, flexible, interested,
and a series of other exemplary qualities. They not only satisfy your needs and help you in your
endeavors but make you feel positive and satisfied. You come to rely on their level of service to
meet your needs and wants
Activity 4
1. Think about the places you have gone for service and discuss the qualities you have seen in
the service providers/skills/
2. Think about your respective branch offices and discuss performers actual customer service
skills
While there are a multitude of customer needs, five basics needs stand out:
Friendliness the most basic and associated with courtesy and politeness.
Empathy the customer needs to know that the service provider appreciates their
wants and circumstances.
Fairness the customer wants to feel they receive adequate attention and reasonable
answers.
Control the customer wants to feel his/her wants and input has influence on the
outcome.

Information customers want to know about products and services but in a pertinent
and time-sensitive manner.
The following are considered important communication skills in customer service;
Smiling there is nothing like a smile and pleasant face to greet a customer,
especially if he/she has a complaint. A smile and polite conversation can
immediately disarm a disgruntled customer. Facial expression sets a positive
tone before we even begin speaking. A relaxed or pleasant facial expression
is the ideal most of the time.
Eye contact always look into our customers eyes. Directly address customers
How we look personal grooming has a big impact on customers. When interacting with
customers, dress neatly and in a professional manner so as to command respect and to
let customers know we take work position and work seriously.
Be attentive - when listening to a customer, we slightly lean towards our customer and
nod our head ever so slightly to indicate we are listening.
Active Listening in active listening we are genuinely interested in understanding what

the person is saying, thinking and feeling.
Tone of voice always convey friendliness and amicability. We should not raise our
voice in frustration or anger no matter how difficult or tiresome a customer may
behave.
Posture slumping in a chair or leaning against a wall while interacting with a customer
are sure signs we are not interested in the customer. Our pose or posture should
express attention, friendliness, and openness.
Observation - we should notice how our customer behaves and what he/she reacts
positively to while we are providing service.
We can also use GUEST-Model:

G Greet the customer
U Understand customer needs

E Explain features and benefits
S Suggest additional items
T Thank the customer
Activity 5
Please answer each question to the best of your ability.
Response
Statements NO Neutral Yes
1. I like dealing with many people on a daily basis. 1 2 3
2. I enjoy handling challenges. 1 2 3
3. I work well under pressure. 1 2 3
4. I have a high stress tolerance. 1 2 3
5. I am selfmotivated and able to maintain enthusiasm. 1 2 3
6. I can handle it when people disagree with me. 1 2 3
7. I want a lot of involvement with others. 1 2 3
8. I like to be on the front line. 1 2 3
9. I get satisfaction from helping people solve their needs. 1 2 3
10. I can keep my moods in check and concentrate on getting the job done. 1 2 3
USE INTERPERSONAL SKILLS TO IDENTIFY AND CLARIFY CUSTOMER NEEDS AND

EXPECTATIONS
1. EXCEED CUSTOMERS EXPECTATIONS

Most banks can satisfy the basic expectations of a customer. What about delighting our customers and
always exceeding their expectations in some small way. If we are aim to exceed customers expectations
on every interaction and are consistently able to do this, we have a good chance of keeping customers for
life.
2. PROVIDE PERSONAL ATTENTION TO CUSTOMERS

We should provide personal attention to customers who are going to reciprocate by being consistently
using our products or services. The more our customers feel as though we are treating them individually,
the more likely they are to continue their relationship with us.
3. GAIN NEW CUSTOMERS FROM EXISTING ONES

Always ask customers if they know of any other people that would be interested in our products or
services. Existing customers are our major source of referrals and new businesses. Through them, we get
access to new customers who already know about us and have a positive opinion of what we do.
4. IMPROVING CUSTOMER APPRECIATION

Thank customers for referrals, feedback and suggestions they make. It makes them feel recognized and
reinforces a positive behavior so that they like helping us and referring our business. Remember that the
last thing they want is for a friend or relative to come back to them unhappy about a referral they have
made, so dont let them down.
Activity 6
What opinion do you have in exceeding customer expectations in your workplace?
What are your recommendations for providing personal attention to customers?
What is your proposal for gaining new customers from existing ones?
What suggestion do you have in improving customer appreciation?

Chapter 4
Account opening
Chapter objective
Know the purpose of KYC norms

Appropriately identify customers and distinguish the type of documents required for
account opening
Clearly understand account opening process
Account opening involve attending customer request, making sure the customer get
appropriate product type, verifying the required documents and applications, consequently
maintaining the account on the system.
4.1 Know your customer (KYC) Norms
KYC stands for Know Your Customer. It aims to understand who your customer is. The KYC
process involves verifying customers' identity and address by asking them to submit documents
that are accepted as relevant proof.
The main purpose of KYC norms is to restrict money laundering and terrorist financing. In order
to prevent identity theft, identity fraud, money laundering, terrorist financing, etc, the
Regulatory Authorities have directed various financial intermediaries to put in place a policy
framework to know their customers before opening any account.
KYC also serves as key instrument in providing premium services to those known and prominent
customers. In addition it is an asset for promoting new and additional services based on
customers profile already established.
According to NBE directive Banks shall identify the customer ,whether regular or occasional
,natural or legal person legal arrangement and verify the customers identity using as much as
possible ,reliable ,independent source of documents ,data or information

4.2 Required Documents
Individual or corporate customers may come up with account opening request or we may
proactively approach the customer for account opening. Yet In order to ensure the customer
eligibility, we need legally acceptable documents that can be verified at any point of time.
The following are documents that are commonly required from customers who need to open
accounts.
A. Valid ID cards as prescribed in the CATS operation procedure

These documents are used to obtain information about the natural person
Legal name (Full name )
Correct permanent address
Date and place of birth
Nationality
Occupation
B. Work or residence permits, Foreign-nationals-of-Ethiopian-origin ID card, together
with a valid passport.
C. Articles and memorandum of Associations- according to Commercial code Article
313 and 314 the documents contain the name ,nationality and address of the share
holders ,purpose of business ,the amount of capital ,the number of directors and
manner of operation (typical for article of association ).
D. Minutes to open accounts
E. Letter of authorization to open and operate accounts-/ a letter from a delegated
person /
F. Certificate of legal personality particularly for cooperatives
G. Renewed Trade license
H. Tax identification certificate
I. NBE permit

Activity 7
Identify and list the required documents (listed above) to open an account for each customer type
Customer Type Required Documents

Individual customers
Edirs
Partnership
Private limited company
Share companies
Association and Clubs
Religious organizations
Account for Minors
Government
Federal & state
Government
Embassy
International
organizations
4.3 Customer creation and Account opening
We should properly examine the details of the documents presented to our counter before
customer creation on the system. Tolerated irregularities in the documents presented should
be authorized by respective supervisors and followed through for immediate correction. For
instance, the branch can maintain a pending file, which can be used to manage documents to
be fulfilled at latter point of time. However continuous and effective follow-up should be in
place to avoid outstanding pending files.
Customer record refers the information kept about the customer and her/his or its business. It
must be created before account opening. Customer record holds all the basic information
about a customer. Ideally only one customer record should exist for each customer. Detail and
accurate information should be maintained into the system.

Once ascertained that the necessary documents are in place, the next step is opening the
account type that the customer desires to maintain with the bank.
Customer
Record
Demand
Fixed Time saving
Deposit
deposit account
account
Special Women Teen youth ordinary Housing

Ordinary
demand ECX accounts saving ,youth saving saving Saving
Demand
deposit account accounts accounts Accounts
Interviewing and advising the customer about the type of account, collecting necessary
documents to open the account, opening an account and eventually up selling( visa ,mobile
,internet banking and etc) the product and cross selling other bank product .
Customer service officer will appropriately segregate and pick customer type according to
ownership (private, cooperative, government ) and customer business type (manufacturing,
real estate ) from the list options in the system.
In selecting customer type according to ownership, we have to note CBE classify as;
1. Private and individuals this category includes all accounts of individual customer, Edir,
Equb, NGOs, Micro finance institution and partnerships ,Private limited companies,
share companies (except those companies 100 % of the share owned by government),
religious organizations

2. Public institutions this category include institutions which are established by
proclamations and owned by the government. They are also profit making institution
and usually called state owned enterprises.
Example: Ethio telecom, Ethiopian Airlines
3. Government local and central- comprise accounts of various federal and local
government offices within the government administration hierarchy and control of
respective finance offices.
4. Cooperative and associations according to proclamation no 147/1998 these category
is defined as a society established by individuals on voluntary basis to collectively solve
their economic and social problem and to democratically manage same.
Examples: Agricultural, housing, industrial and Artisans, consumers, saving and credit,
fishery and mining cooperative societies
While saving and special demand deposit accounts are opened with minimum balance of 25
birr, in exceptional cases, however, a savings account may be opened and maintained with a
zero balance for a period of only one month for the purpose of salary account, foreign
remittance and etc...
In opening demand deposit account the minimum deposit is currently birr 500 for individuals
and birr 1000 for corporate entities.

Activity 8
Please identify the duties of each performer with appropriate order using table 2 based on the process
flow from activities listed on table 1 (write the activity number)
Table 1
Activities
1 Writes the system generated account number on the deposit slip, on the application form and on
the check-requisition slip.
2 Types the necessary particulars on the passbook (for a savings account)
3 Scans the customers signature and relevant particulars and link with the account.
4 Receives the pertinent document from the customer, based on the type of account
5 Puts a stamp on the affixed photo by covering therewith the lower half of it
6 Opens the new account in the system by using the customer Id created in the branch or other CBE
branches.
7 Opens a new mandate file in the name of the account holder and keeps the letter of application and
the copies of the other relevant documents in her/his custody.
8 Makes the customer fill out the first check-requisition form requesting a check book of 10 leaves
and above as appropriate.
9 Makes sure that the customers name is not on the mal-operation list;
10 Makes sure that the account-opening documents are properly prepared and the opened accounts
are authentic
11 Issues an account-opening application form
12 Follows-up the customers ID card and license are authenticated within one month.
13 Delivers the passbook, the gift package, the welcome note, the original documents (ID card, trade
license and other relevant documents) and the deal slip to the customer.
14 Collects all the documents submitted for the opening of an account and makes sure that the
account is opened as per the Banks pertinent policy and procedure;
15 Checks that the required documents are properly filled out and signed by the applicant
16 Checks and authorizes the scanned signatures
17 Authorizes the account opening and Co-signs on all the account-opening documents and passbook
(for a savings account)
18 Authenticates the customer ID card and license from the issuing organ
19 Ascertains that the name of the applicant requesting to open a demand-deposit account does not
appear on the mal-operation list account

Table 2
Performers Title Duties according to process flow
CSO-maker
CSO-Checker
CSM
Branch Controller

Exercise 1
1.Ato Abebe approached your counter and requested you to open an account in the name of
his uncle living in south Africa ,saying his uncle will sign the documents when he will be visiting
home for holiday .How do you handle this situation and what documents do you require from
Ato Abebe ,in case of entertaining his request..
2. in the event one of the account holder dead, who jointly opened and/or account type, the
living account holder can withdraw from the joint account. Please say true or false and specify
your reasons.
3. What are the reasons to checking the similarity of customer signatures on specimen before
finalizing the account opening process?
4. In the event that the customer specified the branch and a/c number in which he/she already
maintained an account in online branch /non-on line branch /, when requesting to open a new
account at your branch .How do you use this information?

Chapter Five
Tickets, slips, Vouchers and Negotiable Instruments
Chapter objective
At the end of this chapter, trainees will be able to
Identify & appropriately make use various type of tickets

Know features of payment instruments
Properly process the payment instruments in accordance with CATs procedure
Accounting entries should have related source documents for proper documentation and
control. Likewise CBE make use of various internal tickets and forms as evidentiary of events
and transaction. Moreover the bank uses for various valuable payment instruments designed
for the purpose of financial intermediations .The purpose of the chapter is therefore to
acquaint participants the various types of tickets and payment instruments in CBE.
5.1 Types of Tickets, slips & Vouchers
The following are various all-purpose tickets, forms and claims that are used as a source
document to facilitate the recording of transactions in CBE:
5.1.1 Single Debit

This ticket used for the processing cash payment. The account to be debited should be
specified on the debit side.
Example
Expense paid in cash
Cash payments from account by letter of instruction /from account holder /

5.1.2 Single Credit
This ticket used for the processing cash collection. The account to be credited should be
specified on the credit side.
Example: service charge, commission
5.1.3 Debit with Advice
This ticket used for the source document of debit entry transaction which the contra account is
affect the cash account with debit advice to the customer.
Example: - Cash payments from account by court order to third party, Payments made
by Account receivable and the advice used as tracer
5.1.4 Credit with Advice
This ticket used for the source document of credit entry transaction which the contra account is
affect the cash account with credit advice to the customer.
Example: cash collection to internal accounts,
5.1.5 Debit and Credit with Advice
This ticket used for the source document of debit and credit entry transaction which the contra
accounts affects other than the cash account with debit and credit advices to the customer.
Example: Account to account transfers
5.1.6 Blocking Outwards

Blocking outward ticket is used to handle payment in cash and to account when a customer
requests saving withdrawal or check from offline branch.

