Operational Procedures to be Observed by Rural Banks which may be designated as Rice and Corn Administration (RCA) Agent Banks under its Rice, Palay, and Corn Buying Program

April 15, 1966 CBP MEMORANDUM CIRCULAR TO ALL RURAL BANKS NO. 13-66 SUBJECT : Operational Procedures to be Observed by Rural Banks which may be designated as Rice and Corn Administration (RCA) Agent Banks under its Rice, Palay, and Corn Buying Program In connection with the Rice and Corn Administration (RCA) Rice, Palay and Corn Buying Program through a system of payments against warehouse receipts or quedans as provided in Republic Act No. 3452, as amended, by Republic Act No. 4643, hereunder are the operational procedures to be observed by all rural banks under this program: 1. Only Rural Banks designated as RCA Agent Banks upon prior certification of their sound financial standing by the Department of Rural Banks shall participate in the RCA Rice, Palay and Corn Buying Program; 2. Rural Banks authorized under this Program shall appoint one of their officers to enter into an agreement with the RCA by way of resolution, copy of which together with the agreement shall be submitted to this Department; 3. Rural Banks designated as RCA Agent Banks shall not be required to screen the credit standing of surety companies which will guarantee the warehouseman as well as the value of the securities given to the surety companies by the warehouseman. Instead, the RCA shall provide Agent Banks with a list of insurance and bonding companies acceptable to the Philippine National Bank and the RCA. From such list the particular surety company which will guarantee the warehouseman shall be selected by the warehouseman, subject to the approval of the RCA which shall limit the amount of bonds which said surety company may write in accordance with the financial stability and performance record of the company. This list shall be revised from time to time as prudence and good business policy dictates; 4. The RCA, for the handling and bookkeeping by the Agent Bank of quedans issued for palay stocks, for credit investigations of the warehouse-millers who will handle the storage and milling of the palay, and for the periodic reporting to the RCA engages to pay the Agent Bank 4% per annum of the total value of the quedans paid for by the Agent Bank, deductible from the RCA deposit in said Bank. Please note that the original agreement with respect to this fee was for a flat rate of 3%. Under the present rate of 4% per annum, the effective earning of the Agent Bank thereon will depend on the length of time the quedans are held by the Rural Bank. If, say, quedans are acquired on April 15 and liquidated on August 15, the effective earning of the Agent Bank thereon would be 1/3 of 4%. The acceptance of the rate of 4% per annum as indicated above shall therefore be at the discretion of the Rural Bank concerned; 5. Rural Banks designated as RCA Agent Banks shall adopt the following accounting procedure: a) Upon receipt of funds from the RCA, entry shall be: Debit: Checks and Other Cash Items Pxxx Credit: Due to RCA Pxxx To take up funds deposited by RCA b) Upon deposit of RCA funds with Rural Bank Depository in the form of current account, entry shall be: Debit: Due from Banks (RCA Deposit) Pxxx Credit: Checks and Other Cash Items Pxxx To record deposit of RCA funds with depository bank. (A separate account should be opened with the Rural Bank's depository solely for this fund) c) Upon payment of quedans to the palay producer depositor (which shall be made by check drawn on the depository bank) entry shall be: Debit: Due RCA Pxxx Credit: Due from Bank (RCA Deposit) Pxxx To record payment of quedans held by palay-producer depositor (Attach abstract of quedans purchased) d) To keep track of the quedans on hand, the following entry shall be made simultaneously with paragraph c): Debit: RCA Quedans on Hand Pxxx Credit: RCA Quedans Received Pxxx To record quedans on hand Note: A nominal value of P1 is given for each cavan of palay for the purpose of keeping track of the number of cavans covered by the quedans held by the rural bank. These are contingent accounts which should appear only as a footnote to the financial statements. e) Upon surrender of the quedans held by the Rural Bank to the bonded warehouse, entry shall be: Debit: RCA Quedans Received Pxxx Credit: RCA Quedans on Hand Pxxx To record liquidation of quedans held f) Whenever a rural bank receives cash payment for milled rice from an RCA accredited retailer, it shall issue an official receipt to said retailer for the payment. The entries for such transaction shall be: Debit: Cash on Hand or Checks and Other Cash Items Pxxx Credit: Due to RCA Pxxx To record cash received Debit: Due from Banks Pxxx Credit: Cash on Hand or Checks and Other Cash Items Pxxx To record deposit of cash received with the depository bank 6. No partial liquidation of quedans shall be allowed under this Program; 7. Rural Banks designated as RCA Agent Banks shall furnish this Department a copy of the weekly abstract of quedans received and paid during the week which they are required by RCA to submit. Also, said Agent Banks shall submit to this Department a weekly accounting and financial report on the disposition and disbursement of RCA funds entrusted to them. Please be guided accordingly. (SGD.) HONESTO O. FRANCISCO Director