Banks are one of the most regulated financial institutions around the world. The banking sector needs to ensure that all its customers comply with regulatory requirements. Compliance is very important and central banks and other global watchdogs provide stringent oversight.
- Deposit Slip
- Debit Card
- Credit Report
- Bank Statement
- Loan agreement form
- Letter of Credit (DLC)
- Bank Pre-Advice
- Bank Guarantee (BG)
- Bank Note
- Account Opening Form
- Withdrawal Slip
- Fixed Deposit Receipt
- Demand Draft
- Demand Draft Request Form
- Account Closing Form
- Reference Form
- Account Upgrade Form
- Transfer Request Form
- Card Request Form
Every business needs to know and understand the preparation of accounting documents like the balance sheet and income statement. In terms of documents, any accountant will tell you how important receipts or invoices are. What about the documents used in banking? Like in accounting, there are several documents that one might not miss if they were dealing with a bank. Here we list some of these tools. Documents most commonly used in banking:
1. Deposit Slip
The deposit slip is a common banking document that anyone depositing cash into an account will need. It is a form on which the depositor indicates the date of the transaction, the depositor’s name, account number, and amount deposited. Here are the benefits of deposit slips:
- Bank records: Banks rely on deposit slips to maintain a ledger of deposited funds
- Proof of deposit: The customer can also use it as proof that the bank received the funds if the deposit was incorrectly counted.
- Provides useful details: The slip contains the depositor’s name, the date, the depositor’s account number, and the amount.
- The deposit slip also indicates whether the depositor made the deposit using cash or a check. This information is useful when there is a need for an audit.
- If you use a check to make a deposit, the term “cash received” appears where you may indicate a cash amount that you want from the check you are depositing.
- You should sign the deposit slip before presenting it to the teller. The teller must also sign the deposit slip, for it to become valid. After signing, the teller must issue you a receipt for that deposit.
- You can use deposit slips to transport money, whereby you deposit cash in one branch and then withdraw it from another bank branch.
- Clients can also use deposit slips to make direct payments, instead of issuing checks, when they need to prove they made payments on time, such as when paying rent, taxes, fines, etc.
2. Debit Card
Banks issue debit cards to account holders. The card helps the individual gain access to their money electronically. Most people use debit cards to withdraw money from automated teller machines (ATMs) or to pay for goods or services at shopping malls and other point-of-sale locations.
The debit card allows for debit or credit transactions on an individual’s account. Unlike credit cards, debit cards protect you from going into debt. However, in a few cases, you may incur a small debt if you signed up for overdraft protection. But the negative balance is usually incredibly small.
Using a debit card comes with some risks on the part of the user. For instance, if it gets lost, someone may use it to make an online purchase.
Fortunately, most banks allow for a chargeback, if the user reports the debit card loses promptly, and the fraudster fails to provide the right billing address.
Some companies may not accept debit cards, instead preferring users to pay via credit cards, because banks charge them higher fees when users use debit cards to make payments.
Debit cards expire after a certain period, which appears on the front side of the card, after which the user must apply for a replacement card.
Some banks may charge you a debit card maintenance fee monthly or annually, while others may only charge you a fee when you renew your debit card.
The fact that debit cards typically have daily purchase limits also ensures you cannot spend too much money with the card within a short time. Some credit cards also offer valuable reward programs. For example, they can give you discounts on your purchases.
3. Credit Report
This is a detailed report showing the credit history of an individual. Banks rely on these reports to determine the creditworthiness of anyone seeking a loan facility. Credit reports are typically divided into the following 4 sections:
The first section contains the customer’s personal information. In some cases, you may also find variations of the client’s Social Security number or name. This happens if a lender or another entity incorrectly reported the information.
After the top section, you find precise details on lines of credit. The tradelines or lines of trade often form the bulk of the report.
This is where public records typically appear. If there are issues on judgments, tax liens, and bankruptcies, you find them here.