5.1.7 Inward Blocking
This ticket is prepared in triplicate and used in account holding branch as a source document of
payment made by blocking to debit from the customer account, crediting payable account and
the remaining kept as a tracer until settlement.
5.1.8 Reimbursement Claim
This ticket is used to make payments on behalf of the other unit of the bank and at the same
time request a refund for payment made on with attached source document
5.1.9 Cheque Deposit slip
This slip used as a source document filled by customer for deposit of other bank cheques to be
credited to customers account
5.1.10 Cash Deposit slip
This slip used as a source document filled by customer to credit the account for cash collection
5.1.11 Saving Withdrawal voucher
This voucher is used as a source document filled by customer to withdraw money from the
saving account
5.1.12 OBC-tickets

The ticket used by branches to collect a fund from ATS for value of other bank cheques
deposited at CBE branches
5.1.13 LMTS transfers

LMTS involving at least one non online branch
It is the type of money transfer among non-online branches with online branch or other
non-online branch, whereby the remitting branch sends payment instruction immediately
to the paying branch over the telephone. This means of transfer needs the use of test key
coding and decoding system and it is relatively the fastest means usually preferred by
most transfer users.
LMTS in online branches
It is a type of money transfer where by transfers are made to all online branches to pay
the beneficiary against security code, test question and proper identification
5.2 Payment Instruments
5.2.1 Cashiers payment order (CPO)
C.P.O is an endorsable payment instrument issued up on request of a customer for

specific purpose; Such as to participate in bid, to effect payment to government offices
mainly tax, etc.
CPOs is payment instruments that are presented to the issuing branch either by the
purchaser or the beneficiary as case may be. When a CPO is prepared to allow the order
of the CPO to participate in auction, it is in the name of the auction awarding
organization. The instrument is valid for six months.
5.2.2 Demand draft
Demand Draft is an order in writing to pay a specified sum at sight, issued by a bank
against a paying bank. Drafts are negotiable within twelve months from the date of issue
after which drawers confirmation is required for payment. Although drafts are
negotiable, the genuineness of endorsee has to be ascertained before payments are
affected. Drafts are preferred means of transfer but, their loss may create severe
dissatisfaction to purchasers and beneficiaries
5.2.3 Cheque

There are many ways to define a cheque .The following definitions are from banking
perspective.
A cheque is simply an order written by someone, a drawer directing the bank, the
drawee to pay a specified sum to the order of a certain named person(s),the payee
.The cheque also directs the bank to debit the drawers account by the amount of the
cheque .
A cheque is a customers order to the bank to pay on demand a nominated sum of

money from their cheque account.
Characteristics of a cheque
There are three parties to a cheque;
The drawer (who writes /signs the cheque)

The payee (Who receives the money)
The drawee (the bank the cheque is drawn on )
Features of cheques
A cheque bears the following elements across its face:

Name of the bank
Name of the branch
Date of cheque
Name of account holder and account number
Name of payee/beneficiary
Amount in words and figures
Cheque number
Signature of the account holder or Signatories
A cheque shall contain:
An unconditional order to pay a sum certain in money;

The name of the person who is to pay (drawee);
The place of payment;
The date when and the place where the cheque is drawn;
The signature of the person who draws the cheque (drawer).

Date
Payee
Drawee Amount in
Words Amount in Drawer
figure
signature
A
Cheque Number
Drawer and Name
account should
printed
Important Issues in the operation of Cheques
A. Endorsement of checks
Endorsement is defined as the signature plus any other writing by which the endorser transfer
his rights in an item to someone else. A check should be endorsed on the reverse side thereof.
The number of endorsements on a check has no limit as per the Commercial Code of Ethiopia,
Article 844 (1).However; in practice endorsement shall be restricted up to the space found on
the reverse side of the cheque because the attached paper used for endorsement may be
detached and entail additional risk thereof.

The following are the types of endorsement that are applicable in the CBE:
Self: if the check is issued for self, the performer should ascertain that the check has
been endorsed by the drawer.
Cash or bearer: if a check is drawn to the bearer or cash, the performer should make sure
that the check has been endorsed by the presenter.
Specified person: the beneficiary/payee of the check has to be identified at the counter
and told to endorse the check.
If the check is issued to the order of the specified person followed by the word only, or
if the word payee only is written on the top left corner of the face of the check, only
the payee/beneficiary thus indicated is allowed to cash the check.
If the check is issued in the name of a corporation, a cooperative, an association, or a
government body, it will not be paid in cash, but will be credited to the
beneficiarys/payees account. To be endorsed, the check (S must bear a seal of the
beneficiary, whenever possible.
If the check is issued to the order of two individuals, both beneficiaries/payees will have
to be identified and told to endorse the check drawn in their favor.
If a check is issued in the name of alternative individuals, either of the individuals must
be identified and told to endorse the check.
Crossed checks are not at all paid in cash, but deposited into the accounts of the
beneficiaries/payees thereof.
B. Stop Payment
Stop payment can be defined as a request made to a bank to cancel a check or payment that has
not been processed yet. A stop payment order is issued by the account holder, and can only be
enacted if the check or payment has not already been processed by the recipient.
The widely known are theft and/or loss of the check. Any order that contravenes the legality of
checks must not be accepted.
At the time a stop-payment order is placed, there must be sufficient fund in the account that covers
the value of the check requested to stop payment of. The amount of money on the check under the
stop-payment order will not be withdrawn until the account holder gives, in writing, an order to
cancel the stop-payment order, however, the placement of stop payment order shall be cancelled
upon the expiry date of the check or by the court order.

c. Insufficient Cheques /Non sufficient
Insufficient Cheques /Non sufficient are terms used in the banking industry to indicate that a
demand for payment (a cheque) cannot be honored because insufficient funds are available in the
account on which the instrument was drawn. In simplified terms, a cheque has been presented for
clearance, but the amount written on the cheque exceeds the available balance in the account.
When insufficient cheques are presented for payment, the following actions are taken on drawer as
issuing cheques without suffient cover will entail administrative penalty in addition to criminal and civil
liability.
1. First instance The cheque is returned to the payee specifying the reason using cheque return
slip and the drawer should also be served with 1st written warning.
2. Second instance The cheque is returned to the payee specifying the reason using cheque
return slip, the drawer should also be charged/penalized 5% of the face value of written
on the cheque and served with the second written warning .
3. Third instance The cheque is returned to the payee specifying the reason using cheque
return slip, the drawer account should be closed; the drawer should be communicated in writing
to return the unused cheques to the bank and collected the unpaid cheques in the hand of
payees.
The account holding branch should also communicate same to CATS CPC to circularize the action for all
CBE branches in addition to notifying NBE.
5.2.3 Foreign Demand Draft
Demand Draft is a payment order issued by a bank drawn on its correspondent bank abroad. It
means the bank who is issuing the draft has to make the draft payable at a bank where it
maintains an account. This bank is called drawee bank, while the issuing bank is called drawer
bank.

Exercise2
1. An account holder of outlying branch approached on one city branch to withdraw from his
saving account .what type of ticket would you suggest to be utilized by
the outlying branch (account holding)

the city branch (paying branch)
2. A Customer who maintain current account in our branch requests a new cheque book and
want to withdraw some amount of money at the same time .unfortunately, we have no cheque
book stock at our hand. How we can treat his request?
3. A customer wants to cash a cheque that is signed but the date is missing, coincidentally you see
this customer filling the cheques date and the cheque is not her own account .How do you
approach this request?
4. A check is drawn in favor of Wondwosen siyoum and Elias Eshetu , consequently Ato Elias
Eshetu has endorsed the check to his wife wro.Meaza sileshi and she came to your branch to
cash the check. Can we cash the check? State your reasons

Chapter six
Collection and payment processing
Chapter objective
Know the detail collection and payment procedure

Enhance skills in handling customer transaction
6.1 Collection
Collection can be defined as cash, cheques, Cash payment order, Draft, and fund transfer
deposited (credit) to any customer account or internal account.
6.1.1 Cash Collection
Foreign Currencies acceptable for collection

The NBE as a supervisory authority shall decide other countries currencies acceptable for cash and
Transaction in commercial banks of the country. In this regard, the currencies categorized in three
category
i. Currencies that are utilized both in Cash and Transaction- the bank is allowed to deal in both
currency notes and transaction values. Hence the bank or NBE has accounts in those
currencies abroad in reputable correspondent banks.
Currency Name Sign Currency Name Sign

Us dollar USD Canadian Dollar CAD
Great Britain
Pond GBP Swedish Kroner SEK
Euro EUR Swiss frank CHF
Norwegian
Kroner NOK Danish Kroner DKK
Djibouti Frank DJF Japanese Yen JPY
Applicable for purchasing foreign currency notes and processing outgoing and incoming
foreign transfers (SWIFT, transfers from MTOs)

ii. Currencies that can be utilized only in Cash- the bank is allowed to deal only in currency
notes. Hence the bank or NBE has accounts in those currencies abroad in reputable
correspondent banks
Saudi Riyal SAR
UAE Dirham AED
Central African Franck XAF
Applicable for purchasing foreign currency notes
iii. Currencies that can be utilized only in Transaction: the bank is allowed to deal only in
transactions. Hence the bank or NBE has accounts in those currencies abroad in reputable
correspondent banks
Indian Rupee INR

Kenyan Shilling KES
Australian Dollar AUD
South African Rand ZAR
Chinese Yuan CNY
Applicable processing outgoing and incoming foreign transfers (SWIFT, transfers from MTOs)
Collection of Cash for Deposit

The Customer Services Officer/Maker Receives the cash by denomination against the
deposit slip signed by the depositor and the passbook, if any, from the depositor is the
primary task and; checks that the amount in words and figures is the same on the
deposit voucher; and then Check the name and account number on the deposit slip
against the system. Finally Credits the customers account by debiting cash
Example: - suppose Mr. X wants to deposit
i. USD 100.00 to his ETB saving account 10099999999xx and

ii. Birr 10,500.00 to ABC plc ETB Current account 1009999999xxx
The transaction shall be as follows
i. Debit USD1001199990xxx(cash USD) 100.00
Credit 10099999999xx Mr. X (100*19.0xxx) 1900.xx

ii. Debit ETB1001199990xxx(cash ETB) 10,500.00

Credit 1009999999xxx ABC plc 10,500.00
6.1.2 Collection of Cash for Money Transfer
Outgoing Local Money Transfer /between on line branches /
The process of local money transfer start by customer filling application for local money transfer. The
performers check and confirm the details in application form including;
The beneficiary name
The amount to be sent
Remitter name /sender/
Address of the beneficiary and remitter
Security question and answer
Account (if to be debited from customers account )
Signature of the remitter
The best approach in this regard is to read the details in order to be confirmed by the remitter.
Consequently, collect cash and correctly insert the particular in the system. Finally the performer should
give the deal slip by advising the remitter to give the security code, question and answer to the
beneficiary.
Outgoing Local Money Transfer /transaction with at least one branch is non-on line/
Except the involvement of security code, question and answers, all the process flow and precaution
should remain intact and apply same. However, the message should be transferred by the front officer
checker through telephone. In transferring the message, the checker should correctly transfer and
reconfirm the same from receiving end before concluding the process.
Illustration
Assume that Mr. X wants to send money from online named T branch to
i. Birr 1000.00 to Mr. Y by cash through our non-online branch named z branch.
ii. Birr 1,500.00 to his son by cash through online branch named Y branch.
iii. Birr 3,000.00 to his daughter from his account 10099999999xx to online branch Y branch.

The transaction shall be done as follows
i. Debit Cash 1,023.00

Credit H.O. account 1,000.00
Credit Commission 3.00
Credit Telephone and Telex 20.00
ii. Debit Cash 1,523.00
Credit LMTs payable account (T Br.) 1,500.00
Credit Commission on LMTS 23.00
iii. Debit a/c 10099999999xx 3,023.00
Credit LMTs payable account (T Br.) 3,000.00
Credit Commission on LMTS 23.00
Demand Draft and Cash Payment Order (CPO)
The process of preparation of Demand Draft and Cash Payment Order (CPO) start by customer filling
application form. The performers check and confirm the details in application form including;
The beneficiary name
The amount to be sent
Remitter name /sender/
Address of the beneficiary and remitter
The beneficiary branch
Account (if to be debited from customers account )
Signature of the remitter
Receives the money transfer application form or letter from the customer, checks the particulars therein
and incorporates the details into the system;
- Receives cash/debit from the customers account, including the commission, and
forwards to the Checker the letter of application, together with the Draft or CPO;
- Receives the CPO/draft from the Checker, co-signs on the prepared CPO/draft, makes
the remitter sign on the back of the application and gives the instrument to the
customer.
Illustration

Assume that Mr. X wants to purchase CPO/Draft from online named T branch
i. CPO Birr 10,000.00 for bid bond favoring ABC plc by cash.
The transaction shall be done as follows
Debit Cash 10,050.00

Credit CPO payable 10,000.00
Credit Commission on CPO 50.00
Foreign Money Transfer

Foreign money transfer shall be made for Education, correspondence fee, seminar, Training,
Symposium, workshop, conference, Membership fee, Medical fee and others in line with the
pertinent directive of the NBE.The transfer is processed by preparing foreign demand draft or
swift transfer message .SWIFT/Society for Worldwide Interbank Financial Telecommunication /
transfers are secured and reliable interbank message transfer systems that enable banks to
transact with each other .Banks use standardize formats to send and receive messages.
Although there are numerous standard SWIFT messages, the following are the frequently used
messages types in branches.
MT MT Name Purpose
101 Request for Transfer Requests to debit a customers account held at another institution
102 Multiple Customer Credit Transfer Conveys multiple payment instructions between financial
institutions
103 Single Customer Credit Instructs a funds transfer
Transfer
104 Direct Debit and Request Conveys direct debit instructions and requests for direct debits between
for Debit Transfer financial institutions
Message
107 General Direct Message To order the debit of a debtor's account and to collect payment from this
account
110 Advice of Cheque(s) Advises or confirms the issuance of a cheque to the drawee bank
111 Request for Stop Requests the drawee bank to stop payment of a cheque
Payment of a Cheque
112 Status of a Request for Indicates action(s) taken in attempting to stop payment of a cheque
Stop Payment of a
Cheque
900 Confirmation of Debit Advises an account owner of a debit to its account
910 Confirmation of Credit Advises an account owner of a credit to its account

