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FEDERAL RESERVE BANK
OF NEW YORK
r C ircu la r N o . 5 2 1 7 1
L
A u g u s t 27, 1962
RESERVES OF M EM BER B A N K S
Revision of Regulation D and Operating Circular No. 2
To the Member Banks o f the
Second Federal Reserve D istrict:
Effective July 28, 1962, the Board of Governors of the Federal
Reserve System revised its Regulation D, Reserves of Member Banks,
a copy of which is enclosed. The regulation, including its Supplement,
has been amended to conform to the change in law, effective July 28,
1962, abolishing the central reserve city classification. Other changes
included in the revision are as follows:
(1) Section 204.2(a) (2) has been amended by setting forth the factors
considered by the Board in acting upon applications by individual member
banks located in reserve cities for permission to maintain the lower reserves
applicable to member banks not located in reserve cities ( “ country banks” ).
This change was the subject of a notice of proposed rule making published
in the Federal Register of March 7, 1961, and was adopted by the Board
after consideration of relevant views and arguments received from interested
persons.
(2) Sections 204.l ( i ) , 2 0 4.2(a)(1), 204.3(a), and 204.5 have been
amended by making certain minor clarifying changes.
Also enclosed is a copy of this Bank’s Operating Circular No. 2,
Revised effective July 28, 1962, entitled ‘ ‘ Reserves of Member Banks.”
In addition to editorial changes, the circular has been revised to con
form to the changes in Regulation D.
Additional copies of the revised regulation and operating circular
will be furnished upon request.
A
lfred
H
ayes,
President.
J
BOARD OF GOVERNORS
of the
FEDERAL RESERVE SYSTEM
RESERVES OF MEMBER BANKS
▼
REGULATION D
(12 CFR PART 204)
As Revised Effective July 28, 1962
INQUIRIES REGARDING THIS REGULATION
Any inquiry relating to this regulation should be addressed to
the Federal Reserve Bank of the district in which the inquiry
arises.
STATUTORY AUTHORITY
This regulation is issued under authority of provisions of section 19
of the Federal Reserve Act (38 Stat. 270, as amended; 12 U.S.C. 461,
462, 462a-l, 462b, 464, 465) which, together with related provisions of
law, are published in the Appendix hereto.
CONTENTS
(This text corresponds to the Code of Federal Regulations, Title 12,
Chapter II, Part 204, cited as 12 CFR PART 204)
Page
S ec. 204.1. D e f in it io n s ........................................................................................................ ...1
(a) D em an d deposits ............................................................................. ... 1
( b ) T im e deposits ................................................................................... ... 1
(c) T im e certificates o f d e p o s it.......................................................... ... 1
( d ) T im e deposits, open a cco u n t........................................................ ... 1
( e ) Savings deposits ............................................................................... ... 2
( /)
Gross dem and dep osits...................................................................... 2
(g ) Cash items in process o f co lle ctio n ............................................... 2
( h ) N et dem and d ep osits..........................................................................3
(i)
C urrency and c o in ............................................................................. ... 3
Sec . 204.2. C omputation
of
R eserves ..............................................................................3
(a) A m ounts o f reserves to be m ain tain ed.........................................3
( b ) D eductions allowed in com puting reserves............................. ...4
(c ) A vailability o f cash items as reserve..................................... ....... 4
( d ) Reserves against trust fu n d s........................................................ ...4
(e ) Continuance o f “ tim e deposit” status...........................................5
S ec. 204.3. D eficiencies
in
R eserves ........................................................................... ...5
(a ) C om putation o f deficien cies.......................................................... ...5
( b ) Penalties
(c)
.................................................................................................6
N otice to directors o f banks deficient in reserves....................6
( d ) C ontinued deficiencies ......................................................................6
A p p e n d ix
7
REGULATION D
(12 CFR PART 204)
As Revised Effective July 28,1962
RESERVES OF MEMBER BANKS
SECTION 204.1—DEFINITIONS
(а) Demand deposits.— The term “ demand deposits” includes all
deposits except “ time deposits” as defined below.
