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F ederal
reserve bank of
DALLAS, TE X A S
Dallas
7S222
Circular No. 83-8
January 18, 1983
REGULATION D
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
REGULATION Q
INTEREST ON DEPOSITS
(Amendments)
TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has amended its
Regulation D (Reserve Requirements of Depository Institutions) and Regulation Q
(Interest on Deposits) to incorporate the rules of the Depository Institutions
Deregulation C om m ittee.
The amendments, effectiv e January 5, 1983, are
technical in nature and conform the Board's rules to those of the C om m ittee.
A ttached are copies of the Board's press release and the m aterial as
submitted for publication in the Federal R egister.
Questions regarding the
m aterial contained in this circular should be directed to this Bank's Legal
D epartm ent, Extension 6171.
Additional copies of this circular will be furnished upon request to the
Public Affairs D epartm ent, Extension 6289.
Sincerely yours,
William H. Wallace
First Vice President
Banks and others are encouraged to use the follow ing incomin g WATS numbers in con tacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extensio n referred to above.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FEDERAL RESERVE press release
For immediate release
December 29, 1982
The Federal Reserve Board today made public a number of
technical revisions of its Regulations concerning reserves of
depository institutions (D) and interest on deposits (Q) to conform
the regulations to rules adopted by the Depository Institutions
Deregulation Committee.
The Board's notice of its actions, including a list of rules
of the DIDC to which it is conforming its regulations, is attached.
-0 -
Attachment
FEDERAL RESERVE SYSTEM
REGULATION D
REGULATION Q
[12 CFR Part 204]
[12 CFR Part 217]
(Docket No. R-0444]
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
INTEREST ON DEPOSITS
Technical Amendments
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Technical amendments.
SUMMARY:
Pursuant to its authority under section 19 of the Federal
Reserve Act, as amended, the Board has amended Regulation D — Reserve
Requirements of Depository Institutions
(12 CFP Part 204)
and
Regulation Q— Interest on Deposits (12 CFR Part 217) to incorporate the
rules of the Depository Institutions Deregulation Committee ("DIDC"),
adopted pursuant to the Depository Institutions Deregulation Act of 1980
and section 327 of the Garn-St Germain Depository Institutions Act of
1982 (Pub. L. 97-320; 96 Stat. 1501).
The amendments to Regulations D
and Q are technical in nature and conform the Board's rules to those of
the DIDC.
EFFECTIVE:
January 5, 1983.
FOR FURTHER INFORMATION CONTACT:
Gilbert T. Schwartz, Associate General
Counsel
(202/452-3625),
or
Paul S.
Pilecki,
Senior
Attorney
(202/452-3281) , Legal Division, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
SUPPLEMENTARY INFORMATION:
The Depository Institutions Deregulation Act
of 1980 (Title II of Pub. L. 96-221) transfers to the DIDC the authority
conferred by section 19 (j) of the Federal Reserve Act (12 U.S.C. § 371b)
upon the Board (and the similar
authority of the Federal Deposit
Insurance and the Federal Home Loan Bank Board, which are contained
in
other statutes) to establish rules concerning the payment of interest on
deposit accounts.
The Board has amended its Regulation D and Regulation Q to bring
them into conformity with actions taken by the DIDC.
The following table
presents the regulatory provisions that have been affected by the DIDC's
a ctions:
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DIDC Rule
Regulatory Provision Amended
1204.104— 26 Week Money Market
Time Deposits of Less Than
217.7(f)
$ 100,000
1204.108— Maximum Rates of Interest
Payable by Depository Institu
tions on Deposits Subject to
Negotiable Orders of Withdrawal
217. 1(e)
217. 7(c)
1204.120— 90-Day Time Deposits
of Less Than $100,000
217 . 7 (j)
1204.121— Seven to 31-Day Time
Deposits of $2,500 or More
204.2(b)(2),
217.4 (d) (6)
217 . 4 (f)
217.7(1)
1204.122— Money Market Deposit
Account
217.1(e)(4)
217.5(c)
217.7(m)
1204.201— Establishment of
Interest Rates on Deposits
Not Subject to Interest
Rate Ceilings
217.4(d)(5)
(c)(1)
Because of the technical nature of the amendments conforming
Regulations D and Q to actions of the DIDC, the Board finds that
application of the notice and public participation provisions of 5 U.S.C.
§ 553 to these actions is unnecessary and contrary to the public
interest, and that good cause exists for making these actions effective
January 5, 1983.
List of Subjects in 12 CFR Part 217
Advertising;
Banks,
banking;
Federal
Reserve
System;
Foreign
bank ing.
Pursuant to its authority under section 19 of the Federal
Reserve Act (12 U.S.C. §§ 461, 371a, and 371b), the Board amends
Regulation D (12 CFR Part 204) and Regulation Q (12 CFR Part 217) ,
effective January 5, 1983, as follows:
1.
Section 204.2 is amended by removing the phrase ", subject
to a minimum balance of $20,000," in paragraphs (b) (2) (iv) (A) and
paragraph (c) (1)(iii) .
2.
as follows:
Section 217.1(e)
is amended by adding a new subparagraph
(4)
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SECTION 217.1 —
*
(e)
*
*
DEFINITIONS
*
*
* * *
(4)
Savings deposit also means a deposit issued pursuant
to section 21 7. 7 (c)(2)(ii) or section 2 1 7 . 7 (m) with respect to which the
member bank reserves the right to require at least seven days' notice
prior to withdrawal or transfer.