Since transfers for import are usually handled at TS CPC, salary expatriations are the frequent
transfers in branches.
Per the N.B.E directive FXD/10/1998 Commercial Bank of Ethiopia allow foreign employee to
remit aboard salary which should not exceed net earning upon submission of the following
documents;
1. Duly completed &signed application form by the applicant
2. Valid work permit accompanied with employment contract which show his /her earnings
3. Valid passport & Residence ID card & Work permit ID
4. The permit is valid for payment during the month of issue only & may extend for good for 10
days and CBE can only give permit for the amount one month salary net earnings
Activity 9
Please properly read and order the following activities based process work flow
Activities Correct order

1 Sorts and attaches therewith the appropriate documents and files
them
2 Assigns the correspondent bank on which the draft should be drawn;
3 Receives back the application/permit, including the name of the
correspondent bank, and incorporates the details into the system;
4 For transfers to be made via SWIFT, checks the filled out MT103 form
then, sign.
5 Authenticates the signature (if the balance is to be debited from the
customers account), does preliminary checking and forwards it to the
Checker for further scrutiny;
6 Write the system generated permit reference number on the
application and forward to manager customer service for approval.
7 Receive the letter of application for foreign exchange or the duly
completed remittance form, together with the other required
documents against the check list;
8 Signs on the draft and forwards it to the Customer Service Manager;
9 If the transfer is made via SWIFT, incorporates the MT103 detail into
the system and forwards it to the Customer Services Officer/Checker.
10 Receives the draft from Customer Service Manager, makes the
remitter sign on the back of the file copy and gives it to the customer;

11 Checks the letter of application against the prepared document, the
conversion of the counter value of the requested foreign currency,
including related charges, for amounts in her/his discretionary limit;
12 The Checker shall Receive the letter of application for foreign exchange
from the Customer service officer Maker and compares the contents of
the document against the checklist;
13 Receives the approved permit from Customer Service Manager;
14 Receives the local currency equivalent in cash/debit from the
customers account for the preparation of the draft and forwards it to
the Checker;
15 Forwards the permit to the Senior Customers Officer Accounts,
together with a copy of the exchange control; and
Sales foreign currency cash notes
When customers lodge foreign currency request in line with pertinent NBE directives (the
designated of amount for foreign currency and the purpose of foreign currency is
periodically revised by NBE) the following main activities are performed in branches with
Forex permit.
- Receiving travel documents (passport and air ticket) and authenticating the letter of application
- collecting the local currency equivalent in cash or debiting from the customers account
- Paying the customer with foreign currency notes
- Writing the amount sold and the air ticket number on the pass port and put the bank stamp
Collection of Negotiable Instruments for Deposit
We accept negotiable payment instruments /cheques and CPOs / from various customers to credit
their respective accounts after confirming the proper presentation, authenticity and completeness of
the instruments. If the drawn check is from one of CBE branches we simply check the necessary details
of the check and pass the necessary debit and credit entries, consequently give a deal slip to the
customer.

When customers present checks or CPOs given to them by local other bank customers, we facilitate
payment through clearance system. CBE and other local banks facilitate their customers collection
&payment transactions through their respective payment and settlement accounts maintained at NBE.
In this regard, CBE keep mirror/replica/ account to its payment and settlement account at NBE for
proper recording and control.
National Bank of Ethiopia
Payment and Payment and Payment and

settlement of settlement of settlement of
CBE AIB DBE
Illustration; A customer of CBE , Ato siyoum Reta has deposited a check given to him by wro .Almaz
sileshi ,holder of C/A at Awash international bank (AIB).Consequently, CBE branch should receive the
cheque after ascertaining the completeness and proper presentation of the cheque. The cheque should
be sent to ATS sub process along with OBC ticket for collection .The ATS sub process should scan the
check on the ATS system and put forward the physical check to Awash bank at clearing house in NBE
.Thus AIB should debit wro Almaz Sileshi account at their end or reject through the system and return
the physical check by the specifying the reason for any irregularity .If the check is not returned within
48 hours ,it is assumed the AIB has accept the claim .Hence ,payment of settlement of AIB at NBE should
be debited and payment and settlement of CBE should be credited .As result ATS sub process should
debit P&S mirror account and credit the respective branch account through credit summary .
Branch dispatch ATS scan the cheque and

Branch receive from cheque &CPO along send the cheques and
customer other bank with OBC ticket to CPOs to other banks
cheque and CPO ATS

Other banks return the CPO and cheque
Other banks Branch forward the return cheque to

ATS return the CPO and check
return/reject the customer after collecting the deposit
to the branch by deducting it
CPO and check receipt from the customer
from OBC ticket /claim
specifying the
reasons (Customer signature may be required)
Other bank accept the CPO and cheque
Other bank debit ATS Debit P&S mirror

Respective bank P&S
customer or its CPO account and Credit
account will be debited
respective branch account
Account with credit of CBE P&S Branch Debit H.O account
and customer account
Currently cheque clearance is facilitated for branches in Addis Ababa.
For amounts above 200,000.00 NBE has issued an instruction that advice banks to forward checks and
CPO to drawee bank branch. Hence the basic route is shortened as depicted here under
Branch receive from Branch forward

customers other Other bank cheques return the
check/CPO to
bank cheque and cheque for any irregularity or accept
respective other
CPOs and acknowledge the receipt
bank branch
Other banks pay the value of
ck/cpo through ATS system by
crediting CBE P&S account
ATS debit P&S mirror
account and directly credit
customer account

According to NBE instruction the whole process for handling cheques and CPO above the amount of
200,000.00 should not take more than six working hours. Hence branches are advised to follow-up the
status of the respective customer account. Any delay in this regard should be sort out by communicating
respective other bank.
Note; when interfacing the Core banking and ATS of NBE is finalized, the highlighted work process may
be altered.
Foreign Checks
We can receive foreign checks and process according to the nature, dependability and regularity of
checks and drawee relation .There are two mechanisms namely Outward Bills Purchased (OBP) Outward
Bills for Collection (OBC) ,to handle foreign checks presented to our branch offices .
Outward Bills Purchased (OBP)-though we are now using less of this mechanism due to the temporary
discontinuation of traveler cheques, this mechanism refers the honoring of checks before getting
payment for the value of check . When customers present travelers cheques/cash equivalent
instrument paid to the purchaser/, we automatically debit OBP account and pay the customer
equivalent Ethiopian birr after deducting the necessary charges .Afterward, we dispatch the cheques to
our correspondent bank so it can credit our foreign currency account maintained at its end.
Outward Bills for collection(OBC) This mechanisms allow branches to collect the foreign checks from
customers, dispatch to respective corresponding bank(through NR/NT account ) ,get confirmation on
credit to CBEs foreign currency account and consequently pay the customer in equivalent Ethiopian
birr .
Outward Bills Purchased (OBP) Outward Bills for collection(OBC)

Payment is made to customer ,before CBE get paid Payment is made to customer ,after CBE get paid
(CBE foreign Currency account with correspondent (CBE foreign Currency account with correspondent
bank is credited after customer is paid ) bank is credited before customer is paid )

6.2 Payment
Payment can be defined as cash, cheques, Cash payment order, Draft, and fund transfer paid
(debit) to any customer account or internal account.
6.2.1Payment from a Current Account

A) Payment in cash
Payment of cash for local checks involve
Accepting the check and ID card from the payee/beneficiary
Checking the genuineness and completeness of the check
Identifying the customer on the back of the check, if the bearer is other than
the account holder; otherwise, marking Account holder on the back of the
check
Authenticating the signature on the check and debits the appropriate
customers account
Posting the transaction and pays the specified amount of money on the
withdrawal voucher to the account holder by recording the denominations into
the system, depending on the customers preference
Asking the customer what type of denominations she/he requires to pay the
available mix of denomination; and Writes them in to the system and pays the
customer accordingly;
B) CBE Checks/CPOs collected by other banks (Incoming checks or CPOs)
When CBE checks/CPOs deposited in other banks, the other bank sends the checks/CPOs on
collection base for clearance in scanned copy on the ATS and the original check or CPO. CBE
branches and ATS sub process should handle the process as indicated in the collection part.CBE
branches should return checks for any irregularity/amount in figures and words differ,
insufficient balance, alteration not backed by drawer signature/ within the specified time.
According to NBE instruction the whole process for handling cheques and CPO above the amount of
200,000.00 should not take more six working hours. Hence branches are advised to debit the related
customers account or CPO by the credit NBE mirror account and swiftly dispatch the credit ticket to ATS
sub process, so it can be paid to concerned financial institution.

6.2.2 Withdrawal from Savings Accounts
Withdrawal from saving account involves;
Receiving the passbook and withdrawal voucher from the customer and checks that the
withdrawal voucher is properly filled outthat is, the date on which it was withdrawn, the
name of the account holder, the amount of money in both words and figures, the account
number and the signature of the account holder appear on it
When a blind customer appears at the counter, the following conditions should be met:-
The transaction should be made in the presence of two witnesses one of whom should
be the Customer Services Officer/Maker or the Customer Services Officer/Checker or
Customer Service Manager, and the other someone close to the customer;
If the customer is non-literate, she/he must sign by thumb print on the withdrawal voucher in
the presence of the Customer Services Officer/Maker who must attest the thumb print by a
rubber stamp marked Signed before me and initial on it. If there is no rubber stamp marked
Signed before me, the Customer Services Officer/Maker should put her/his name and initials
next to the thump print;
Counterchecking the name and account number written on the voucher against the passbook
and the system;
Identifying the customer and authenticates the signature of the customer on the voucher
against the scanned signature
Posting the transaction and pays the specified amount of money on the withdrawal voucher to
the account holder by recording the denominations into the system, depending on the
customers preference
Delivering the passbook to the customer, together with the requested cash;
6.2.3 Payment against Local Money Transfer
Activity 10
A customer has come to one of our city branch to receive payment from one of our outlying branch
through local money transfer .Please discuss the detail process in paying branch

6.2.4 Payment through Blocking
As payment through blocking involves confirming the detail information through telephone
conversation, we should take note in emphasizing the following customers details at each of
the telephone line ends.
When customers approach the paying branch, the paying branch should;
1. Identify the person by his/her photo ID and passbook /for saving

account /
2. Let the customer fill withdrawal voucher in two copies /for
saving account /
3. Check the proper presentation and authenticity of checks /for
current accounts /
4. Use simple but descriptive approach to portray the drawer
signature on the telephone
5. Give visual description of the account holder to the account
holding branch /in case of saving account /
6. Let the account holding branch confirm the customer details and
authorization of payment
7. Prepare outward blocking ticket ,post and pay the customer
8. Dispatch the one copy of saving withdrawal or cheque /by
retaining photocopy /to the account holding branch for eventual
settlement of its receivable account.
Debit: U/E Blocking Outward ***

Credit: Cash ***
Credit: Commission ***
Credit: Telephone & Telegram ***
Credit: Postage ***
9. Settling the outstanding blocking outward blocking, when

receiving payment through Head office credit summary
Head office ***
U/E blocking outward ****

In the contrary, the account holding branch should
1. Write in inward blocking formats the details of the

customer and check the balance ,the signature and the
facial appearance of the customer /for saving account /
2. Consciously listen the description of the paying branch and
compare it to the actual record at its end.
3. Dont give authorization before debiting the customers
account
4. Confirm the details to the paying branch
5. Keep and follow up the tracer
Debit: Customer Account ****

Credit: A/P blocking inward **** (tracer is kept until we receive the the
original payment tickets/cheque / along with its outward blocking claim Ticket from the
paying branch)
6. Settle the inward blocking when receiving original
payment tickets and claim
Debit: A/payable- inward blocking ***
Credit: Head office account ****
6.2.5 Cashier Payment Order (CPO)
CPO will be paid to payee after properly examining the authenticity and the proper presentation of the
instrument. The payee should endorse at the back of the CPO before payment is made. In addition, we
should properly identify the customer and retain the photo copy of the customer ID card. Expired CPO
should be authorized by respective branch or Customer service manager before payments.
Payment of a Lost CPO and Demand Draft

When a certified payment order is reported by the customer of the branch to which the customer
reports as having been lost, in writing,
Stop payment should be placed on the system
circularize the loss of the instrument to all banks through the CATS-CPC \
once circularized ,the beneficiary will lodge request letter accompanied by with appropriate
undertaking

If the beneficiary and the remitter of the lost instrument are two different persons or
organizations, the one who requested for the refund of the proceeds of the lost instrument shall
present the other partys consent and enclose any other additional supporting documents as
and when necessary
It should be approved by authorized organs as stipulated in CATs procedure

Exercise 3
1. A cash deposit slip along with the cash notes presented at the counter. After the
ascertaining the correctness of the cash, you have learnt the account is inactive .Please
discuss the successive process.
2. Ato siyoum frequently came to your branch with Ato Nuru owner and signatory of ABC plc.
On Tuesday January 1,20**,Ato siyoum came to your customer service window and
furnished you with application letter for CPO preparation in the name of ABC plc .How do
you serve his request?
3. A remitter/sender/ of LMTS transfer to on line branch has reported to you, he has lost the
secret number for the LMTS transfer .What specific procedure you will follow in solving
this problem.
4. While collecting other local banks payment instruments (cheque, CPOs), some cheques
were returned from the respective banks due to some irregularities. Discuss the possible
reasons for retuned cheques and some internal remedies to mitigate delaines.