(б) Time deposits.— The term “ time deposits” means “ time certifi
cates of deposits,” “ time deposits, open account” and “ savings
deposits,” as defined below.
(c) Time certificates of deposit.— The term “time certificate of
deposit” means a deposit evidenced by a negotiable or nonnegotiable
instrument which provides on its face that the amount of such deposit
is payable to bearer or to any specified person or to his order—
(1) On a certain date, specified in the instrument, not less than
30 days after the date of deposit, or
(2) At the expiration of a certain specified time not less than 30
days after the date of the instrument, or
(3) Upon notice in writing which is actually required to be given
not less than 30 days before the date of repayment,1 and
(4) In all cases only upon presentation and surrender of the
instrument.
(d) Time deposits, open account.— The term “ time deposit, open
account” means a deposit, other than a “ time certificate of deposit”
or a “ savings deposit,” with respect to which there is in force a written
contract with the depositor that neither the whole nor any part of
such deposit may be withdrawn, by check or otherwise, prior to the
date of maturity which shall be not less than 30 days after the date
of the deposit,2 or prior to the expiration of the period of notice which
must be given by the depositor in writing not less than 30 days in
advance of withdrawal.3
1 A deposit with respect to which the bank merely reserves the right to require notice of not
less than 30 days before any withdrawal is made is not a “ time certificate o f deposit.”
2 Deposits such as Christmas club accounts and vacation club accounts, which are made
under written contracts providing that no withdrawal shall be made until a certain number of
periodic deposits have been made during a period of not less than three months constitute
“ time deposits, open account” even though some of the deposits are made within 30 days
from the end o f such period.
3 A deposit with respect to which the bank merely reserves the right to require notice of
not less than 30 days before any withdrawal is made is not a “ time deposit, open account.”
1
2
R E G U L A T IO N D
S ec. 204.1
(e) Savings deposits.— The term “ savings deposit” means a deposit—
(1) Which consists of funds deposited to the credit of one or more
individuals, or of a corporation, association, or other organization
operated primarily for religious, philanthropic, charitable, educa
tional, fraternal, or other similar purposes and not operated for
profit;4 or in which the entire beneficial interest is held by one or
more individuals or by such a corporation, association, or other
organization; and
(2) With respect to which the depositor is required, or may at
any time be required, by the bank to give notice in writing of an
intended withdrawal not less than 30 days before such withdrawal
is made.
(/) Gross demand deposits.— The term “ gross demand deposits”
means the sum of all demand deposits, including demand deposits
made by other banks, the United States, States, counties, school
districts and other governmental subdivisions and municipalities, and
all outstanding certified and officers’ checks (including checks issued
by the bank in payment of dividends), and letters of credit and
travelers’ checks sold for cash.
( g)
Cash items in process of collection.— The term “ cash items
in process of collection” means:
(1) Checks in process of collection, drawn on a bank, private
bank, or any other banking institution, which are payable im
mediately upon presentation in the United States, including checks
with a Federal Reserve bank in process of collection and checks
on hand which will be presented for payment or forwarded for
collection on the following business day;
(2) Government checks and warrants drawn on the Treasurer
of the United States which are in process of collection;
(3) Such other items in process of collection, payable immediately
upon presentation in the United States, as are customarily cleared or
collected by banks as cash items.
Items handled as noncash collections may not be treated as “ cash
items in process of collection” within the meaning of this part.
4 Deposits in joint accounts o f two or more individuals may be classified as savings deposits
if they meet the other requirements of the above definition, but deposits of a partnership
operated fo r profit may not be so classified. Deposits to the credit of an individual of funds in
which any beneficial interest is held by a corporation, partnership, association or other
organization operated for profit or not operated primarily for religious, philanthropic, charita
ble, educational, fraternal or other similar purposes may not be classified as savings deposits.
Secs . 204.1-204.2
R E G U L A T IO N D
3
(h) Net demand deposits.— The term “ net demand deposits”
means gross demand deposits as defined in paragraph (/) of this
section less the deductions allowed under the provisions of §204.2(6).
