Cash Holding Limit of Branch
Cash holding limit for branch is assigned and approved by head office and revised time to time according to the needs and requirements of customers. For each branch cash holding limit may be different. It is statutory criteria imposed by SBP to specify the cash holding limit. The pupose is to make sure the safety of cash and to avoid some unpleasant event e.g. theft, robery, fire etc. Further, it may be invested in business without keeping it idle.
For example a branch has cash holding limit of Rs. 2.500 million. But at the end of day, the balance is found 3.000 million. The amount of excess cash would be (3.000M – 2.500M)=0.5M
Cash Insurance
Cash insurance is a cover which indemnifies the insured against loss of money.Money includes current coin, Bank and currency notes,cheques,pay orders, demand drafts etc. Insurance companies accept the responsibility of loss or damage in case of any unpleasant event to branch, so cash is insured, excess cash as well as cash with in assigned limit.
Cash in vault includes two categories, cash upto cash holding limit and cash in excess to cash holding limit. For, cash upto holding limit, there is normal and usual insurance cover. When cash is above the limit extra premium is paid for insurance. The insurance is paid by Head office when manager/operation manager reports, on daily basis (if cash excedds its limit).
When cash is in transit, the insurance is the responsibility of transporting company.