Chapter seven
Daily Cash management
Chapter Objective
At the end of this chapter, trainees should be able to:
Recognize important precaution in daily cash management

Know the detail process in opening of daily cash operation
Understand the procedure in handling cash during the day
Appropriately close daily cash operations
7.1 Important precaution in daily cash operations
Throughout the banking operation accuracy is imperative .yet, due to higher transferability and
bearer right on cash notes, we should give due and at most accuracy in keeping and controlling
cash. A performer who is working with cash note, should Make sure that he/she is aware of
counterfeit notes and the methods that must be used to detect them. For both Ethiopian and
foreign currency notes there are explicit and implicit water marks that we should identify in
founding out their authenticity. In addition, we should use the highlighter and currency
detecting machine to help us detect counterfeit note.
With regard to behavioral aspects of cash management, we should be always be in focus and
avoiding any thing that can hinders us from being alert and attentive .For example; talking or
using our mobile phone and other similar devices while handling cash and attending customer
can prevent us from being focus in addition to offending our esteemed customers. Moreover
avoid talking while counting cash, so as to forestall making any errors;

With regard to managing cash, the customer service officer maker should;
Make sure that all the blank spaces that appear before and after the amount of the
money to be deposited, should be closed.
Before effecting payment thereof, always make sure that the value of the check has
been posted and that the appropriate account has been debited
If and when the customer changes her/his mind regarding the cash denominations
during payment, do not try to attend to her or his request up until you have given
her/him the cash as per her/his earlier preference
While exchanging money notes (from one currency to another), do not remove the cash
presented by the customer from the counter until you have made sure that she or he
has fully agreed to proceed with the exchange
Before effecting payment thereof, always make sure that the value of the check has
been posted and that the appropriate account has been debited
Make sure that the cash limit is always kept intact
Make sure that cash is promptly transferred to the Senior Customer Services Officer, so
as to avoid an unnecessary accumulation thereof
The handing and taking over of cash has to be evidenced by an authorization on the
system ;
In addition a Good Customer service officer is outstanding in;
Forging good working relations with customers of the branch, and familiarization with
their signatures and the transactions of their accounts;
keeping cash notes inside the cash drawersout of public viewnot at the counter;
always keep cash and cash items only in lockable drawersnot in shelves or elsewhere;
Concentrating only on what he/she is doing while counting, receiving and paying cash;
Caring for cash-related items as vouchers, checks, payments and receipt instruments
are almost as good as cash;

Moreover the customer service officer should;

Record the correct denomination on the system /ticket/ and pay accordingly rather than
writing cash denominations after the payment has been effected
put initials/signing on notes wrappers before the cash has been wrapped
not forget to lock the drawers wherein you stash up cash whenever you have to leave
the cash area and after office hours;
Balance cash, ascertain the correctness of the amount thereof and hand it (the cash in
his/her possession) over to the Senior Customer Services Officer and lock the drawers,
before leaving the premises for lunch.
slit/open wrapped notesespecially Birr notes of big denominationsbefore delivering
them to the customers of the Bank;
Remind customers of the need for carefully counting the cash given to them before
leaving the cash counter;
Customer Services Officers are not allowed to keep items like bags, pieces of luggage,
lunch boxes, in the cash area.
7.2 Opening of daily cash operation
At the start of the daily operation the customer service officer collects the cash box from the
vault when it is opened in the morning and opens the cash box in front of the Senior Customer
Services Officer-Cash to confirm the existence of petty cash (the cash leftover in the box from
the previous day), together with the personal cash brand/stamp.
Consequently the customer service officer takes the cash box to its cage, opens the computer
and verifies the amount of the petty cash transferred through the computer against the
previous days record and accept/authorize;
The customer service officer maker is also responsible for;

Collecting the cash from the Senior Customer Services Officer-cash and checks all the
complete bricks to ascertain that each one of them contains 10 bundles and that all of
them have been wrapped
Making sure that the signatures or the initials of the Cash Counter and the Verifier have
been affixed to the bundle. Notes of Birr 50 and Birr 100 are to be accepted only by
carefully counting each one of them
Checking the amount of cash transfer through the system, authorize the Till transfer as
acknowledgment of receipt of cash for the daily operation
Adjusting the date of the stamps (brands) before starting the days operations.

7.3 During the daily cash operation
In performing daily cash operation, we have to be alert of the cash balance at our hand .If the
remaining balance is below the minimum cash limit or it could not cover customer payment
request ,the customer service officer maker request the Senior Customer Services Officer-cash
the required additional cash through the system, Collects the money, counts and ascertains the
correctness of the amount and of the denominations thereof, by comparing it with what was
requested; and like always Confirms to acknowledge receipt of the money by authorizing the
cash transfer through the system.
In the contrary when cash beyond the CSO-maker limit ,the CSO maker should sort the cash at
hand into bundles, in accordance with the denominations and balances thereof, hand over the
cash to the Senior Customer Services Officer, and transfer the amount of cash through the
system (Till to Till transfer)
Meanwhile, the customer service maker at assigned at sorting table Sorts collects from the
customer the amount of money to be deposited in excess of 15-bundle cash. Counts the Birr
notes against each denomination in the bundles and ascertains the correctness thereof by
comparing it with that of the voucher filled in. In addition the customer service officer maker at
the sorting table Posts the amount of money to the customers account using her/his user ID,
affixes a stamp to the voucher/s, signs on it and prints a deal slip and makes the cash office
attendant wrap the bundles of the Birr notes according to their denominations and affixes a
stamp to the wrapping paper and Signs on the wrapped Birr notes to confirm the correctness of
the amount of money in each bundle (two signatures are required on wrapped notes of Birr five
and above, and one signature on wrapped notes of Birr one)
When the brick become too bulky, CSO-maker assigned at table balances the money according
to its denominations and hands it over to the Senior Customer Services Officer-cash, and
transfer the cash through the system.

Customer service officer Senior Customer service

maker at the counter officer /cash /
Transfer cash when cash
-Should always keep the at hand >limit and -should always maintain
cash notes in organized request cash when cash < sufficient cash
manner /for ease of minimum limit -Should continuously
sorting / monitor till balance
-Should continuously customer service
Supply cash when requested officers
monitor till balance
Check & receive cash when
CSO retain above limit
7.4 Closing of daily cash operation

When conducting day closing the customer service officer maker hands over all the Birr notes
except the loose ones, to the Senior Customer Services Officer in addition to surrendering the
remaining voucher to controller and make a till transfer through the system.
Meanwhile the CSO maker Keep the cash in her or his hands (the petty cash) in the box,
together with the stamp, lock the cash box and hands it over box to the Senior Customer
Services Officer.
On the hand the Senior Customer Services Officer-Cash accepts the cash surrendered by the
Makers, ascertains the correctness of the denominations and of the total and acknowledges
receipt of the cash by authorizing the till transfer on the system; check the correctness of the
cash-balancing done by the Makerthat is, the opening balance (the petty cash) and the cash
received from the Maker against the cash surrendered to the Maker and the cash still in her or
his (the Makers) hands
Moreover receives the total debit and credit (payments and receipts) of each Maker;
Ascertains the correctness of the cash balance and of the petty cash in her or his possession by
comparing it with the amount of the money debited and credited; and makes sure that the
amount of the petty cash in the box is correct against the Till transfer made to him as a petty
cash and keeps it in the safe.

The CSO maker amalgamates the cash in her or his hands in bundles and loose notes, sorting it
by its denominations, and balances the overall cash as follows:
Petty Cash (beginning balance + cash received from customers + cash received from
the vault (the Senior Customer Services Officer-Cash) - cash paid to the customers
cash sent to the vault = cash on hand).
After balancing it, transfers to the Senior Customer Services Officer-cash the balance twice-at
first the total amount, which should be transferred to the table, and subsequent to that the
petty cash balance, which should have to be kept in the cash box over night and make a Till
transfer; Finally Submits to the Senior Customer Services Officer the cash box and locks up the
cash box in the vault.
With the same fashion the senior customer service officer -cash accepts cash by authorizing till
transfer from the CSO Makers at the table and table, after checking against the system,
balances the total cash transaction against the Customer Services Officers balance in the
system, records the breakdown of all Customer Services Officers petty cash and daily debit and
credit on a register for the next days transfer and fills the amount of money withdrawn from
the vault during the day and the amount of money lodged to the vault on the cash book.
Subsequent to this important activities, he /she balances the cash book and signs on the space
provided for that purpose
Other issues in cash operations

It is imperative that counterfeit Birr notes presented by customers be marked
COUNTERFIET in front of the presenter. Otherwise, she or he should have a ground on
which to lodge a complaint as having been unduly expropriated of her/his property.
Except notes of Birr one, all other money notes should be counted by one person and
then verified by another. Both the Counter and the Verifier of the notes should sign at
the two corners of the bundles containing the first money notes. The Counter should
sign in black ink, and the Verifier in red. The money so counted should then be wrapped.
Birr notes that are in bad physical conditions should be kept separately, according to
their denominations, segregated from the Birr notes that are still in good condition.
Handling of Cash shortage & Excess

It would a rare probability to encounter cash shortage & excess, when has applied all
the recommendation discuss above. In case of cash shortage & excess however, proper
investigation should be carried out regardless of the amount involved, for subsequent
rectification.
With regard to reporting these cash irregularities ,the following are recommended;
A cash discrepancy (shortage and excess) involving Birr 100.00 and above, but below Birr
1,000.00, be reported to the Branch Manager or to Customer Service Manager
A cash discrepancy involving a shortage of Birr 1,000.00 or more must be immediately

reported by phone to the District Office .A letter should follow, indicating the effort made to
trace the difference. The letter should contain the following:
The amount of money involved;

The name of the Customer Services Officer;
The effort made to trace the discrepancy;
The action taken to settle the discrepancy; and
Any other relevant facts.

Exercise 4
1. On Tuesday march 25, 2014; CSO maker assigned at Y branch table master performed the
following activities in sequential manner.
Arrive at 8.07, Greet the SCSO cash and cash Aid, receive cash box from SCSO Cash.
Signed notes wrappers of different denomination for the subsequent use.
After Collecting birr 250,000.00 from the customer at 8.35, he opened his cash box and
put a stamp for confirmation of deposit and later at 10.15 credit the account by
specifying the denomination on the system
What are your reflections on the matter?
2. One of the customer service manager assigned at another corner of the branch has came to
you (with withdrawal voucher and ID photocopy), to give him birr 120,000.00 by debiting woy.
S saving account, insisting she is an elder who have sited on his guest chair .How do you threat
his request?
3. On April 3, 2014 cash excess of birr 5000 was found to be an excess at x branch. After
checking the concerned staff physical cash and tickets ,the daily cash was closed by foot
noting the mentioned discrepancy .Expecting the concerned customer will request the
fund, the branch kept the amount off-balance sheet(for 3 days) ,by only recoding the amount
on cash discrepancy registration booklet.
On May 6, a customer has reported to the branch of depositing birr 15,000.00 instead of the
birr 20,000.00, for which he claimed mistakenly considered 100 birr note bundle as 50 birr note
bundle .
What suggestions do you have for the branch?
4. Let us say you are a customer service Manager at Nixx branch .on July 5, 2014 a monthly audit
report was assigned to you for urgent rectification. While examining the detail of the
discrepancies, you have noticed, a major proportion of the discrepancy belong to one maker.
The said customer service officer is working in one of the customer service windows in front of
you (engaged in process cash collection).
How do you make the officer rectify the discrepancy?

PART II

Chapter Eight
Internal Account and Entry Management
Chapter Objective
After studying this chapter, the trainees will be able to
Identify the basic internal account classification

Illustrate the use and feature of internal accounts
Know the feature of suspense account and the management
Equip with knowhow of drawing reconciliation
There are accounting terminologies that we frequently come across in our daily banking
operations but give limited attention to their conceptual meaning. It is not uncommon that
some of us take the meaning of the following terminologies for granted but know little about
their conceptual meaning.
Account: a book on which entries are recorded. A group of accounts is called ledgers.
Account titles: These are names given to each account to identify it from the other.
Transaction: transaction refers to business dealings. In order for a transaction to take
place two individuals or parties ought to get involved. When a customer withdraws
money from his account we say transaction has taken place between the bank and the
customer.
Source document: Its name relays two concepts. Source means a basis or a resource to
validate the recording of the transaction. Document a paper on which the nature of the
transaction is indicated as a reference. Hence, a source document is a paper that
genuinely provides information for recording entries in the journal.
Chart of Accounts: A listing of accounts in a ledger is called a Chart of Accounts.
Ledger or Accounts of specific enterprise is affected by the nature of its operations, its volume of
business, and it is an account containing transaction data relating to a specific type of item, whether in

the Profit and Loss statements or Balance sheet. The full list of ledger accounts for a business is called
the businesss Chart of Accounts.
General ledger accounts comprise the controlling accounts whereas the subsidiary ledgers are group of
accounts other than general ledger accounts which show the details underlying the balance of a
controlling account in the general ledger.
8.1 Internal Accounts

8.1.1 Account Receivable
STOCK ACCOUNTS
12017 Revenue Stamp on Hand
This category shall be used to open and summarize individual accounts that record value of
revenue stamp kept for use or sale by Bank organs. At Head Office or branches a separate
revenue stamp on hand subsidiary ledger shall be maintained in the name of the holding organ.
A register book showing the stock of revenue stamps on hand by denomination shall also be
maintained.
i. The bank purchase the revenue stamp held as a stock in order to ease the bureaucracy
of handling the customer request. In this case the following entry shall be passed
Debit: A/c 12017- Revenue Stamp on Hand XXX

Credit: Cash XXX
ii. When the revenue stamp affixed on the contract the following entry shall be passed
Debit: Cash/Customer account XXX

Credit: A/c 12017- Revenue Stamp on Hand XXX
TIP: The balance in this account shall always show value of the physical Revenue stamp on hand.
PREPAID EXPENSE/DEFFERED CHARGE/
12105 PREPAID FOR RENT:

This category shall be used to open and summarize individual accounts that record payments
made in advance to governmental organizations or individuals for the rental of a flat or a
building. Such prepayments shall be expensed when the rental period matures.
ILLUSTRATION:
Suppose that the rental contract of our branch expired and negotiation of the contract finalized
for the period of Two years with monthly payment of Birr 50,000.00 ; the owner of the building
requested a prepayment for the whole period paid by the bank. The following entry shall be
passed
i. When the prepayment is made
Debit: A/c 12105 Prepaid for Rent 1,380,000.00
Credit: Building owner a/c 1,176,000.00
(1,200,000-(VAT+ 2% with holding tax)
Credit: VAT a/c with H.O. 180,000.00
Credit: 2% withholding a/c with H.O. 24,000.00
ACCOUNT Receivables
12501 Adjustments and Refund
This category shall be used to open and summarize individual accounts that record cash
shortages encountered by tellers and other similar differences ascertained by the Branch
Manager/or Manager - Customer Service/ or Senior Customer Service Officer.
Debited when:
Cash shortage or other similar differences are identified.
Accounting entry
Debit: Adjustment and Refund (Receivables) xx

Credit: Cash in Teller xx

Credited when:
The amount of cash shortage is paid from teller's cash indemnity, saving account or cash.
Accounting entry
Debit: Staff's Cash Indemnity Allowance Accounts XX

Credit: Adjustment and Refund (receivable) XX
12502 Employees' Salary Advance
This category shall be used to open and summarize individual accounts that record a portion of
the monthly salary advanced to the Bank employees on public holidays.
Debited when:
Salary advances are made to employees.
Debit: Employees' Salary Advance xx
Credit: Staff Accounts xx
Credited when:
The Bank collects the advanced salary from employees' salary on the payday.
Debit: Salaries Expense xx

Credit: Employees' Salary Advance xx
12508 Leave Pay Advance
This category shall be used to open and summarize individual accounts that record staff net
salaries paid in advance Bank's employees who are going to commence their annual leaves.
(Transaction events and accounting entries similar to that A/ c 12502)
12548 Miscellaneous Account Receivable
This category shall be used to open and summarize individual accounts that record the values of
transactions that cannot be classified under any of the above sub-headings of account
receivable. This account shall not be used frequently; it needs strong follow up and approval of
the branch Manager only.

