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#2196318 - 10/24/18 03:58 PM Overdraft Policy
Oscar Offline
Member
Joined: Aug 2017
Posts: 53
I have been tasked with writing an overall Overdraft Policy for the financial institution where I work. We currently have an Overdrafts section as part of our Loan Policy that covers overdrafts as an unsecured extension of credit and how they should be approved but nothing else. They are wanting a separate Overdraft Policy that covers a lot more. I have searched for industry best practices regarding this and have mainly seen articles on overdraft payment programs. Are there any industry best practices on what should be in a bank's Overdraft Policy?

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#2196357 - 10/24/18 06:41 PM Re: Overdraft Policy Oscar
OnTheEdge Offline
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Joined: Apr 2002
Posts: 1,677
SmallTown, USA
Check CBANC they are very good about sharing policies. You will need to review and adapt to you bank. Use anything you get as a starting point....something to build on.
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#2196385 - 10/24/18 08:28 PM Re: Overdraft Policy Oscar
Oscar Offline
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Joined: Aug 2017
Posts: 53
I appreciate the suggestion. Unfortunately, our IT department has us locked down like Fort Knox so I can't get on the site. I am going to talk to them about allowing it. Thank you!

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#2196408 - 10/25/18 12:35 PM Re: Overdraft Policy Oscar
osucpa Offline
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Joined: May 2011
Posts: 1,403
Sounds like they might want more "procedure type" processes rather than a policy. I have never seen a separate Overdraft Policy.

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#2196497 - 10/25/18 07:42 PM Re: Overdraft Policy Oscar
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Your overdraft "policy" is where it should be, incorporated into your loan policy as approved by your board of directors.

If your bank wants a description of its "overdraft program;" i.e. the specifics of how you handle overdrafts it's something of a mystery that none was drafted before now; this was a very hot issue going back as far as 2005. (I would do some looking before I started doing any writing.)

Anyway: FIL from 2010 with link to interagency guidance from 2005

Taking documents from CBANC is like eating mushrooms you find along the hiking trail: If you don't know what you are doing the effects can be disastrous.
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#2196516 - 10/25/18 08:54 PM Re: Overdraft Policy Oscar
P*Q Offline

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P*Q
Joined: May 2001
Posts: 8,458
Somewhere
We have a board approved overdraft policy because of the reasons Elwood states above. It cross references the loan policy as well. OD continue to be a hot button we feel it belongs at the policy level rather than procedural.

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#2197594 - 11/07/18 04:55 PM Re: Overdraft Policy Oscar
John Burnett Online
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John Burnett
Joined: Oct 2000
Posts: 39,795
Cape Cod
Agreed. You should have a policy regarding overdraft programs to set the parameters within which procedures must work. Just as an example, because of the regulatory vibes out there, a bank might adopt a policy ban on imposing "continuing overdraft" fees or on the imposition of an overdraft fee when an overdraft is created by the posting of a fee. Then when some hotshot proposes that you change a program to add a daily overdraft fee (another name for a "continuing overdraft" fee), calmer heads can point to policy and say "Whoa! We don't play that game here!"
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