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Approved by Board decision of National Bank of the Azerbaijan Republic of January 18, 2003 the Protocol No. 1 Register No. 32

Rules of accounting in bank system of the Azerbaijan Republic of means of payment in financial statements

1. General provisions

1.1. These rules are developed according to the laws of the Azerbaijan Republic "About National Bank of the Azerbaijan Republic", "About banks and banking activity in the Azerbaijan Republic", the Civil code of the Azerbaijan Republic and other legal acts of the Azerbaijan Republic, and also regulations of National Bank of the Azerbaijan Republic and determine accounting treatment in bank system of the Azerbaijan Republic (further - "bank") calculations with means of payment in financial statements.

1.2. Legal relationship on carrying out calculations with means of payment are regulated on the basis of requirements of the Civil code of the Azerbaijan Republic.

2. Concepts

2.1. Calculations with means of payment in bank system are implied as calculations for transactions with plastic cards, checks and other means of payment.

2.2. Plastic cards are the personal means of payment allowing the owner of the card to perform cashless payment of goods, works or services, and also to receive cash from banks and ATMs. The procedure for use of plastic cards is regulated by cross liabilities between the owner of the card and emitting bank.

2.3. Plastic cards are issued to physical persons and legal entities.

2.4. For each owner of the card the bank opens the separate bank account.

2.5. Corporate cards are the plastic cards allowing the owner of the card who is the legal entity to make transactions on own account.

2.6. Transactions with plastic cards are made:

by means of ATMs;

by means of pos-terminals.

2.7. ATMs are the automatic tellers provided for cash disbursement of money, carrying out cashless payment for goods, works or services in case of transactions with plastic cards and for collection. Besides, the ATM allows the owner of the card to obtain information (including the statement on paper) about current status of its account.

2.8. Pos-terminaly are the electronic devices able to read out information placed on magnetic tape or on the chip of plastic cards and to contact bank with the purpose to make plastic card transactions. Pos-terminaly take place in Items of trade and services.

2.9. The processing center is the independent organization or division of bank serving ATM network and Items of trade and services accepting for payment plastic cards. The processing center has access to the network of exchange of information of credit institutions. By means of the processing center authorization of transactions is made.

2.10. Obespechitel of accomplishment of the payment obligations arising in the course of servicing of plastic cards is the emitting bank which issued these cards. And therefore plastic cards during all term of their action remain property of bank, and owners of cards (clients) act as users of plastic cards.

2.11. In character plastic cards are subdivided into two types:

debit cards;

credit cards.

2.12. Debit cards are the plastic cards providing to the owner of the card implementation of calculations for goods, works and services by direct write-off of means within the amount on the bank account and receipt of means with cash.

Owners of debit cards shall credit previously certain amount of funds for the account in emitting bank. When carrying out calculations with use of the card of means on the account decrease according to the made transaction.

2.13. Credit cards are the plastic cards providing to the owner of the card carrying out calculations for goods, works and services at the expense of bank loan and receipt of means with cash. For credit cards certain limits are set. The limit of means of the open account is connected with amount of the credit line open for the owner of the card for the purpose of expenditure of means.

The credit can be one-time and recovered. Depending on the contract between bank and the owner of the card all amount of credit line or its part after payment is recovered.

2.14. The check is the valuable order paper consisting from nothing not caused written order of the issuer to bank to pay to the payee the amount of money which is written down in it.

3. Off-balance accounting of transactions

3.1. After production by request of bank of means of payment their accounting before transfer to use is conducted on off-balance accounts of financial statements. At the same time the following posting is given:

Dt Other documents and values

Kt the Off-balance contra account for assets

3.2. By transfer to use means of payment are removed from off-balance accounts. At the same time the following posting is given:

Dt the Off-balance contra account for assets

Kt Other documents and values

4. Accounting of plastic card transactions

4.1. In financial statements of banks accounting of plastic card transactions is subdivided into two parts:

accounting of the transactions made by means of ATMs;

accounting of the transactions made by means of pos-terminals.

4.2. The transactions made by means of ATMs:

4.2.1. When making plastic card transactions by means of ATMs the bank opens separate sub-account for each ATM. The bank places in the ATM cash in certain amount with observance of the established procedural rules about the room of cash liquidity in ATMs. At the same time the following posting is given:

Dt Cash in ATMs

Kt Kass

4.2.2. Based on information on movement of cash which arrived from the processing center in the ATM the following posting is given:

Dt Payment of the amounts and other assets

Kt Cash in ATMs

4.2.3. If the owner of the card using the ATM is client of this bank, the following posting is given:

Dt Client account

Kt Payment of the amounts and other assets

4.2.4. If the owner of the card using the ATM is client of other bank, the following posting is given:

Dt Corresponding correspondent account "nostro"

Kt Payment of the amounts and other assets

4.2.5. In case of delivery in bank with observance of the established procedural rules of cash from the ATM the following posting is given:

Dt Kass

Kt Cash in ATMs

4.3. The transactions made by means of pos-terminals

4.3.1. When making plastic card transactions by means of pos-terminals the bank opens separate sub-account for each owner of the pos-terminal. Based on information which arrived from the processing center the following posting is given:

Dt Payment of the amounts and other assets

Kt Account of the owner of the pos-terminal

4.3.2. If the owner of the card using the pos-terminal is client of bank, the following posting is given:

Dt Client account

Kt Payment of the amounts and other assets

4.3.3. If the owner of the card using the pos-terminal is client of other bank, the following posting is given:

Dt Corresponding correspondent account "nostro"

Kt Payment of the amounts and other assets

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