Foreign receivables
12551 Claims on Western Union Company
This category shall be used to open and summarize individual accounts that record the sum
total daily Western Union Money transfer payment made by each branch of the Bank to WU
customers.
Debited when:
WU money transfers are paid at WU windows of the Branch.
Debit: Claims on Western Union Company xx

Credit: Cash in Teller or Customer's Account xx
Credited when:
The WU Company deposits the value of WU Money Transfer payments made at the CBE's
organs in the foreign demand deposits account of the Bank.
Debit: Nostro Account - X Bank (USD) xx
Credit: Claims on Western Union Company xx
12552 Claims on Money Gram

total daily Money Gram money transfers payment made by each branch of the Bank to Money
Gram customers. (Transaction events and accounting entries similar to that A/ c 12551)
12554 Claims on Dehabshill
total daily Dehabshill money transfers payment made by each branch of the Bank to Dehabshill
customers. (Transaction events and accounting entries similar to that A/ c 12551)
12556 SWIFT Transfers Received

This category shall be used to open and summarize individual accounts that record the value of
foreign transfer amounts paid to customers on behalf of correspondent banks who have sent
their payment orders via the SWIFT system.

Debited when:
SWIFT payment orders are received.
Debit: SWIFT Transfer Received xx
Credit: Customer's A/ct or Cash in Teller or SWIFT Transfer Payable xx
Credited when:
The correspondent banks send credit advice or reconciliation division issues a memo that
ascertains the credit of our foreign currency deposit account for the cover of the SWIFT
transfer.
The original Payment Order is returned to the ordering institution at the request of the later
Debit: Nostro Account - X Bank (Y Currency) or SWIFT Transfer Payable xx

Credit: SWIFT Transfer Received xx
Branch /Head office Receivables
12601 Cash in Transit -Foreign Currency
foreign currencies surrendered to NBE, or consigned to branches or other organs of the Bank.
Debited when:
Foreign currencies surrendered to NBE, or consigned to branches or other organs of the Bank.
Debit: Cash in Transit - Foreign Currency xx

Credit Cash Foreign xx
Credited when:
NBE orders our correspondent banks to credit our accounts and same confirmed through the
SWIFT message;
The organ responds branch's or units respective claims through the inter-branch clearance
system of the Bank.
Debit: Correspondent Our A/c - X Bank (Y Currency) or Head Office A/c xx
Credit: Cash in Transit - Foreign Currency xx

12602 Cash in Transit-Local Currency
This category shall be used to open and summarize individual accounts that record the values of
notes and coins denominated in local currency shipped from Branches to Issue Accounts or
Issue branches to NBE or vice versa.
1. Cash Issuing Branches / Cash custody and Distribution
1.1 Cash Issuing Branches /Cash custody and Distribution Vis-a Vis NBE
Until Cash issuing branches recognize the total daily withdrawal and lodgment amount at the
end of the day, the following entries should be made when is withdrawn and lodged from/into
the NBE vault.
1.1.1 withdrawal of Cash From NBE vault
Debit: Cash (Teller)
Credit: Cash in Transit LCY (ETB126020001xxxxx of Cash Issuing Branches /Cash
custody and Distribution)
1.1.2 Lodgment of cash into NBE vault
Debit: Cash in Transit LCY (ETB126020001xxxxx of Cash Issuing Branches /Cash custody
and Distribution)
Credit: Cash (Teller)
The total withdrawal and total lodgment during the day shall be transfer to Mirror Issue
Account with NBE /1000066596587/ at the end of day as depicted below
1.1.3 For total withdrawal during the day
Debit: Cash in Transit LCY (ETB126020001xxxx of Cash Issuing Branches /Cash custody
and Distribution)
Credit: Issue Account with NBE /1000066596587/
1.1.4 For the total lodgment during the day
Debit: Issue Account with NBE /1000066596587/
Credit: Cash in Transit LCY (ETB126020001xxxx of the issuing branch)
After passing the above entries, cash issuing branches should transfer the balance into real
Issue Account maintained with NBE 01613701439000 through online system
Debit for total withdrawal
Credit for total lodgment
1.2 Cash issuing branches / Cash custody and Distribution Vis-a vis other CBE branches
within its domain
1.2.1 Supplying Cash branches
Debit: Cash in Transit LCY (ETB126020001xxxxx of the issuing Branch/ Cash custody and
Distribution)
Credit: Cash (Teller)

1.2.2 Receiving of Cash from Branches
1.2.2.1 From on line branches
Cash: Cash (Teller)
Credit: Cash in Transit LCY (ETB126020001xxxxx of the issuing Branch/ Cash custody
and Distribution
1.2.2.2 From non-on line branch
Cash: Cash (Teller)
Credit: Head office Account/Branch account (in case of cash was issued from Cash
custody and Distribution)
1.3 Between Cash issuing Branches and other bank branches
We should affect the respective Issue Account of banks maintained at the NBE (based on NBE
on line system), when processing receiving and supply.
1.3.1 Supplying Cash to other bank branches
Debit: Cash held with NBE /ETB19019SSSSBBBB/
Credit: Contra Cash Held with NBE /ETB195480001BBBB/
Where SSSS is specific account number of other bank
BBB is issuing branch code
1.3.2 Receiving of Cash from other banks branches
Debit: Contra Cash Held with NBE /ETB195480001BBBB/
Credit: Cash held with NBE /ETB19019SSSSBBBB/
Note No entries and physical cash delivery for request to withdraw shall be made, if the issue
account of other banks maintained at NBE doesnt have sufficient balance
2. Cash Receiving and Sending Branches
1.1 Outlying Branches vis--vis Cash Issuing Branches
1.1.1.1 Receiving Cash From cash issuing branches
Debit: Cash
Credit: Cash in transit LCY /ETB 126020001BBB of cash issuing branch)
1.1.1.2 Sending Cash to cash Issuing Branches
Debit: Cash in transit LCY /ETB 126020001BBB of cash issuing branch)
Credit: Cash
1.2 Addis Ababa Area branches (on line branches ) Vis--vis Cash custody and distribution
1.2.1 Receiving of Cash from Cash Custody & Distribution
Debit: Cash
Credit: Cash In transit LCY /ETB1260200010001/
1.2.2 Sending of Cash to Cash Custody & Distribution
Debit: Cash in Transit LCY /ETB 126020001001/
Credit: Cash

12604 Claims on Head Office, Branches & Districts
This category shall be used to open and summarize individual accounts that record claims for
refund of payments made on behalf of Head Office, districts or branches of the Bank.
Debited when:
H.O. organ, District, or Branch made payment on behalf of other H.O. organ, District office, or
Branch of the Bank,
i. The paying organ shall pass the following entry.
Debit: Claims on Head Office, Branches and Districts xx

Credit: Cash or Customer A/c xx
ii. a) if the responding organ and claiming branches both are online
Debit: Expense account xx
Credit: Claims on Head Office, Branches and Districts xx

(Claiming organ account through online)
b) If the responding organ or claiming branches is non-online
Debit: General expense xx

Credit: H.O. account xx
And send the credit ticket by credit summary on the same date.
Credited when:
The responded claim reaches the claiming branch through the credit summary system of the
Bank. The following respective entries should be accounted in the books of the Bank
accordingly:
Debit: Inter Branch legacy Account xx
Credit: Claims on Head Office, Branches and Districts xx
12605 Claims on Remittance Company from Bank Unit

This category shall be used to open and summarize individual accounts that record claims on
remittance companies (like Xpress, T & Y, Blue Nile, etc) with respect to payments effected on
their behalf as per their respective Payment Procedures.
Debited when:
Payments are affected by the Bank Units to the respective remittance companies' customers
based on their initiations.
Debit: Claims on Remittance Companies from Bank Units xx
Credit: Cash in Teller or Customer's Account xx
Credited when:
The respective claimed unit of the Bank sends a cover ticket through the inter-branch
clearance system of the Bank or claim responded.
Debit: Inter Branch legacy Accounts xx
Credit: Claims on Remittance Companies from Bank Units ... xx
12606 CPO Paid
This category shall be used to open and summarize individual accounts that record payment of
CPOs issued by another CBE branches and claim same from the originating branch.(in the case
at list of one of the branch is non-online Branch)
Debited when:
The CPOs that was issued by other units of the Bank is presented, accepted and cashed at a
branch counter.
Debit: CPO Paid xx
Credit: Cash in Teller or Customer's A/c xx
Credited when:
Issuer of the CPOs responds the claim through the Inter- Branch clearance system of the Bank.
Debit: Inter Branch legacy Accounts xx
Credit: CPOs and Certified Cheques Paid xx
12607 Demand Drafts Paid

his category shall be used to open and summarize individual accounts that record payment of
Demand Drafts issued by another CBE branch originated in the name of the paying

branch.(when the issuing or paying branch in non-online or both are non-online) . (Transaction
events and accounting entries similar to that A/ c 12606)
12611 Outward Blocking-Demands
This category shall be used to open and summarize accounts for Other CBE Branch Cheque
presented and payment made after getting confirmation of deduction of the cheque from the
drawee account by telephone and test(if the amount is above 5000.00)( be used for transaction
made between non-online branch with online branch or another non-online branch.)
Debited when:
The values of cheques that was issued against the demand deposit accounts of a customer at
other branches of the bank (but not within the same city) and presented and en-cashed at the
counters of the unit as well as those blocking made out of a Special Deposit Account through
withdrawal vouchers are debited to this account.
Debit: Outward Blocking Demand xx

Credit: Cash or Customer's Account xx
Credit: commission xx
Credit: Telephone & Telex xx
Credit: postage xx
Credited when:
The branch holding the checking account responds the paying branch's claim through the
Inter-Branch Clearance
Debit: Inter Branch legacy Accounts. ........... ... Xx
Credit: Outward Blocking Demand xx
12612 Outward Blocking-Savings
This category shall be used to open and summarize accounts for withdrawal of money from
Saving Account maintained in other CBE Branch (but not within the same city) and payment
made after getting confirmation of deduction of the amount from the drawee account by
telephone and test (if the amount is above 3000.00) (be used for transaction made between

non-online branch with online branch or another non-online branch.) (Transaction events and
accounting entries similar to that A/ c 12611)
12648 Miscellaneous Accounts
This category shall be used to open and summarize miscellaneous branch/Head office
receivable accounts.
12650 Advance Payment Receivable
This category shall be used to open and summarize any advances granted in the day-to-day
activity of the Bank organs until the source document presented to pass the appropriate
account.
It needs strict and close follow up since it is created for temporary balancing purpose.
Illustration: Suppose that we expect that the price of thermal paper used for printing deal slip is
between birr 20.00 and birr 30.00 and want to buy 10 pieces for our immediate need. We send
our staff to buy the paper by withdrawing birr 300.00 from the branch. The staff purchase by
birr 25.00 each. To record this
Debited when:
Advance payment is made to a staff until the actual expenditure or expense recognized.
Debit: Advance Payment Receivable 300.00

Credit: Cash in Teller 300.00
Credited when:
Settlement is made for given advance payments.
Debit: Stationary & printing Expense 250.00
Debit: Cash in teller 50.00
Credit: Advance Payment Receivable 300.00
Inter-branch Account

12800 Inter Branch
This category shall be used to open and summarize inter branch account held at Head Office
and branches. Such accounts shall automatically be opened at the same time as inter branch
transaction exist.
Illustration: Suppose the customer requested Adama branch for payment of his cheque drawn
at Addis Ketema Branch since the two branches are online Adama Branch debited the customer
account and paid the customer. The following entry passed on the system
i. In the books of Adama Branch

Debit: inter-branch Br. A/c (Adama) XXX
Credit: cash XXX
ii. In the book of Addis Ketema Branch
Debit: Customer Account XXX

Credit: inter-branch Br. A/c (Addis Ketema) XXX
iii. In the books of H.O. accounts
Debit: inter-branch a/c (Addis Ketema) XXX

Credit: inter-branch a/c (Adama) XXX
12801 Inter Branch-Legacy
This category shall be used to open and summarize inter branch account held at Head Office
and the mirror at branches (it shows the balance maintained in Head Office). It is used for
settlement of inter branch transaction between non-online branch with online branch or
another non-online branch and settlement is facilitated through credit summary system. Credit
summary is a form used by branches to authorize CATSCPC to debit their account and instruct
to credit various bank units as per the list i.e. outgoing Credit summary and on the other side
CATSCPC advice the various branches about their account at H.O. is credited and instruct to
debit the mirror a/c maintained at the branch book of accounts.