(i) Currency and coin.— The term “ currency and coin” means
United States currency and coin owned and held by a member bank,
including currency and coin in transit to or from a Federal Reserve
bank.
SECTION 204.2—COMPUTATION OF RESERVES
(a)
Amounts of reserves to be maintained.— (1) Every mem
ber bank shall maintain on deposit with the Federal Reserve bank
of its district an actual net balance equal to 3 per cent of its time
deposits, plus 7 per cent of its net demand deposits if it is not located
in a reserve city or 10 per cent of its net demand deposits if it is
located in a reserve city, or such different percentages of its time
deposits and net demand deposits as the Board of Governors of the
Federal Reserve System, pursuant to and within the limitations con
tained in section 19 of the Federal Reserve Act,5 may prescribe from
time to time in § 204.5 (the Supplement to this p a rt); Provided,
That a member bank’s currency and coin shall be counted as
reserves in determining compliance with such requirements to such
extent as the Board of Governors of the Federal Reserve System,
pursuant to section 19 of the Federal Reserve Act, may permit
from time to time in § 204.5.
(2)
Notwithstanding the provisions of subparagraph (1) of this
paragraph, a member bank located in a reserve city may hold and
maintain the reserve balances which are in effect for member banks
not located in reserve cities if, upon application to the Board of
Governors, the Board grants permission for the holding and main
taining of such lower reserve balances after consideration of all
factors relating to the character of such bank’s business, including,
but not limited to, the amount of such member bank’s total assets,
the amount of its total deposits, the amount of its total demand de
posits, the amount of its demand deposits owing to banks, the nature
of its depositors and borrowers, the rate of activity of its demand
deposits, its geographical location within the city, and its competi
tive position with relation to other banks in the city. Any such per
mission shall be subject to revocation by the Board at any time in
5 Any such different percentages prescribed by the Board may not be less than 3 per cent of
time deposits, 7 per cent of net demand deposits of banks not located in reserve cities, or 10
per cent o f net demand deposits o f banks located in reserve cities, nor more than 6 per cent
of time deposits, 14 per cent o f net demand deposits o f banks not located in reserve cities, or
22 per cent of net demand deposits of banks located in reserve cities.
4
R E G U L A T IO N D
S ec . 204.2
the light of changed circumstances, and all such grants of permission
may be subject to annual review by the Board.
(3)
For the purposes of this part, a member bank shall be con
sidered to be in a reserve city if the head office or any branch thereof
is located in a reserve city.
(6)
Deductions allowed in computing reserves.— In deter
mining the reserve balances required under the terms of this part,
member banks may deduct from the amount of their gross demand
deposits the amounts of balances subject to immediate withdrawal
due from other banks and cash items in process of collection as
defined in § 204.1 (g). Balances “ due from other banks” do not in
clude balances due from Federal Reserve banks, balances (payable
in dollars or otherwise) due from foreign banks or branches thereof
wherever located, or balances due from foreign branches of domestic
banks. The word “ banks” in the term “ due from other banks” refers
to incorporated banks and does not include private banks or
bankers.6
(c) Availability of cash items as reserve.— Cash items for
warded to a Federal Reserve bank for collection and credit cannot
be counted as part of the minimum reserve balance to be carried
by a member bank with its Federal Reserve bank until the expiration
of such time as may be specified in the appropriate time schedule
referred to in part 210 of this chapter. If a member bank draw against
items before such time, the draft will be charged against its reserve
balance if such balance be sufficient in amount to pay it; but any
resulting impairment of reserve balances will be subject to the
penalties provided by law and by this part: Provided, however,
That the Federal Reserve bank may, in its discretion, refuse at any
time to permit the withdrawal or other use of credit given in its
reserve account for any item for which the Federal Reserve bank
has not received payment in actually and finally collected funds.
