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What is CBC in Banking?

Published in Banking Security 3 mins read

CBC in banking refers to Call Back Confirmation, a security measure used to verify transactions, particularly cheques, exceeding a certain threshold. This process involves the bank contacting the account holder to confirm the legitimacy of the transaction before processing it.

Here's a more detailed breakdown:

  • Purpose: The primary goal of CBC is to prevent fraud and unauthorized transactions on an account. By directly contacting the account holder, the bank can verify that the cheque was indeed issued by them and for the stated amount.

  • How it Works:

    1. Threshold: Banks typically set a threshold amount. If a cheque exceeds this amount, it triggers the CBC process. The threshold amount varies from bank to bank.
    2. Contact: The bank attempts to contact the account holder using the contact information on file.
    3. Verification: The bank representative will ask specific questions related to the cheque, such as the payee, amount, and purpose, to verify its authenticity.
    4. Confirmation: If the account holder confirms the transaction, the cheque is processed as normal.
    5. Rejection (if Unconfirmed): If the bank is unable to reach the account holder or if the account holder denies authorizing the cheque, the cheque may be returned unpaid. The reference states: "In case Call Back Confirmation (CBC) is not confirmed the Bank has the right to return the cheque received over the counter and in clearing..."

  • Why it's Important:

    • Fraud Prevention: It significantly reduces the risk of fraudulent cheques being processed.
    • Account Protection: It safeguards account holders from unauthorized withdrawals.
    • Regulatory Compliance: In some regions, CBC may be a regulatory requirement for high-value transactions.

  • Example: Imagine someone tries to cash a cheque for \$10,000 from your account. If your bank has a CBC threshold of \$5,000, they will attempt to contact you to confirm that you indeed wrote and authorized that cheque for \$10,000 to the named payee.

  • Impact on Cheque Processing: The CBC process may slightly delay the processing of cheques that exceed the threshold, as the bank needs time to contact the account holder and receive confirmation.

In conclusion, Call Back Confirmation (CBC) is a vital security measure implemented by banks to verify high-value cheque transactions, helping to prevent fraud and protect account holders.

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