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F ederal Reserve B ank DALLAS, TEXAS of Dallas 75222 Circular No. 73-219 August 30, 1973 AMENDMENT TO REGULATION Q (Applicability of Penalty for Early Withdrawals) To All Member Banks and Others Concerned in the Eleventh Federal Reserve District: Details of the enclosed printed Amendment to Regulation Q, were forwarded under our Circular No. 73-217 dated August 23, 1973* The enclosure should be inserted in your Binder of Regulations and Bulletins. The amendment to Section 217.^(d) effective July 2b, 1973? should be removed from the Binder and destroyed. Yours very truly, P. E. Coldwell, President Enclosure This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM INTEREST ON DEPOSITS A M E N D M E N T TO R EG U LA TIO N Q f Effective September 10, 1973, section 217.4(d ) is amended to read as follows: SECTION 217.4— PA Y M EN T OF TIME DEPOSITS BEFORE M ATURITY * * * * shall be deducted from the amount requested to be withdrawn. Any amendment of a time deposit contract that results in an increase in the rate of interest paid or in a change in the maturity of the deposit constitutes a payment of the time deposit before maturity. * * (d) Penalty for early withdrawals. Where a time deposit, or any portion thereof, is paid before maturity, a member bank may pay interest on the amount withdrawn at a rate not to exceed that currently prescribed in § 217.7 for a savings de posit: Provided, That the depositor shall forfeit three months of interest payable at such rate.6® If, however, the amount withdrawn has remained on deposit for three months or less, all interest shall be forfeited. Where necessary to comply with the requirements of this paragraph, any interest al ready paid to or for the account of the depositor * * * * 6a The provisions of this paragraph apply to all time deposit contracts entered into after July 5, 1973 and to all existing time deposit contracts that are extended or renewed (whether by automatic renewal or otherwise) after such date, and to all time deposit contracts that are amended after such date so as to increase the rate of interest paid. All contracts not subject to the provisions of this paragraph shall be subject to the re strictions of § 217.4(d) in effect prior to July 5, 1973, which permitted payment of a time deposit before maturity only in an emergency where necessary to prevent great hardship to the depositor, and which required the forfeiture of accrued and unpaid interest for a period of not less than 3 months on the amount withdrawn if an amount equal to the amount with drawn had been on deposit for 3 months or longer, and the forfeiture of all accrued and unpaid interest on the amount withdrawn if an amount equal to the amount withdrawn had been on deposit less than 3 months. t For this Regulation to be complete as amended effective September 10, 1973, retain: 1) Printed Regulation pamphlet containing Regulation Q dated January 1, 1971. 2) Supplement effective July 26, 1973. 3) This slip sheet.