(d) Reserves against trust funds.— A member bank exercising
trust powers need not maintain reserves against trust funds which
it keeps properly segregated as trust funds and apart from its general
assets or which it deposits in another institution to the credit of
itself as trustee or other fiduciary. If, however, such funds are
mingled with the general assets of the bank, as permitted to national
banks under authority of section 11 (k) of the Federal Reserve Act
8 A member bank exercising fiduciary powers may not include in balances “ due from other
banks” amounts o f trust funds deposited with other banks and due to it as trustee or other
fiduciary. If trust funds are deposited by the trust department of a member bank in its com
mercial or savings department and are then redeposited in another bank subject to immediate
withdrawal they may be included by the member bank in balances “ due from other banks,”
subject to the provisions o f § 204.2 (b).
S ecs.
204.2-204.3
R E G U L A T IO N D
5
(40 Stat. 969; 12 U.S.C. 248(k )), a deposit liability thereby arises
against which reserves must be maintained.
(e)
Continuance of “ time deposits” status.— A deposit which
at the time of deposit was a “ deposit evidenced by a time certificate
of deposit,” “ time deposit, open account,” or “ savings deposit” con
tinues to be a “ time deposit” until maturity or the expiration of the
period of notice of withdrawal, although it has become payable
within 30 days. After the date of maturity of any time deposit, such
deposit is a demand deposit. After the expiration of the period of
notice given with respect to the repayment of any savings deposit or
other time deposit, such deposit .is a demand deposit, except that, if
the owner of such deposit advise the bank in writing that the deposit
will not be withdrawn pursuant to such notice or that the deposit
will thereafter again be subject to the contract or requirements
applicable to such deposit, the deposit will again constitute a savings
deposit or other time deposit, as the case may be, after the date
upon which such advice is received by the bank.
SECTION 204.3—DEFICIENCIES IN RESERVES
(a)
Computation of deficiencies.— (1) Deficiencies in reserve
balances of member banks in reserve cities shall be computed on the
basis of average daily net deposit balances and average daily cur
rency and coin covering weekly periods.7 Deficiencies in reserve
balances of other member banks shall be computed on the basis
of average daily net deposit balances and average daily currency
and coin covering biweekly periods.
(2)
In computing such deficiencies the required reserve balance
of each member bank at the close of business each day shall be
based upon its net deposit balances and currency and coin at the
opening of business on the same day; and the weekly and biweekly
periods referred to in paragraph (1) hereof shall end at the close
of business on days to be fixed by the Federal Reserve banks with
the approval of the Board of Governors of the Federal Reserve
System. When, however, the reserve computation period ends with
a nonbusiness day, or two or more consecutive nonbusiness days, of
the member bank or its Federal Reserve bank, such nonbusiness day
or days may, at the option of the member bank, and whether or
not it had a reserve deficiency in such computation period, be
included in the next reserve computation period.
7 However, deficiencies in reserve balances of member banks in reserve cities which have
been authorized by the Board o f Governors, under the provisions o f § 204.2(a) (2), to hold
and maintain the reserve balances in effect for member banks not in reserve cities will be
computed on the basis provided for such latter member banks.
6
R E G U L A T IO N D
S ec . 204.3
(6)
Penalties.— (1) Penalties for such deficiencies will be as
sessed monthly on the basis of average daily deficiencies during
each of the reserve computation periods ending in the preceding
calendar month.
(2)
Such penalties will be assessed at a rate of 2 per cent per
annum above the Federal Reserve bank rate applicable to discounts
of 90 day commercial paper for member banks, in effect on the first
day of the calendar month in which the deficiencies occurred.
(c) Notice to directors of banks deficient in reserves.— When
ever it shall appear that a member bank is not paying due regard
to the maintenance of its reserves, the Federal Reserve bank shall
address a letter to each director of such bank calling attention to
the situation and advising him of the requirements of the law and of
this part regarding the maintenance of reserves.
(d) Continued deficiencies.— If, after the notice provided for in
paragraph (c) of this section has been given, it shall appear that
the member bank is continuing its failure to pay due regard to the
maintenance of its reserves, the Federal Reserve bank shall report
such fact to the Board of Governors of the Federal Reserve System
with a recommendation as to whether or not the Board should:
(1) In the case of a national bank, direct the Comptroller of
the Currency to bring suit to forfeit the charter of such national
bank pursuant to section 2 of the Federal Reserve Act (38 Stat.
