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Federal Reserve Bank
OF DALLAS
T O N Y J . SALVAGGIO

DALLAS, TEXAS
75265-5906

F IR S T V IC E P R E S ID E N T

March 16, 1994
Notice 94-39
TO:

The Cashier or Individual Responsible for
Managing the Reserve/Clearing Account at
the financial institution addressed
SUBJECT
Policy Change Regarding Overnight Overdrafts
in Reserve/Clearing Accounts
DETAILS

To achieve equitable treatment of all account holders and promote
sound banking practices, the Federal Reserve believes that reserve/clearing
balance accounts should be maintained on a positive daily settlement basis.
In the continuing effort to reduce payment system risk, the Federal Reserve
has recently revised its Overnight Overdraft Policy. The following changes
have been made to the policy and will be effective April 1, 1994:
The monetary penalty for an overnight overdraft will be
calculated at a rate that is four percentage points above
the effective Federal Funds rate prevailing on the date
the overdraft occurred. The minimum monetary charge per
occurrence will be retained at $100.
The current penalty rate floor of ten percent has been
eliminated.
For those institutions that incur an excessive number of
overdrafts, the monetary penalty rate will be increased.
Specifically, for each overnight overdraft occurrence over
three, in a moving 12-month period, the monetary penalty
rate will be increased by one percentage point. These
increases would be cumulative, with an additional one
percentage point added for each occurrence.

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

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MORE INFORMATION
For more information, please contact the Reserve Management Division
at (214) 922-5646 at the Dallas Office. Depository institutions in the El
Paso territory should contact the Reserve Maintenance Division in the El Paso
Office at (915) 521-8213.
Depository institutions in the Houston territory
should contact the Reserve Maintenance Division in the Houston Office at (713)
652-1538.
Depository institutions in the San Antonio territory should contact
the Reserve Maintenance Division in the San Antonio Office at (210) 978-1426.
For additional copies of this B a n k ’s notice, please contact the
Public Affairs Department at (214) 922-5254.
Sincerely

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