I know this has been discussed many times but I am still looking for some guidance on how to determine the appropriate ACH and RDC exposure limit. Does anyone know of a resource guide, webinar, formula, etc to help define this limit?

Thanks!

I don't have a specific resource reference for you but I would recommend considering if the services have a credit risk. If the customer also has a loan with you, I would include the ACH limitation that you are considering with the total customer analysis and then refer to your credit policy. I would assume your credit policy includes the Board's guidance for ACH risk.

You may decide an exposure up to a certain dollar amount does not require a credit analyst review, anything over that amount does require a review.

I would talk to your Sr Credit Officer and get his/her opinion.

Hope this helps........Just my opinion............

I'm not sure about RDC, but both NACHA and most regional ACH payment associations have resources on ACH Risk Management avaialble for ODFIs. I would recommend you contact their Help desk to point you to the best resource for your needs.

The normal approval process looks at how much the company normally transmits and considers if they owed you that money (if the bank sent the ACH and the customer failed to fund the account in time) could they repay it?

If it is above what the bank would feel comfortable funding require collateral (including cash collateral.)

This risk is then added to the entire relationship when captured in credit writeups.

Treat their origination limits as an unsecured loan, run it through your normal lending checks and verifications, require financials be updated annually.