252; 12 U.S.C. 501a); or
(2) In the case of a State member bank, institute proceedings
to require such bank to surrender its stock in the Federal Reserve
bank and to forfeit all rights and privileges of membership pur
suant to section 9 of the Federal Reserve Act (46 Stat. 251; 12
U.S.C. 327); or
(3) In either case, take such other action as the Federal Re
serve bank may recommend or the Board of Governors of the
Federal Reserve System may consider advisable.
(SECTION 204.5—SUPPLEMENT, containing reserve percentages and use of
vault cash in meeting reserve requirements, is printed separately.)
APPENDIX
STATUTORY PROVISIONS
Section 19 of the Federal Reserve Act (38 Stat. 270, as amended; 12
U.S.C. 461, 462, 462a-l, 462b, 464, 465) provides in part as follows:
The Board of Governors of the Federal Reserve System is author
ized, for the purposes of this section, to define the terms “ demand
deposits,” “ gross demand deposits,” “ deposits payable on demand,”
“ time deposits,” “ savings deposits,” and “ trust fund,” to deter
mine what shall be deemed to be a payment of interest, and to
prescribe such rules and regulations as it may deem necessary to
effectuate the purposes of this section and prevent evasions there
of: Provided, That, within the meaning of the provisions of this
section regarding the reserves required of member banks, the term
“ time deposits” shall include “ savings deposits.”
Every bank, banking association, or trust company which is or
which becomes a member of any Federal Reserve bank shall estab
lish and maintain reserve balances with its Federal Reserve bank
as follows:
(a) If not in a reserve city, as now or hereafter defined, it
shall hold and maintain with the Federal Reserve bank of its
district an actual net balance equal to not less than seven per
centum of the aggregate amount of its demand deposits and
three per centum of its time deposits.
(b) If in a reserve city, as now or hereafter defined, it
shall hold and maintain with the Federal Reserve bank of its
district an actual net balance equal to not less than ten per
centum of the aggregate amount of its demand deposits and
three per centum of its time deposits.
Notwithstanding the other provisions of this section (1) the Board
of Governors, under such regulations as it may prescribe, may permit
member banks to count all or part of their currency and coin as re
serves required under this section; and (2) a member bank in a
reserve city may hold and maintain the reserve balances which are
in effect under this section for member banks described in paragraph
(a), if permission for the holding and maintaining of such lower re
serve balances is granted by the Board of Governors of the Federal
Reserve System, either in individual cases or under regulations of the
Board, on such basis as the Board may deem reasonable and appro
7
8
R E G U L A T IO N D
priate in view of the character of business transacted by the member
bank.
Notwithstanding the other provisions of this section, the Board
of Governors of the Federal Reserve System, upon the affirmative
vote of not less than four of its members, in order lo prevent
injurious credit expansion or contraction, may by regulation change
the requirements as to reserves to be maintained against demand
or time deposits or both (1) by member banks in reserve cities, (2)
by member banks not in reserve cities, or (3) by all member banks;
but the amount of the reserves required to be maintained by any
such member bank as a result of any such change shall not be less
than the amount of the reserves required by law to be maintained by
such bank nor more than twice such amount, except that in the case
of member banks in reserve cities the maximum amount of reserves
which may be required to be maintained against demand deposits
shall be 22 per centum.
The required balance carried by a member bank with a Federal
Reserve bank may, under the regulations and subject to such pen
alties as may be prescribed by the Board of Governors of the Fed
eral Reserve System, be checked against and withdrawn by such
member bank for the purpose of meeting existing liabilities.
In estimating the reserve balances required by this Act, member
banks may deduct from the amount of their gross demand deposits
the amounts of balances due from other banks (except Federal
Reserve banks and foreign banks) and cash items in process of
collection payable immediately upon presentation in the United
States, within the meaning of these terms as defined by the Board
of Governors of the Federal Reserve System.
