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F e d e r a l Re s e r v e Ba n k
DALLAS. TEXAS

of

Dallas

75222
C i r c u l a r No. 76-92
J u l y 2, 1976

INTERPRETATION TO REGULATION D

TO ALL MEMBER BANKS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
T h e B o a r d 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 te m h a s
i s s u e d a n i n t e r p r e t a t i o n to R e g u l a ti o n D r e g a r d i n g t h e a b i l i t y of a m em ­
b e r b a n k to in c l u d e c e r t a i n a u to m a te d p a y m e n t s in t h e a c c o u n t " c a s h
item s in p r o c e s s of c o l l e c t i o n . " S u c h p a y m e n t s a r e r e g a r d e d a s c a s h
item s a n d a r e p e r m i t t e d to b e d e d u c t e d from " g r o s s d e m a n d d e p o s i t s "
u s e d in c o m p u tin g m e m b e r b a n k r e s e r v e s .
T h e n e w i n t e r p r e t a t i o n to R e g u l a ti o n D is p r i n t e d o n t h e
r e v e r s e of th i s c i r c u l a r . T h i s n e w i n t e r p r e t a t i o n , e ff e c tiv e J a n u a r y 16,
1976, s h o u l d b e file d w ith y o u r c o p y of R e g u l a ti o n D in y o u r R e g u l a ti o n s
B i n d e r . If y o u h a v e a n y q u e s t i o n s r e g a r d i n g R e g u l a ti o n D, p l e a s e c o n ­
ta c t A lla n Y . N eale a t (214) 651-6334 o r C . L. V ic k a t (214) 651-6333, o r
t h e A c c o u n ti n g D e p a r tm e n t a t o u r El P a s o , H o u s to n , o r S a n A n to n io
B ranches.
A d d itio n a l c o p i e s o f t h e i n t e r p r e t a t i o n to R e g u l a ti o n D will b e
f u r n i s h e d u p o n r e q u e s t to t h e S e c r e t a r y ' s Office o f t h i s B a n k (214)
651-6267.
S in ce rely y o u r s ,

T. W. Plant
First Vice President

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

RESERVES OF MEMBER BANKS
IN T E R P R E T A T IO N O F R E G U L A T IO N D

Automated Payment Arrangements and the U se o f Cash Items in the Process o f Collection
Effective June 16, 1976, §204.118 is added to
read as follows:
SEC T IO N 2 0 4 .1 1 8 — C A SH ITE M S IN T H E
PRO CESS O F C O L L E C T IO N
(a) As a result of involvement in autom ated
arrangem ents in w hich paym ent inform ation is
contained on magnetic tape, paper listings, etc.,
rath er than checks, a num ber of m em ber banks
have inquired as to the proper reserve require­
m ent treatm ent for payroll, F ederal recurring
paym ents, and other items received for credit to
a custom er’s account in such arrangem ents.
(b) W here paym ent inform ation is sent to a
m em ber b ank p rior to the date credit is passed
for the item, some banks have been crediting their
custom ers on the date p rior to th at paym ent date
to ensure th a t such deposit is available to the
depositor at opening o f business on the paym ent
date. Such procedure, however, results in an in­
crease in reported m em ber bank deposits even
though the m em ber bank does n o t itself receive
credit for the funds until the next day. Some

mem ber banks have inquired as to w hether the
account “cash items in the process of collection”
may be debited in an am ount equal to the am ount
credited on the date prior to the paym ent date.
(c) Section 19(g) o f the Federal Reserve A ct
(12 U.S.C. 465) perm its a mem ber bank to deduct
“cash items in the process of collection” as defined
by the Board. Section 204.2(b) o f Regulation D
provides that cash items m ay be deducted from
gross dem and deposits, and §204.1(h)(3) defines
cash items in the process o f collection as “those
customarily cleared o r collected by banks as cash
items.” The deduction was intended, in part, to
avoid the “double counting” by m em ber banks of
their deposits subject to reserves. Furtherm ore,
due to the spread o f autom ated arrangem ents, it
has become custom ary to treat such autom ated
paym ents as “cash items.” Because double count­
ing would arise in circumstances described above,
and in view of the fact th at autom ated arrange­
m ents are now custom ary practices, the Board
believes th a t banks are perm itted to debit the
account “cash items in th e process o f collection”
in such amounts.

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