Activity 11
If we consider CATSCPC as your branch and interbranch account-Legacy of various branches
maintained on Head Office as customer account and assume the customer wants to make a
payment to his five suppliers which maintain accounts in your branch.
i. If you know the wants of the customer, what do you need from the customer?
ii. Do your request authorization from each supplier?
iii. Why do you give advice for each supplier?
iv. Suppose the above customer request you to Debit birr 100.00 each suppliers
account and credit his account by birr 500.00 by stating he has made over payment
last time. What will you do for the customer? Why?
v. How do you relate the above illustration with Credit Summary and Interbranch-
Legacy account handling?
8.1.2 Account payable Account

Margin Accounts
16505 Margins on LCs

This category shall be used to open and summarize individual accounts that record value of
import letter of credits issued by the Bank in favor of a beneficiary abroad by debiting the
importer account and kept as payable in the name of the customer for the purpose of settling
value of the shipping documents. (If the margin to be kept is below 100% it needs prior
approval by the appropriate credit committee)
Credited when:
A certain percentage of margins are collected,
The remaining percentage of document value is collected upon issuance of Delivery Notes
(Order) when requested by the importer.
Debit: Customer Accounts or X Branch Account xx
Credit: Margin Held Payable - X Customer xx
~Debited when:

The related clean shipping documents are presented at the counters of the Bank; the
associated letter of credit is cancelled.
Debit: Margin Held Payable - X Customer xx
Credit: Correspondent Our Account - X Bank (Y Currency) xx
Credit: Customer Accounts or X Branch Accounts xx
Blocked Account
16802 Blocked Amounts Payable
This category shall be used to open and summarize individual accounts that record a specified
amount of money earmarked for account of Government Offices, Companies, Embassies, etc.
brought to the Bank in cash to be kept blocked, until officially released, by the order of
individuals and courts and other appropriate authorities.
Credited when:
A certain amount of money is collected for blocking.
Debit: Cash in teller xx
Credit: Blocked Amounts payable xx
Debited when:
Instruction is received to release the blocking and effect payment.
Debit: Blocked Amount payable xx
Credit: Cash in teller or Customer's Account xx
16803 Blocked Current Account Payable
This category shall be used to open and summarize individual accounts that record the full
balance of customer's current account blocked by court order or by the request of different
organizations, which have the authority to do so.
Debited when:
Instruction received from the appropriate organ (court, Revenue & customs authority, etc)

Debit: Customer account xx
Credit: Blocked Current account payable xx
Credit When:
Release instruction received by the blocking organ and effect payment
Debit: Blocked Current account payable xx

Credit: Cash in teller or Customer's Account xx
16804 Blocked Saving Account Payable
This category shall be used to open and summarize individual accounts that the full balance of
customer's saving account blocked by court order or by the request of different organizations,
which have the authority to do so, or by the account holder him/herself.(the condition and
entry management as illustrated for a/c 16803 above)
17501 Adjustments and Refund

lost cash found in the bank or the excess cash found by bank tellers in Bank's business day.
Credited when:
Lost or excess cash is found.
Debit: Cash in Teller xx
Credit: Adjustment and Refund (Payable) xx
Debited when:
The lost and found cash notes are paid to the rightful owners or the cash surplus is
transferred to other income account (if no claimant presented up to the end of the calendar
month end)
Debit: Adjustment and Refund (Payable) xx

Credit: Cash in Vault or Cash Surplus Collected xx
C.P.O.s issued payable

CPO issued to customers.
Credited when:

We prepare and issue CPO by the order of the customer from her/his account.
Debit: Cash in Teller/or customer a/c xx
Credit: CPOs issued Payable xx
Credit: commission on CPO xx
Debited when:
The CPO presented for payment by the beneficiary or by the ordering customer if beneficiary
returned to her/him.
Debit: C.P.O.s payable xx

Credit: Cash in till or customer account xx
Demand Drafts payable-Legacy

a draft drawn on other branch and the cover is received before the original draft presented for
payment, the amount is credited to this account.(in this case one of the branch is non-online
branch)
Credited when:
The cover of Demand Draft received before the original draft received.
Debit: inter branch legacy account xx

Credit: Demand draft Payable xx
Debited when:
The original Demand draft presented for payment.
Debit: Demand draft payable xx

Credit: Cash in till or customer account xx
TTs Payable
Telegraphic transfers (coded messages) received by telephone in local currency in favor of the
third parties, are credited to this account until paid to beneficiaries.
Example: When Telegraphic transfer received from non-online branch through telephone
Debit: UE TT received xx

Credit: TTs Payable xx
When customer is paid in cash
Debit; TTs payable xx
Credit; cash xx
TTs retransferred
Telegraphic transfer received from non on line branch will be retransfer to the originating
branch through head office after 30days if payee fails to collect the fund .Hence the paying
branch will pass :
Debit; TTs payable xx
Credit; Head office /originating branch xx
The originating branch in the contrary passes the following entries when it received the
retransfer TT;
Debit; Head office accounts xx
Credit; TT retransfer xx
The originating branch will then communicate the sender and pay by passing the following
entries;
Debit; TTs retransfer xx

Credit: Cash xx
17568 Miscellaneous Accounts Payable

This category code shall be used to open and summarize accounts for payable items which
cannot be classified in other payable accounts. (Amounts to be kept in this account shall be
approved by SCSO-accounts, CSM or Branch Manager and also need strict and close follow-up)

Example : From the list of salary payment to be credited to individual customers accounts one
account number may differ or missed .Hence we temporary kept the amount in this account ;
C/A of the salary paying organization xxx

Miscellaneous xxx
18045 Profit and Loss Summary Account

This category shall be used to open and summarize individual accounts that record Profit and
Loss that the Bank retains from its annual net profit. The account shall be zero after the balance
is transferred to head office and respective proration is made at Head office.
Debited when
There is loss and transferred to Head office.
Debit Profit and Loss Summary Account xx
Credit: Various Expenses or Head office Account xx
Credited when:
There is profit and transfer to Head office
Debit: Various Income or Head Office Account xx
Credit: Profit and Loss Summary Account xx
8.1.3 Profit and Loss Accounts

In the on line branches there are no ACCOUNTS" for Profit and Loss heads. Here, the need
shall be category codes to differentiate one Profit and Loss heading from another and then
rules for consolidating Profit and Loss accounting entries. Interest, Salaries and Benefits,
Commission, Charges and General Expense are examples of Profit and Loss headings. Unique
Category codes shall be assigned to these headings to differentiate one from the other. Then by
proper consolidation, Profit and Loss heads shall be grouped. Profit and Loss heads shall be
broadly classified as Product related heads and Overheads
Product related income or expense result out of banking products. For example, Interest on
Loans, Commission on LC, and Charges on Different Account etc. Non product related heads are
Overheads like, Salaries, Employee benefits, General Expenses ... etc.

Product related
Interest Expense
This category shall be used to open and summarize all interest expenses that emanate from
different products.
Debit Interest expense xxx

Credit customer account /internal account xxx
51001 Interest Incomes
This category shall be used to open and summarize all interest income earned from different
products. The system shall automatically raise accounting entries for interest income based on
the given product.
Debit: customer account /internal account xxx

Credit: Interest income xxx
Commission income/ charges
All commissions and charges are product related and therefore each product commissions and
charges shall be defined by which the system automatically raises an accounting entry to the
respective commissions and charges.
52002 Cheque Stop Payment Charges
This category shall be used to open and summarize commissions charged from cheque stop
payments.
Debit: Customer Account xx
Credit: Cheque Stop Payment Charges xx
52003 Cheque Issue Charges

This category shall be used to open and summarize commissions charged from Cheque Issue.
52013 Commission Income on Outward Blocking Local
This category shall be used to open and summarize commissions charged from outward
blocking local.

Activity 12
Please fill the empty box by either stating the Name of the account or the use of the account
Account name Account Use

52015 Service Charges on ECX
52025 Statement Charges
MT/TT /Demand Draft
52101 Commission
This category shall be used to open and summarize commissions
52103 charged from certified cheque issued
52105 Outward SWIFT Charges
52106 earned from Outward Telex Charges.
52107 Outward Remittances charged from outward remittances.
52108 Inward SWIFT Charges
52109 Inward TELEX Charge earned from inward Telex Message charges.
52110 Inward Remittances
Service Charge Collections This category shall be used to open and summarize commissions
52115 on Salary Payments earned from service charge collections on salary
Safe Deposit Box Rental This category shall be used to open and summarize commissions
52116 Incomes earned from safe deposit rentals.
52117 Postage Charge Collected
Commission Incomes on
52118 Visa Payment
52119 Commission Incomes on Foreign Cheque
This category shall be used to open and summarize commissions earned from foreign cheques
charges.
52145 Others Commission and Charge
This category shall be used to open and summarize commissions earned from others product
related charges.

Non product related PL
Employee salaries
60002- Salaries Expense-Clerical
This category shall be used to post monthly gross salaries paid to permanent clerical employees
of the Bank.
Debit: salaries Expense clerical
Credit: Various Accounts (such as Employees Pension Contributions
Payable, Income Tax Payable, Staffs account, etc.)
60005 Salaries Expense-Non Clerical
This category shall be used to post monthly gross salaries paid to permanent non clerical
employees of the Bank.
60008 Salaries Expense-Clerical Other Organization
This category shall be used to post monthly gross salaries paid to permanent clerical employees
of other organizations credit association staffs.
60011 Salaries Expense-Non Clerical Other Organization

This category shall be used to post monthly gross salaries paid to permanent non-clerical
employees of other organizations like credit association staffs.
Employee Benefit
60201 Medical Expenses
This category shall be used to post costs incurred for medicines, medical treatments and
hospital bills for Bank's permanent (but not retired) employees with approval from appropriate
official of the Bankers' Clinic or the branch or other unit of the Bank.
Debit: Medical Expense xxx
Credit: Customer account /cash xxx

60205 Medical Expenses for Pensioned Staff
This category shall be used to post costs incurred for medicines and medical treatments in
relation to Bank's retired (pensioned) employees.
60209 Residential Rent Expense
This category shall be used to post the fixed periodic rental payments made directly to the
owners of the housing quarters leased by the Bank to provide its specific employees with free
furnished quarters in cities where the Bank does not own a living quarter.
60213 Staff Insurance Expense
This category shall be used to post the insurance premiums paid to insurance companies on the
group personal accident insurance coverage for employees of the Bank.
60217 Bank's Pension Contribution

This category shall be used post the Bank's contribution to the pensions plans of its permanent
employees paid to the appropriate social security organs of the Government and is computed
on the basic staff salaries.
60221 Pension Contributions Other Organization
This category shall be used to post other organization contribution to the pensions plans of its
permanent employees paid to the appropriate social security organs of the Government and is
computed on the basic staff salaries.
60225 Uniform Expenses
This category shall be used to post costs of such uniforms as suits, dresses, ties, shirts,
overcoats, shoes, boots, umbrellas, etc. supplied to clerical and non-clerical staffs of the Bank
who are entitled to receive same
Allowances
This category includes;

60401 Acting Allowance
60403 Acting Allowance Other Organization

60405 Cash Indemnity Allowance
60409 Disturbance Allowance
60413 Fuel Allowance
60417 Housing Allowance
60425 Representation Allowance
60429 Utility Allowances
60437 Verification Allowance
60441 Shifting Allowance
60445 Cash Office Girl/Boy Allowance
60449 Project Allowance
Other Expenses
60804 Overtime Pay-Clerical

This category shall be used to post the amount of payments made to clerical employees of the
Bank for the work they have performed after the normal working hours and/or during
weekends and holidays.
60808 Overtime Pay-Non Clerical

This category shall be used to post the amount of payments made to non clerical employees of
the Bank for the work they have performed after the normal working hours and/or during
weekends and holidays.
60810 Overtime Pay-Clerical Other Organization

This category shall be used to post the amount of payments made to clerical employees of
other organization (Credit association) for the work they have performed after the normal
working hours and/or during weekends and holidays.
60812 Accrued Leave Pay
This category shall be used to post the values of unutilized staff leave pay including the
proportionate pension contribution accrued in the name of the staffs of the Bank.
60816 Bonuses -Clerical

This category shall be used to post the amounts paid to clerical staff of the Bank in addition to
the normal pay as a reward on CBE's annual profitability and specific employee's good
performances.

60820 Bonus-Non Clerical

This category shall be used to post the amounts paid to non-clerical staff of the Bank in addition
to the normal pay as a reward on CBE's annual profitability and specific employee's good
performances.
60824 Cash Prize Award

This category shall be used to post the amount paid to those that provide extra-ordinary
support to the Bank in its operation as approved by the authorized officials.
60828 Driver's Bonus

This category shall be used to post the fixed amount approved and paid as an incentive to
entitled drivers who have not caused any car accidents during a period.
60832 Funeral Expense

This category shall be used to post a lump sum amount paid to families of deceased employee
of the Bank.
60836 Maternity Pay

This category shall be used to post the fixed amount paid to female employees of the Bank who
gave birth to a child.
60844 Retirement Award

This category shall be used to post a fixed cash payment made to employees who leave the
Bank due to retirement.
60848 Service Pin Award
This category shall be used to post the costs of pins made of gold or other materials awarded to
those employees who served the Bank for specific period of time or external parties as
approved by the appropriate levels of management.
60852 Severance Pay This category shall be used to post one-time compensations paid to the
permanent employees on the termination of their employment contract with the Bank (per the
latest and prevailing labor laws of the country and the collective agreements).
60860 Bonus-Clerical Other Organization

This category shall be used to post the amounts paid to clerical staff of other organization (such
as credit association) in addition to the normal pay as a reward on profitability and specific
employee's good performances.