You find the entities that recently requested to see the report for any reason at the bottom of a credit report. For example, when you apply for personal loans, the records appear here. Another document closely related to the credit report is a Soft Probe. A Soft Probe is a document banks prepare and use to indicate a customer’s creditworthiness. Banks also use the document to confirm whether a given customer’s account is in good standing.
4. Bank Statement
The bank statement is a financial document used in the banking sector to show a summary of account transactions. The document is usually prepared every month and takes into account transaction details in a deposit or a credit card account. The statement contains particulars such as date, type of transaction, amounts involved, and balances. Bank statements are incredibly useful documents for any business or individual. You can use the document in the following ways:
- Check your bank balance and reconcile your accounts
- Identify errors or fraudulent activities
- Track your income and expenditure
- Get to know your net worth
- Help you to document your finances
5. Loan agreement form
The Loan Agreement form is one of the most commonly used documents in the banking sector. Whenever one needs to apply for a loan, the bank will provide the loan agreement form to be filled by the borrower and verified by the lender. A bank will rely on other documents to establish the creditworthiness of the borrower. The loan agreement form contains a commitment to a repayment schedule and may include collateral in case of an inability to pay.
6. Letter of Credit (LC)
Banks use a letter of credit as a financial document that stipulates what documents a party needs to provide for payment to occur. The LC also ensures the payment occurs as indicated and through SWIFT.
It is a guarantee of payment provided by the bank, that if a party meets the requirements stated in the letter of credit, they will get paid. There are 16 different types of letter of credit, which are:
- Import/Export LC
- Commercial LC
- Green Clause LC
- Red Clause LC
- Revocable LC
- Irrevocable LC
- Transferable LC
- Un-Transferable LC
- Confirmed LC
- Unconfirmed LC
- Standby LC
- Revolving LC
- Back-to-Back LC
- Sight LC
- Direct Pay LC
- Deferred Payment LC
7. Bank Pre-Advice
The Pre-Advice document is used by banks to offer advice and as a request to open financial instruments on behalf of customers in this or that bank. It involves two banks, with the recipient bank expected to acknowledge and accept the advice before the asking bank proceeds to facilitate the said financial instrument.
A check, also a cheque, is a document most used within the banking sector. A written check will instruct a bank or other such financial institution to pay the indicated amount of money. The amount is paid from the drawer’s account to the person named on the check or the bearer. Many people still use check in the digital era since they are:
- Safer to mail
- Cannot be used by criminals
- Not deposited immediately
- People who have no bank account can still cash checks
- Make budgeting easier
And there are three types of checks; the bearer check, the order check, and the crossed check.
A bearer check is payable to the person who presents it at the counter. It is an unsafe means of payment since anyone can cash a bearer’s check at the counter. A bank does not have a way to verify the details of the person cashing the bearer’s check.
An order check is payable to the person whose name appears on the check, or according to the instructions of the person named on the check. Therefore, the payee can cash it at the counter or the bank can transfer the funds to the payee’s bank account.
A crossed check has two lines drawn on its face, and the payee cannot cash it at the counter. Instead, the bank transfers the check’s funds to the payee’s bank account. It is the safest check since it allows the bank to do further checks on the payee.
Despite the safety and convenience that checks offer, you need to mitigate risks if you have a personal checkbook. Keep it safe and be sure you have adequate cash in your account to cover the checks you write.
9. Bank Guarantee (BG)
Another common document is the Bank Guarantee. Banks use this financial instrument to indicate that the bank is ready to make a full payment once the target party meets certain conditions as set out in a Sale and Purchase Agreement (SPA). Anyone with a BG document can borrow money or access credit against it.
10. Bank Note
This is a banking document that people also call a “bill”. It is a negotiable promissory note, which a bank issues, and whose usage is broadly similar to what we call money or legal tender. A banknote is always payable on demand and to the bearer. The financial institution (bank) prints the note’s amount payable figure on the note.
