Bank of First Deposit - BOFD
Barron's Banking Dictionary:
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Bank of First Deposit
Bank where a check in the process of collection is initially deposited to an account. If the check is drawn on another bank, the collecting bank presents the check directly to the paying bank, or to a Federal Reserve Bank, for settlement against the paying bank's Reserve Account. See also Cash Items; Collection Items; Direct Send.
Investopedia Financial Dictionary:
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Bank of First Deposit - BOFD
The bank where a check is initially deposited to an account. If the check is drawn on the same bank, it is an "on-us" check that can be settled in-house.
If the check is drawn on another institution, it is presented for payment and either processed through the Federal Reserve System or cleared through private arrangements between banks.
Investopedia Says:
The Federal Reserve System was created because, during the financial panic of 1907, many banks failed to clear checks drawn on other banks.
The industry routing numbers developed in the 1940s that appear at the bottom of checks help ensure timely payment, which is usually the same or the next business day. In the 1970s, the ACH (automatic clearinghouse) system was developed to permit the electronic conversion of checks.
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Barron's Banking Dictionary
Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.
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