If a customer intends to cash a check drawn on his account with our bank and makes the check payable to the bank, what kind of problem would there be if the teller cashes the check? Should the customer endorse the check if it is OK to cash the check?

It's just a good bookkeeping practice, for one thing. Checks made payable to your bank should be a transaction between the bank and its customer... like a loan payment.

If the customer wants to withdraw cash from their account, they are essentially doing business with themself... not with the bank. Therefore, the check should be payable to self and indorsed by self. It's a much better record when done this way.

Here's a link you may want to check out, too:

http://www.bankersonline.com/operations/gurus_op051203d.html

Sometimes it is essential to retrain bank employees. Sometimes it is essential to retrain customers. As noted, banks should not accept checks payable to the bank unless the bank is receiving the money; e.g. a loan payment. Accepting an item payable to the bank for cash or deposit opens the door to a number of ways to defraud the bank or its customer.

The teller should always draw the error to the customer's attention. If the bank chooses to continue with the transaction (big IF), it should require the customer to sign the check on the back, "Presented for cash at XYZ bank, John Doe." That is less of an endorsement and more of a memorandum. It puts a band-aid on the problem without fixing the problem.

Again, the customer needs to be retrained...

Thanks, everyone. That's what I'd thought, but another employee (not the teller) thought that it was OK.

I learned something new today. At the beginning of my banking career - I was told if I was going to cash a check I should never make a check payable to cash but payable to the bank. The explanation was that if it was loss it couldn't be cashed.