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Federal reserve Bank
O F D ALLAS

Dallas, Texas, July 20, 1966

INTERPRETATIONS APPLYING TO AMENDMENT AND SUPPLEMENT TO REGULATION Q
EFFECTIVE JULY 20, 1966

To All Member Banks in the
Eleventh Federal Reserve District:

A number of questions have been raised concerning the Amendment to Regulation Q effective
July 20, 1966, defining “multiple maturity time deposits”, and the revised Supplement, also effective
July 20, 1966, fixing a maximum rate of 5 per cent per annum on new multiple maturity deposits of
90 days or more, and 4 per cent for those of less than 90 days. The following comments are intended
to clarify questions that have been raised and assist member banks in interpreting and applying
the amendment and the revised supplement.
The amendments prescribe maximum rates of 5 per cent or 4 per cent on “multiple maturity
time deposits”, depending upon the maturities or terms of withdrawal or repayment specified in
the deposit contract. A multiple maturity time deposit is a time deposit (whether a certificate or
a time deposit, open account) that permits withdrawal by the depositor, at his option, at more than
one date, including deposits payable on alternative specified dates, payable at any time after prior
written notice, or providing for automatic renewal at maturity. A deposit with a single fixed date
of payment, such as one payable only on a specified date, is not a multiple maturity deposit, and
such a deposit may continue to bear interest up to a maximum rate of 5 per cent.
In determining whether the maximum rate on a multiple maturity deposit is 5 per cent or
4 per cent, the test is the length of the interval between the date of any permissible withdrawal
and the date of the deposit or the last preceding date when withdrawal would have been permissible.
If the interval is 90 days or more, the maximum rate is 5 per cent; if it is less than 90 days, the
maximum rate is 4 per cent.
The amendments apply only to deposits received on or after July 20, 1966. They do not affect
deposits made before that date even though the bank may have a right to terminate the deposit
contract or to modify the contract rate.
Following are some illustrative cases regarding the application of the amendments:
1. A deposit is payable three months, six months, or nine months after the date of deposit.
The maximum rate is 5 per cent.
2. A certificate is payable one year after date or at any time prior thereto after 30 days’
written notice. The maximum rate is 4 per cent.
3. A six-month certificate provides for automatic renewal at maturity for a further six months.
The maximum rate is 5 per cent.
4. A certificate is payable one year after date and thereafter upon 30 days’ written notice.
The maximum rate is 5 per cent for the one-year period and 4 per cent for any period after one year.

(O V E R )

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5. A deposit contract specifies no fixed maturity but permits withdrawal at any time after
30 days’ written notice. The maximum rate is 4 per cent.
6. A certificate issued prior to July 20, 1966, provides for automatic renewal every 90 days
and optional withdrawal at any time after 30 days’ notice. The new lower rates do not apply;
the maximum rate remains 5 per cent.
7. A time deposit, open account, opened prior to July 20, 1966, permits withdrawals after
30 days’ notice. The maximum rate on deposits made in the account before July 20 is 5^2 per cent;
the maximum rate on deposits made on or after July 20 is 4 per cent.
8. A deposit made by a foreign central bank is payable six months after date or on 30 days’
written notice. By reason of a special statutory provision, time deposits of foreign governments
and foreign central banks, until October 15, 1968, are not subject to maximum rate limitations
prescribed by the Board.
Yours very truly,
Watrous H. Irons
President

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