*
*
*
*
*
*
*
*
Notwithstanding the provisions of the First Liberty Bond Act,
as amended, the Second Liberty Bond Act, as amended, and the
Third Liberty Bond Act, as amended, member banks shall be
required to maintain the same reserves against deposits of public
moneys by the United States as they are required by this section
to maintain against other deposits: Provided, That until six months
after the cessation of hostilities in the present war as determined
by proclamation of the President or concurrent resolution of the
Congress no deposit payable to the United States by any member
bank arising solely as the result of subscriptions made by or through
R E G U L A T IO N D
9
such member bank for United States Government securities issued
under authority of the Second Liberty Bond Act, as amended, shall
be subject to the reserve requirements of this section.
[“Cessation of hostilities” was proclaimed by the President on Decem
ber 31, 1946; and, accordingly, the proviso in the above paragraph expired
six months after that date.]
Section 11 of the Federal Reserve Act (38 Stat 262, as amended; 12
U.S.C. 248) provides in part as follows:
The Board of Governors of the Federal Reserve System shall be
authorized and empowered: * * * (c) To suspend for a period not
exceeding thirty days, and fronr time to time to renew such sus
pension for periods not exceeding fifteen days, any reserve require
ments specified in this Act: Provided, That it shall establish a
graduated tax upon the amounts by which the reserve requirements
of this Act may be permitted to fall below the level hereinafter
specified * * *
SUPPLEMENT TO REGULATION D
Section 204.5— Supplement
I s s u e d b y t h e B oard o f G o v e r n o r s o f t h e F e d e r a l R e s e r v e S y s t e m
Effective as to all member banks at the opening of business on
July 28,1962
(a) Reserve percentages.— Pursuant to the provisions of section 19
of the Federal Reserve Act and §204.2(a), but subject to paragraph
(b) of this section, the Board of Governors of the Federal Reserve
System hereby prescribes the following reserve balances which each
member bank of the Federal Reserve System is required to maintain
on deposit with the Federal Reserve bank of its district:
(1) If not in a reserve city—
(i) 5 per cent of its time deposits, plus
(ii) 12 per cent of its net demand deposits.
(2) If in a reserve city (except as to any bank located in such a
city which is permitted by the Board of Governors of the Federal
Reserve System, pursuant to § 204.2(a) (2), to maintain the reserves
specified in subparagraph (1) of this paragraph)—
(i) 5 per cent of its time deposits, plus
(ii) 16% per cent of its net demand deposits.
(b) Counting of currency and coin.— The amount of a member
bank’s currency and coin shall be counted as reserves in determining
compliance with the reserve requirements of paragraph (a) of this
section.
F
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B
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{
Operating Circular No. 2
Revised effective July 28, 1962
RESERVES OF MEMBER BANKS
To A ll M em ber B an ks o f the
Second F ederal Reserve D istr ict:
This circular contains information regarding the reserve require
ments of member banks, the method of determining required reserves,
the making of certain reports relating to reserves, and penalties for
deficiencies in reserves.
Statutory requirements
1. Section 19 of the Federal Reserve Act (hereinafter referred to
as the “ A c t” ) requires every member bank to maintain reserve bal
ances with its Federal Reserve Bank equal to stated percentages of
its demand and time deposits; and authorizes the Board of Governors
of the Federal Reserve System, by regulation, to define certain terms
used in the Act, to permit member banks to count all or part of their
currency and coin as required reserves, to change the requirements as
to reserves within certain stated limits, and to prescribe penalties for
deficient reserves.
Regulation D
2. Pursuant to section 19 of the Act, the Board of Governors has
issued its Regulation D, to which reference should be made for com
plete details on reserve requirements and for the penalties prescribed
for deficiencies in reserves. A Supplement to Regulation D sets forth
the reserve requirements applicable at any given time and prescribes
the amount of a member bank’s currency and coin that may be counted
as reserves in determining compliance with such requirements.
Establishment and maintenance of reserve balances
3. Reserve balances may be established and maintained by credits
for deposits of currency and coin, of checks and other cash items, and
of noncash items, and for advances and discounts, transfers of funds,
dividends paid on our capital stock, and other payments made to and
received and accepted by us for the account of a member bank. For
the timing o f such credits, our circulars relating to the different types
o f transactions should be consulted. Subject to the imposition of
penalties for deficiencies in reserves, member banks are authorized by
section 19 of the A ct to check against and withdraw reserve balances
for the purpose of meeting existing liabilities.