60864 Bonus-Non Clerical Other Organization

This category shall be used to post amounts paid to non clerical staff of other organization
(such as credit association) in addition to the normal pay as a reward on profitability and
specific employee's good performances.
62001 Advertisements and Publicity Expense

This category shall be used to post the costs associated with advertisements made in
newspapers, magazines, television and radio broadcasting and the production of calendars,
notebooks, 'agendas', wallets, etc.
62002 Amortization Expense

This category shall be used to post the periodic amortization of costs associated with the
various Banks' intangible assets and prepaid leases.
62003 Board Fee Incurred

This category shall be used to post the amounts of remunerations paid to the members of the
Board of Directors of the Bank both in the form of monthly fixed fees and periodic bonuses.
62004 Branch Inauguration Expense

This category shall be used to post all such costs as cost of printing invitation cards, booklets
and pamphlets commemorating the occasion, cost of meals and beverages incurred while
introducing the opening of a new branch and other similar costs.
62005 Cheque Book Printing Expense

This category shall be used to post excess value of cheque book stock costs over the amount
collected from demand deposit account holders for the supply of the cheque books.
62006 Cleaning Supplies Expense

This category shall be used to post the cost of such cleaning supplies as brooms, soaps, alcohol,
washing rugs, paper towels, wax detergents; etc bought for Bank's offices use. This category
shall be used to post amount of service fees paid to professional consultants for their
consultation services.
62008 Correspondent Banks' Charges

This category shall be used to post the fees charged to our demand deposit accounts with
correspondent banks, but not identified with a specific customer, with respect to services

rendered such as investigations over our accounts with them, balance confirmations for
external auditors, and Fey trading and service charges paid the National Bank of Ethiopia.
62009 Currency Transportation Expense

This category shall be used to post such costs as fuel, wages for loading and unloading daily
laborers, airfreight and Perdiem paid to drivers and guards incurred in connection with the
transportation of currencies from a center or a branch to another.
62010 Donations and Contribution Expense

This category shall be used to post Bank's donations and contributions made to governmental
and non-governmental organizations or individuals in a charity and other similar situations.
620 Electronic Data Transfer Expense

This category shall be used to post costs related to the periodic electronic data communication
services for broad band internet connection, ROUTER, SWIFT etc,
62012 Entertainment Expense

This category shall be used to post costs incurred for such servings as food and beverages to
entertain Bank's customers and officials of the correspondent banks and local guests by
authorized officials of the Bank.
62013 External Audit Expense

This category shall be used to post the amounts of fees paid or to be paid (in case of setting
aside a provision amount of audit fees) to the Bank's external auditors for the assurance
services that they provide the management of the Bank.
62014 Extraordinary Losses
This category shall be used to post unusual and material losses from events and transactions,
which are distinct from the ordinary activities of the Bank and occurring infrequently.
62015 Generator Running Expense

This category shall be used to post periodic cost of running the Bank's or branch's own
generators and the share of generator running expense incurred on rented buildings for Bank's
units that do not have their own generator.
62018 Insurance Expenses

This category shall be used to post all insurance premiums and related costs incurred by the
Bank, either to renew existing insurance policies or purchase new ones to cover the Bank's

property and other risks such as comprehensive motor insurance, workmen's compensation,
third party liability, various cash insurance policies, etc, with the exception of staff Insurance.
62019 Legal Expenses

This category shall be used to post attorneys' part-time salaries and other related legal
expenses incurred on behalf of the Bank, including those related to debt recovery or other
court cases, which cannot be identified and debited to a particular loan and other asset
accounts for various reasons.
62025 Maintenance &Repair Expense - Premises
This category shall be used to post the costs of materials and identified labor and other costs
applied in the maintenance and repair of Bank's own premises that do not increase the useful
life of the premises.
62026 Maintenance& Repair Expense - Computers& Accessories

This category shall be used to post the costs of parts and any identified labor costs in the
maintenance, repair and servicing of Bank's computer systems and associated accessories that
do not increase the their useful life.
62027 Maintenance& Repair Expense - Furniture & Fittings

This category shall be used to post the costs of parts and identified labor costs in the
maintenance, repair and servicing of Bank's furniture and fittings that do not increase the
useful life of the fixed assets.
62028 Maintenance & Repair Expense - Motor Vehicle

This category shall be used to post the costs of spare parts and identified labor costs in the
maintenance, repair and servicing of Bank's motor vehicles, motorcycles, trailers and bicycles
that do not increase the useful life of such fixed assets.
62029 Maintenance& Repair Expense - Office & Other Equipment

This category shall be used to post the costs of parts and identified labor costs in the
maintenance repair and servicing of Bank's own office and other equipment that do not
increase the useful life of such fixed assets.

62031 Money Bag Expense
This category shall be used to pos costs of empty moneybags supplied to the Bank unit by Head
Office or District Offices and the value of bags supplied with coins by NBE or other branches of
the Bank simultaneously, a single entry reflecting the value of coin bags received will be
accounted to have record of the number of moneybags received by the unit.
62032 Motor Vehicle Inspection & Circulation Fee Incurred

This category shall be used to post the annual fees paid for the inspection and circulation of
Bank's motor vehicles.
62033 Municipal License& Sanitation Fee

This category shall be used to post the annual trade license fees as well as fees paid to
municipalities for business licenses (if any) or the annual sanitation fees paid to the various
local city councils.
62034 Office Rent Expense

This category shall be used to post the amount of rental expenses incurred during CBE's
accounting period for buildings or premises being rented and used by the Bank.
62035 Per-diem and Travel Expense

This category shall be used to post the amount of traveling or per-diem allowances paid to Bank
staff on duty travels and hotel accommodations.
62036 Petrol and Lubricant Expense

This category shall be used to post the costs of petrol, lubricants, and other similar costs
including the washing costs incurred associated with the running and greasing of Bank's
vehicles.
62037 Postage Expense

This category shall be used to post Bank's annual Post Office box rental fees and postage
expenses incurred to mail different items to its Branches, Customers and Foreign
Correspondent Banks.
62038 Revenue Stamp Expense

This category shall be used to post costs of revenue stamps affixed on Bank's own cheques,
applications, lease agreements etc.

62039 Sponsorship Expense
This category shall be used to post the costs of sponsoring local events and projects by the
Bank.
62041 Stationery and Printing Expense

This category shall be used to post the costs of printing of various bank documents, and costs of
such office supplies as staplers, perforators, rulers, ink, ribbons, cartons, carbon papers, writing
pads, pen, pencils, supplied by the appropriate organ of the Bank or purchased using its imprest
funds.
62042 Subscription Expense

This category shall be used to post the payments of periodic subscription charges to issuers of
newspapers, magazines and periodicals.
62043 Telephones, Telegram & Telex Expense

This category shall be used to post the values of periodic bills of telephone, telegram and fax
charged by the providers of these services against the Bank as well as the annual radio license
fees paid to the appropriate organ of the government and the periodic rental charges on
residential telephone lines of district and branch managers' in outlying branches.
62044 Transportation Expense

This category shall be used to post the costs of air tickets, buses, train, ship or boat fares
incurred in connection with staff duty travel and expenses incurred by the Bank to transport an
employee transferred from one branch to another.
62045 Wage Expense

This category shall be used to post wage paid to daily laborers and contract employees, such as
office boy / girl, messengers, guards, cleaners, etc.
62048 Utility Expenses

This category shall be used to post the values of bills paid for cost of water and electricity
consumed by Bank's office, warehouse and staff residential quarters that do not have separate
utility meter.
62998 Miscellaneous Expenses

This category shall be used to post values of diverse and infrequent expenses that do not
conveniently fall under any of the other expense sub accounts.

Off- Balance sheet
Memorandum Accounts and Contingent Assets
Those accounts of the Bank that do not justify to be included in the balance sheet accounts and
which are mainly kept for record purpose or to serve as reminders are recorded under
memorandum accounts and those accounts by their very nature have the potential of being
asset.
Commitments and Contingent Liability Accounts
The transactions that have the potential to turn liability to the Bank are recorded in these
accounts. The accounts are reminders under contingent accounts.
For both memorandum and contingent accounts single debit /credit tickets are used as source
Document.
8.2 Suspense Account Management
A suspense account is an account used temporarily to carry doubtful receipts/Receivable

accounts / and disbursements /Payable accounts /or discrepancies pending their analysis and
permanent classification
A suspense account is an account in the general ledger in which amounts are temporarily
recorded. Suspense accounts should be cleared at earliest possible time, because they are for
temporary use. It can also refer to transactions in branches or correspondent bank which do
not end within the accounting system or single branch or head office organ, but will be kept
pending clearance or settlement. As per NBE directive SBB/43/2008, banks should keep
provision annually on the basis of aging of their suspense accounts. Currently the required
provision is calculated:
Suspense Aging Classification Applicable Rates for Provision

30 days and below 1%
31 days-90 days 3%
91 days -180days 20%
181 days-365/6 days 50%
Above one year 100%
Therefore, failure to settle the suspense account in timely manner will force the bank to tie its
assets on provisions.

Components of Suspense Accounts
Un-cleared effects-local
Transactions that need to be cleared within the domestic branch network or within the
domestic inter-bank clearing system
Account receivable
Items that are owed by customers/staff such as double payments, misappropriated

money, etc. which are expected to be converted into cash within the accounting period
Accounts payable
Items that are payable to customers or owed by the bank, and expected to be settled within the
accounting period are categorized in this general ledger category.
Activity 13
Please state the various tasks branch ought to take to effectively clear outstanding items in following suspense
accounts
TTS received
Blocking outward
CPOs payable
Claim on head office and branches

LMTS payable
Miscellaneous payable
Miscellaneous Receivables
Suggestion for timely suspense clearance

1. Receive and retain correct address of Customers
2. Correctly insert branch code and Account number
3. Examine the balance for daily credit summary with that of the system balance
4. Upload credit summary at the end of each day or early in next morning
5. Check and down load incoming summary through the FTP or respective district emails
6. Settle the downloaded credit summary or with ticket credit summary with in the day received
7. When retuning values from the credit summary, clearly narrate the H.O credit summary total,
credit summary date, respective Reference number, the intended branch /organ the value
retransferred /returned and the reason for returning
8. Before returning cover for minor discrepancies contact the originating for rectifying the issue
through telephone conversation.
9. Retain copies of source documents for blocking outward, claim on H.o and branches and other
suspense items
10. While dispatching the claim ticket & blocking ticket try to confirm the responding branch/organ
/signature, telephone conversation or Memo)
11. Communicate payees or drawers for long outstanding CPOs (Call or write letters whichever is
convenient, however formal reminders are necessary if the items persist to be outstanding in our
books/
12. Dispatch the claim & blocking tickets to post-office on daily basis.
13. Check the outstanding items in TTs payable and return the items which are unpaid for more 30
days to respective originating branch
14. Check the outstanding TTs retransfer and LMTS payable, and contact the remitter /sender / so
they can collect the fund as soon as possible.
15. Update and follow-up Head office reconciliation drawing summary sheet /make every effort to
the timely settlement of the outstanding items

Write off and Write Back
Write off means removing a receivable considered irrecoverable or asset whose probability of
recovery is remote from the accounts of a business by debiting a corresponding expense
account, while write back means the act of crediting a payable item to income.
Conditions required for write-back:-
When a local transfer of money is not collected by the beneficiary concerned and remains
unclaimed by the remitter for period of two years or above.
When an incoming foreign transfer of money is not collected by the beneficiary concerned
and is not claimed by the remitting foreign bank for a period of two years or more.
When an outgoing foreign transfer is not collected by the beneficiary abroad and is not
claimed by the remitter for a period of two years or more.
When a credit balance under Accounts Payable-Reconciliation remains unclaimed for a
period of two years or more.
When any other payable item remains unclaimed for a period of two years or more
despite reasonable effort by the Bank to settle the payable item.
Initiation and processing of write-back
Proposals to write back outstanding payable items can be initiated by Branches, Finance
Process, TS Process, etc.
The following actions shall be taken by the branches concerned to process the write-back of
payable items.
Identify payable items to be written-back

Complete the required evidentiary/ supporting documents or forward valid and
strong justification/s in the absence of evidentiary documents.
Send the write-back proposal, together with the documents to the district office
For each write-back proposal, prepare and enclose a statement justifying the
proposal. The statement should at least:
Explain why the payable item could not be settled
Give a full account of the efforts made by the initiating organ to settle the item; and
Provide the reasons for recommending the write-back

Conditions for writing off receivables
o If a claim from a correspondent bank proves too difficult to collect.

o When negotiable instruments related to foreign transaction are lost in transit
o When investigation charges regarding claims against correspondent exceed the value of
the claims
o When , in case of frauds, when the fraudster has no property or when his the value of
his property is less than the cost of recovery
o When the whereabouts of the fraudster is not known
o When the fraudster has no property
o When the property disposed covers only portion of the receivable
o When statutory period of limitation elapses
o When the final appellate court rules against the bank
Dechatu
Arba
Sululeta
Minch
Addis Head Wonji

Ketema
office
Hiremata Sebeta
Molale
8.3 Head office Reconciliation
All organizations need to regularly reconcile their general ledger (GL) accounts as a key
function of the finance and accounting teams. Given the time and effort spent on
reconciliations within organizations and the important role they serve, it is critical that the

process is efficient and effective Reconciliation therefore forms a fundamental component of
an administrations internal control system
The branch is responsible
Ensuring the timely completion of all reconciliations

