Saturday, April 9, 2011

Reconciliation


A bank opens account with other banks to ensure smooth functioning of remittance, placements trading etc. The bank has to ensure whether funds have been received in account on value date, funds have been paid on value date, amount debited and credited is right etc. For this, the bank having account with other banks should reconcile the transactions reflected in their ledger with the transaction appeared in the account statement supplied by the other bank (the bank which has real account) on a regular basis. If any deviation is observed, rectification should be made immediately because wrong entry from either end may result in the loss to the banks. 

Unsettled/irreconciled items are presented under following heads in the reconciliation sheets:

  1. We Debit, They do not Credit : Items debited in ledger but not credited in the account statement.
  2. They Debit, We do not Credit : Items debited in the account statement but not credited in the ledger
  3. We Credit, They do not Debit : Items credited in the ledger but not debited in the account statement.
  4. They Credit, We do not Debit : Items credited in the account statement but no debited in the ledger

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