11. Account Opening Form
The account opening form is a standard document that a bank gives to a person that wants to open a bank account within the bank’s branch. The format and required information of this form vary from one bank to another. Nonetheless, most account opening forms require an individual to provide some specific information, which may include full name, addresses, contact number, next of kin, and more. In recent years, this form exists both physically and electronically. As a result, a potential client can download, print, and submit the form to the closest branch. Some banks allow clients to electronically fill online forms, which can be submitted to the bank digitally after being filled.
12. Withdrawal Slip
Withdrawal slips can be described as the opposite of deposit slips. This piece of document allows a bank account owner to withdraw money from their account. A typical withdrawal slip can be found within the banking hall of a bank’s branch. Within this slip, important information is written by the client, which allows the bank personnel to verify the identity of the client. Such information includes account name, signature, account number, withdrawal amount, and more. A withdrawal slip can only be used with a savings account. A chequing account requires a cheque for withdrawal of money.
13. Fixed Deposit Receipt
A fixed deposit receipt is a document that contains information about a fixed deposit made by a client to a bank. Such information includes the full name, address, age, deposit amount, duration of the deposit, and interest rate. This type of receipt serves as proof that a client has money fixed within a bank. A fixed deposit receipt is usually given to a client at a branch once the agreement between a client and a bank has been reached. Therefore, it serves as proof of an agreement between parties.
14. Demand Draft
This type of document is another important banking documentation. Basically, a demand draft allows a client to pay for products from a merchant through a third-party bank. A demand draft functions just as an exchange bill or a cheque. But a demand draft is sometimes difficult to cancel. The reason for this difficulty is that demand drafts are made for a particular party by the bank. This characteristic is quite different from a cheque or an exchange bill.
15. Demand Draft Request Form
A demand draft request form is a type of requisition document. Just like any other requisition document, it allows for a request. However, it is used as a formal document for requesting items or services. The demand draft request form is an excellent document for accounting and tracking requests made within a business. A typical demand draft request form contains the name of the author of the requisition, request date, requested items, dates, delivery details, fulfillment department, and more. Additionally, a box for appending signatures is allows given within the form. For large organizations, this type of document is perfect as it allows for smooth banking processes.
16. Account Closing Form
An account closing form is a document that allows an account owner to formally request the closure of their account. This form is usually given to the customer upon request. In general, the form provides spaces for an account owner to provide personal information such as full name, account name, account type, and more. Additionally, an individual signs the document for validation. Finally, a user is usually asked to provide a reason for the closure of their account as this information is used to better serve other clients.
17. Reference Form
The reference form is sometimes called the account reference form or the referee form. This form is usually given to a client when they are at the point of opening a bank account especially a checking account. The form is to be completed by several individuals that will give an account of the financial worthiness of an individual and the ability to maintain an account. The referees that complete such forms are required to have an active checking account before they become eligible to act as a reference for others.
18. Account Upgrade Form
The account upgrade form is a document that allows a client to provide additional information that will allow a bank to upgrade their account status from one type to another. In most cases, an account upgrade form is used to request more information from an individual. For example, an individual can be asked to provide proof of ownership of a property so that their account can become eligible for accessing a larger amount of overdraft.
19. Transfer Request Form
A transfer request form is of piece document that authorizes a bank to transfer a stipulated amount of money from one account to another. This form is usually given to an account owner at the counter. There they fill in their banking details and provide the banking details for the person to whom the money will be transferred.
20. Card Request Form
A card request form is a document that lets an account owner request either a debit or a credit card from their financial institution. This document usually contains fields where basic information is provided by the person that requires a card. After the form is completed, it is usually submitted and a card is issued either instantaneously or shipped to the mailing address of the account owner in a few working days.
Banks and other financial institutions lead the way when it comes to automation, meaning digitization could transform how we access and use some of these documents. Meantime, however, these are some of the top documents used in banking.