Adequately resolving long outstanding items by due dates and providing guidance to
preparers and reviewers
Providing a high level review to ensure that issues are appropriately identified and
addressed
In order to effectively control head office account, both CATS CPC and the branch need account
statements and drawing summary sheet.
1. Statement of account: Branches and CATS CPC are supposed to exchange
statement of account every month. The statement shows every transaction
made to the account.
2. Drawing Sheet: Drawing sheet is a four quadrant sheet that summarizes details of
transactions that are recorded at the one end but missing from the statements of
account or drawing sheet of the other. Drawing sheets are also prepared monthly and
have to accompany the statement of account. Sample of drawing sheet is given below.
Credit balance ledger as of Debit balance ledger as of

Credit balance statement Debit balance statement
Debit items checked after
Credit items checked after date date
we debit they don't credit we credit they don't debit
Date Particulars Amount Date Particulars Amount
sub total 0.00 sub total 0.00

They debit we don't credit They credit we dont' debit
sub total 0.00 sub total 0.00

Grand total 0.00 Grand total 0.00

1. Who
Segregation of duties is extremely important. The key rule is whoever does the transaction does
not reconcile or review the account.
2. When
Every month
3. How
Currently using Microsoft Excel
4. What
The un reconciled items
The balance of the account
H.O reconciliation Process

1. Gather or print reports for current month (Branchs Head office account statement and
CATs CPC Branch account statement)
2. Open last months reconciliation drawing summary sheet and save as the new month
3. Change the date to the current month and year
4. Change the Balances as per the Ending Account Balance of respective statements
5. From we debit they dont credit last month drawing summary sheet side check on CATs
CPC statement if CATS CPC adjusted / posted and the write the respective dates on the
corresponding statements for items found and delete these items from current month
drawing summary sheet
6. From we credit they dont credit last month drawing summary sheet side check on CATs
CPC statement if CATS CPC posted /adjusted and write the respective dates on the
corresponding statement for items found and delete the items from current month
7. From They debit we dont credit last month drawing summary sheet side check on
branchs statement if the branch adjusted/posted and write the respective dates on the
8. From The credit we dont debit last month drawing summary sheet side check on
branchs statement if the branch posted /adjusted and write the respective dates on the
9. From CATs CPC branch account statement check debit side to that of credit side on
Branchs head office statement ,write the respective dates on the corresponding
statement for items found and insert the un reconciled items with all their particular
on They debit ,we dont credit side in the order of transactions date .
10. From CATs CPC branch account statement check Credit side to that of debit side on
Branchs head office statement ,write the respective dates on the corresponding
on They credit ,we dont debit side in the order of transactions date.

11. From Branchs head office account statement check debit side to that of credit side on
CATS CPC Branch account statement ,write the respective dates on the corresponding
on We Debit ,they dont credit side in the order of transactions date.
12. From Branchs head office account statement check Credit side to that of Debit side on
CATS CPC Branch account statement ,write the respective dates on the corresponding
on We credit ,they dont debit side in the order of transactions date.
13. If the reconciliation has been properly made , the balance the left side of the drawing
summary sheet (Credit balance +we debit they dont credit +they debit we dont credit )
should equate to the balance of right side of the drawing summary sheet (debit balance
+we credit they dont debit +they credit we dont debit )
14. After concluding the preparation of drawing summary branch concerned organs
(branches and CATs CPC) should make every to adjust and settle the items in drawing
summary as soon as possible.

Activity 14
Please reconcile branch and head office accounts using the following statements prepared
for the month of January 2014
Account : ETB12898000xxx Month Jan-14

Customer : Head of account at BRANCH
Currency : ETB
Value date Description Amount Balance
Balance at Period Start 0.00 0
1-Jan-14 LMTS Deposit 1,750.00 1,750.00
4-Jan-14 LMTS Deposit 18,277.00 20,027.00
5-Jan-14 LMTS Deposit 200.00 20,227.00
6-Jan-14 LMTS Deposit 29,750.00 49,977.00
8-Jan-14 LMTS Deposit 1,600.00 51,577.00
9-Jan-14 LMTS Deposit 8,850.00 60,427.00
10-Jan-14 LMTS Deposit 500.00 60,927.00
11-Jan-14 LMTS Deposit 33,843.87 94,770.87
12-Jan-14 LMTS Deposit 1,000.00 95,770.87
13-Jan-14 LMTS Deposit 2,000.00 97,770.87
14-Jan-14 LMTS Deposit 977.00 98,747.87
16-Jan-14 H.o sum 14.01.14 -11,000.00 87,747.87
17-Jan-14 LMTS Deposit 3,000.00 90,747.87
18-Jan-14 H.o 18.01.14 -5,849.48 84,898.39
19-Jan-14 Transfer 35,145.66 120,044.05
20-Jan-14 LMTS Deposit 8,250.00 128,294.05
22-Jan-14 H.o sum 20.1.2014 -20,000.00 108,294.05
23-Jan-14 LMTS Deposit 2,100.00 110,394.05
24-Jan-14 LMTS Deposit 10,569.40 120,963.45
25-Jan-14 LMTS Deposit 5,600.00 126,563.45
27-Jan-14 LMTS Deposit 86,629.27 213,192.72
28-Jan-14 LMTS Deposit 500.00 213,692.72
30-Jan-14 LMTS Deposit 1,400.00 215,092.72
30-Jan-14 H.o sum 24.1.2014 -415,250.00 -200,157.28
30-Jan-14 LMTS Deposit 500.00 -199,657.28
30-Jan-14 Transfer 23,537.14 -176,120.14
Balance -176,120.14

Account Statement Month Jan-14

Account : ETB128980xxx0001
Customer : BRANCH account at H.O
Currency : ETB
Balance at Period Start 0.00 0
1-Jan-14 Branch y cr sum -33,843.87 -33,843.87
5-Jan-14 Branch y cr sum -200.00 -34,043.87
11-Jan-14 Credit summary DC -29,750.00 -94,620.87
14-Jan-14 Credit summary FT 11,000.00 -86,620.87
17-Jan-14 credit 45,000.00 -41,620.87
18-Jan-14 Transfer 5,849.48 -35,771.39
19-Jan-14 Transfer 5,849.48 -29,921.91
20-Jan-14 LMTS Deposit 8,250.00 -21,671.91
21-Jan-14 credit summary FT -20,000.00 -41,671.91
22-Jan-14 Cash Deposit 20,000.00 -21,671.91
23-Jan-14 credit s summary FT -32,141.00 -53,812.91
24-Jan-14 Credit summary FT -10,569.40 -64,382.31
Balance at Period end -194,157.24

Activity 15
Using the following head office, branch statement and last month drawing summary,
please prepare drawing summary for the month of Feb 2014
Account : ETB12898000xxx Month Feb-14

Customer : Head of account at BRANCH
Currency : ETB
Balance at Period Start

-176,120.14
2-Feb-14 H.o 01/21/2014 20,000.00 -156,120.14
2-Feb-14 H.o 01/23/2014 32,141.00 -123,979.14
3-Feb-14 LMTS Deposit 153,907.00 29,927.86
4-Feb-14 LMTS Deposit 28,579.50 58,507.36
4-Feb-14 Transfer -785,754.66 -727,247.30
12-Feb-14 LMTS Deposit 12,752.17 -714,495.13
13-Feb-14 Transfer -280,500.00 -994,995.13
14-Feb-14 LMTS Deposit 21,278.68 -973,716.45
17-Feb-14 Transfer 12,970.43 -960,746.02
17-Feb-14 Transfer 46,069.75 -914,676.27
20-Feb-14 Transfer -508,453.93 -1,423,130.20
20-Feb-14 Transfer 29,088.13 -1,394,042.07
20-Feb-14 Transfer 54,033.98 -1,340,008.09
21-Feb-14 LMTS Deposit 19,718.50 -1,320,289.59
25-Feb-14 Transfer -77,000.00 -1,397,289.59
25-Feb-14 LMTS Deposit 10,900.00 -1,386,389.59
25-Feb-14 Transfer 2,102,471.85 716,082.26
26-Feb-14 Transfer 621,048.40 1,337,130.66
26-Feb-14 LMTS Deposit 24,276.65 1,361,407.31
27-Feb-14 Transfer -94,586.00 1,266,821.31
Balance
1,337,130.66

Account : ETB128980xxx0001 Month Feb-14
Customer : Branch account at H.O
Currency : ETB
Balance at Period Start

-194,157.24
branch y cr sum
2-Feb-14 1/1/2014 -1,750.00 -195,907.24
branch y cr
2-Feb-14 sum1/14/2014 -977.00 -196,884.24
branch y cr
2-Feb-14 sum1/17/2014 -3,000.00 -199,884.24
branch cr sum
2-Feb-14 1/20/2014 -8,250.00 -208,134.24
branch cr sum
2-Feb-14 1/23/2014 -2,100.00 -210,234.24
branch cr sum
3-Feb-14 1/30/2014 -1,400.00 -211,634.24
3-Feb-14 branch sum 1/30/2014 -23,537.14 -235,171.38
5-Feb-14 branch y cr sum -10,900.00 -246,071.38
13-Feb-14 Transfer -12,970.43 -271,793.98
19-Feb-14 Transfer -29,088.13 -394,735.44
20-Feb-14 Transfer -46,069.75 -440,805.19
20-Feb-14 Transfer -54,033.98 -494,839.17
22-Feb-14 credit 77,000.00 -571,746.17
25-Feb-14 credit 508,453.93 -63,292.24
25-Feb-14 Transfer -621,048.40 -684,340.64
26-Feb-14 Transfer -94,586.00 -778,926.64
26-Feb-14 credit 785,754.66 6,828.02
27-Feb-14 credit 280,500.00 287,328.02
28-Feb-14 Transfer -2,102,471.85 -1,815,143.83
28/02/14 adj1/17/2014 -45,000.00 -1,860,143.83
28-Feb-14 adju1/19/2014 -5,849.48 -1,865,993.31
28/02/14 adju 1/20/2014 -8,250.00 -1,874,243.31
Balance at Period Start -1,874,243.31


Y branch
Drawing summary for the month of jan 2014
Credit balance ledger as of Debit balance ledger as of 176,120.14
Credit balance statement Debit balance statement 194157.24
Debit items checked after
Credit items checked after date date
we debit they don't credit we credit they don't debit
H.o sum
30-Jan-14 24.1.2014 415,250.00 1-Jan-14 LMTS Deposit 1,750.00
14-Jan-14 LMTS Deposit 977.00
17-Jan-14 LMTS Deposit 3,000.00
30-Jan-14 Transfer 23,537.14
sub total 415,250.00 sub total 41,014.14

They debit we don't credit They credit we dont' debit
8-Jan-14 Branch y cr sum 1,600.00 17-Jan-14 credit 45,000.00
credit summary
21-Jan-14 FT 20,000.00 19-Jan-14 Transfer 5,849.48
credit s
23-Jan-14 summary FT 32,141.00 20-Jan-14 LMTS Deposit 8,250.00
30-Jan-14 Branch y cr sum 1,400.00
sub total 55,141.00 sub total 59,099.48

Grand total 470,391.00 Grand total 470,391.00

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CBE Training Manual

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COMMERCIAL BANK OF ETHIOPIA

CUSTOMER ACCOUNTS AND

CATs Technical Training Manual Page ii

CATs Technical Training Manual Page iii

CATs Technical Training Manual Page iv

CATs Technical Training Manual Page v

In a modern business environment Commercial banks do perform a number of functions which

Secondary or Ancillary functions are two types:

CATs Technical Training Manual Page 1

1.2 History of Banking in Ethiopia

CATs Technical Training Manual Page 2

CATs Technical Training Manual Page 3

TO BECOME A WORLD CLASS COMMERCIAL BANK BY THE YEAR 2025.

WE ARE COMMMITED TO BEST REALIZE STAKHOLDERS' NEEDS THROUGH ENHANCED

List and discuss CBEs corporate values

CATs Technical Training Manual Page 4

Core and Support Processes of the CBE

Customer Accounts and Transaction Services(CATS)

Human Resource Management

CATs Technical Training Manual Page 5

Organizational structure of CATs process

CATs Technical Training Manual Page 6

1.4 General Learning Issues

The General objectives of this training manual are;

CATs Technical Training Manual Page 7

CATs Technical Training Manual Page 8

Types of Customers and Accounts

At the end of the chapter, trainees will able to;

Correctly identify the various type of customers

According to CATS procedure, the types of customers are;

a) Prospect customer- is a proposed (potential) customer in which the bank assumes to

c) Corporate customers- it is any firm; organization, enterprise, associations, government

CATs Technical Training Manual Page 9

List of customer (A) Indicate individual or corporate customers

Private limited company

Minors (through parent/s/ or Guardians

Interdicted persons through Guardian

Federal and regional Governments

Micro Finance institutes

2.2 Types of customer Accounts

CATs Technical Training Manual Page 10

Where, S= denotes saving

1. What are the most important saving motives?

2. What are the advantages of saving in formal institutions?

CATs Technical Training Manual Page 11

2.2.1 Saving account

No restrictions on the number and amount of deposit

Encourages saving habits

CATs Technical Training Manual Page 12

A. Women saving Account

The account is provided only for women.

Account holders enjoy higher interest rate of 5.125%

B. Youth Teen Account

The account is opened for youth-teen below the age of 18

CATs Technical Training Manual Page 13

D. Mortgage/special / saving Account

A special saving account for the purpose of purchasing residential house

CATs Technical Training Manual Page 14

It is a non interest bearing bank account

It facilitates business transactions

Overdraft facility- it is a credit arrangement whereby current account holders allowed to

CATs Technical Training Manual Page 15

I. Special Demand Deposit Account

A special-demand deposit account is a non-interest-bearing account that is opened to fulfill the