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R e s e r v e Ba n k




C irc u la r No. 75-116
August 12, 1975


The Board of Governors of the Federal Reserve System recently
considered a request by a State member bank to establish offsite electronic
facilities. Many such facilities have the capacity to accept deposits, make
loans, or pay checks, and have become g e n e ra lly known as cash dispensers,
automated te lle rs , and p o in t-o f-sale term inals.
In view of the legal and policy issues raised by the establishment
or use of offsite facilities that p rovide any or all of the above-described
services, the Board has determ ined that, at this time, a State member bank
d es irin g to establish or use an offsite electronic facility described above shall
inform the Federal Reserve Bank in its d is tric t 30 days p rio r to the establish­
ment or utilization of such fa c ility . Where applicable State law or the app ro­
priate State bank su p ervis o ry authority has permitted or approved deployment
of the proposed offsite fa c ility , and w h ere the Reserve Bank does not notify
the applicant of its objection to the establishment or use of the facility w ithin
the 30-day p eriod, the member bank may take action to establish or use such
fa c ility .
The information provided by a State member bank in connection
with establishment or use of an offsite electronic facility described above
should include (a) a description of the location of the proposed facility;
(b) a description of the transactions that can be accomplished at the fa c il­
ity; and (c) the names of other institutions, if an y , sharing or intending
to share the fa c ility .
A State member bank seeking to establish or use an offsite fa c il­
ity that does not accept deposits, pay checks, or make loans, but for example,

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m erely advances cash based on a preexisting agreement or line of c re d it,
need not give p r io r notice of the deployment of such a device; how ever,
Reserve Banks should be advised by State member banks as to the deploy­
ment of such d e v ic e s .
Review of such notices supplied by member banks for establish­
ment or use of offsite electronic facilities may be undertaken by Reserve
Banks pursuant to the authority set forth in Section 2 6 5 .2 (f) (1) of the
Board's Rules Regarding Delegation of A u th o rity . Such reviews should
take into account the c rite ria set forth in that section. T h e Board has d e­
termined that State member banks may make investments in offsite elec­
tronic facilities without regard to the investment limitations of Section 24A
of the Federal Reserve Act.
S incerely yours,
T . W. Plant
F irs t Vice President

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102