Determination of required reserves
4. Required reserves for any given day are computed on the basis
o f net demand deposits and time deposits as shown by the books of
a member bank at the beginning of business on such day, and a member
bank should calculate its required reserves (as well as currency and
coin counted as reserves) as of that time.
Daily reports by member banks of deposits
and currency and coin
5. Each member bank in the Second Federal Reserve District is
required to file with this Bank, on a form furnished by us, a daily
report of its net demand deposits, time deposits, and currency and
coin. The report form, “ Report of Deposits and Vault Cash,” when
properly folded and sealed, will serve as a postage-prepaid envelope
addressed to this Bank. All member banks of the District, including
those located in the territory assigned to the Buffalo Branch, should
file reports directly with the Head Office.
Reserve city banks
6.
Each reserve city member bank has a weekly reserve computa
tion period ending every Wednesday. As soon as possible after we
receive the last daily report for any such period, this Bank will pre
pare and send to each such bank a report on Form RB 13 showing
the computation of that bank’s average required reserves and vault
cash for the period, based on the daily reports submitted by the
member bank.
Country banks
7. Each member bank other than a reserve city member bank has
a biweekly reserve computation period ending every second Wednes
day (the last such Wednesday having been July 25, 1962). As
soon as possible after we receive the last daily report for any such
period, this Bank will prepare and send to each such bank a report
on Form RB 13A showing the computation of that bank’s average
required reserves and vault cash for the period, based on the daily
2
reports submitted by the member bank. The report also shows the
average reserves maintained with us and the excess or deficient
reserves for the period.
Reconciliation of reports
8.
I f a member bank discovers any discrepancy it cannot resolve
between its own records and any report by this Bank on Form RB 13
or Form RB 13A, the discrepancy should be reported promptly to our
x\ccounting Division.
Form RB 24
9. Form RB 24 is a worksheet designed to assist member banks
to determine their reserve positions daily. Form RB 24 should not
be filed with this Bank. Copies of the worksheet and the daily report
ing form, “ Report of Deposits and Vault Cash,” will be furnished
upon request addressed to our Accounting Division.
Treatment of paid United States Savings Bonds
and Armed Forces Leave Bonds
10. In preparing the daily “ Report of Deposits and Vault Cash,”
a member bank qualified to make payment of United States Savings
Bonds and Armed Forces Leave Bonds should treat paid bonds as
follow s:
(a) I f the bank follows a practice of forwarding paid bonds to this
Bank on the day it makes payment or on the following business day, it
should treat such bonds as cash items in process of collection during the
period prior to receipt of settlement from us, and should include the
amount of such bonds in Column 4 of the daily report.
(b) I f the bank follows a practice of holding paid bonds beyond
the business day following the day of payment, it should treat such bonds
as cash items not in process of collection until the day they are forwarded
to this Bank, and should then treat them as cash items in process of
collection until receipt of settlement from this Bank. Cash items not in
process of collection should not be reported on the daily report.
Penalties for deficiencies in reserves
11. Pursuant to instructions of the Board of Governors of the
Federal Reserve System, the penalty for a deficiency in reserves
required to be maintained by a member bank during any reserve
computation period may be waived in the discretion of this Bank when
the deficiency is offset by excess reserves during the immediately fol
lowing reserve computation period, provided that such deficiency does
not exceed 2 per cent of the member bank’s required reserves.
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12. Although penalties for deficiencies in reserves are assessed on
daily average deficiencies over weekly or biweekly periods, and such
penalties may be waived in certain cases, member banks should con
tinue to make reasonable efforts to hold and maintain their required
reserves from day to day, making allowance for unforeseen fluctua
tions in deposits and reserves.
Revision of this circular
13. The right is reserved to withdraw, add to, or amend at any
time any o f the provisions o f this circular.
Effect of this circular on previous circular
14. This circular supersedes our Operating Circular No. 2, Revised
May 19, 1960.
A
lfred
H
ayes,
President.
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@FedFRASER