*
and
*
*
*
*
3.
Section 217.4 is amended by revising
(6) and paragraph (f) to read as follows:
SECTION 217.4 —
(d)(5)
PAYMENT OF TIME DEPOSITS BEFORE MATURITY
*
(d)
subparagraphs
*
*
*
*
* * *
(5)
Any amendment of a time deposit contract that results
in an increase in the rate of interest paid, except for time deposits on
which no maximum interest rate limitation is prescribed, or any amendment
of a time deposit contract that results in a reduction in the maturity of
the deposit constitute payment of a time deposit before maturity.
(6) For purposes of computing the penalty required to be
imposed under this paragraph, under a time deposit agreement that
provides that subsequent deposits reset the maturity of the entire
account, each deposit maintained in the account for at least a period
equal to the original maturity of the deposit may be regarded as having
matured individually and been redeposited at intervals equal to such
period.
Except as provided in section 217.7 (_1) (3) , when a time deposit
is payable only after notice, for funds on deposit for at least the
notice period, the penalty for early withdrawal shall be imposed for at
least the notice period.
*
*
*
*
*
(f)
Loans upon security of time deposits. Except as provided
in section 217.7 (JL) (2) , a member bank may make a loan to the depositor
upon the security of his time deposit, provided that the rate of interest
on such loan shall be not less than 1 per cent per annum in excess of the
rate of interest on the time deposit.
4.
Section 217.5 is amended by revising
read as follows:
subparagraph
(c)(1)
to
-4 -
SECTION 217.5 —
*
(c)
WITHDRAWAL OF SAVINGS DEPOSITS
*
*
*
*
Manner of payment of savings deposits.
(1)
Subject to the provisions of subparagraphs
of this paragraph and section 2 1 7 . 7 (m), a member bank may permit
withdrawals to be made from a savings deposit only through payment!^/
to the depositor himself (but not to any other person whether or not
acting for the depositor), except * * *
*
/
12
*
*
*
(2) and
*
* * *
5.
Section 217.7 is amended by removing the number "$10,000"
wherever it appears in paragraph (f) and the number "$7,500" in
paragraph (j) and substituting in lieu thereof the number "$2,500".
and by
6.
Section 217.7 is amended by revising paragraphs
adding a new paragraph (m) to read as follows:
SECTION 217.7 —
(c) and
(JL)
MAXIMUM RATES OF INTEREST PAYABLE BY
MEMBER BANKS ON TIME AND SAVINGS DEPOSITS
*
*
*
*
*
(c)Savings
deposits.
(1)
Except
as
provided
paragraph (m), no member bank shall pay interest at a rate in
5-1/4 percent on any savings deposit.
in
excess
of
(2)
A member bank may pay interest on any
account subject to negotiable or transferable orders of withdrawal that
is authorized pursuant to 12 U.S.C. § 1832(a)
(i)
at a rate not to exceed 5-1/4 percent per annum,
or
(ii) (A) at any rate on a deposit account subject to
the conditions of this paragraph with an initial balance of no less than
$2,500 and an average deposit balance (as computed in paragraph
(c)(2)(ii)(B) of this section) of no less than $2,500.
However, for an
account with an average balance of less than $2,500, a member bank shall
not pay interest in excess of the rate specified in paragraph (c)(2)(i)
of this section for the entire computation period, as described in
paragraph (c)(2)(ii)(B).
deposit
or
(3)
-5 -
(B)
The
average
balance
in
paragraph
(c)(2)(ii)(A) may be calculated on the basis of the average daily balance
over any computation period selected by a member bank which is not longer
than one month.
(For purposes of this paragraph (c)(2)(ii), a "month"
shall mean, at a member bank's option, a calendar month or statement
cycle.
A statement cycle is normally 28 to 31 days, but may occasionally
be as long as 35 days.)
(C)
A member bank may not obligate itself to pay
any interest rate or obligate itself to employ any method of calculation
of an interest rate on this account for a period longer than one month.
A member bank may not condition the interest rate paid upon the period of
time the funds remain on deposit in this account, if that period is
longer than one month.
(D)
A member bank must reserve the right to
require at least seven days' notice prior to withdrawal or transfer of
any funds in this account. If such a requirement for a notice
period is
imposed by a member bank on one depositor, it must be applied equally to
all other depositors holding an account subject to this paragraph
(c) (2) (ii) at the same institution.
(E)
A member bank is not permitted to lend funds
to a depositor
to meet the $2,500 balance requirements of
this
paragraph (c) (2) (ii) .
*
*
*
*
*
{ 1)
Seven-to-31 day time deposits of $2,500 or m o r e .
(1)
Notwithstanding paragraphs (b) and (d), a member bank may pay interest at
any rate as agreed to by the depositor on any nonnegotiable time deposit
of $2,500 or more, with a maturity or required notice period of not less
than seven days
normore than 31 days.
However, a member bank
shall not
pay interest inexcess of the ceiling rate for regular savings
deposits
or accounts on any day the balance in a time deposit issued under this
paragraph is less than $2,500.
(2)
(i)
A member bank is not permitted
(A) to lend funds to a depositor upon the security
of a time deposit that it has issued under this paragraph, or
(B) to lend funds to a depositor to meet or
maintain the minimum denomination requirement of a time deposit issued
under this paragraph.
(ii)
The rate of interest and any other charges
imposed on an overdraft credit arrangement to which withdrawals are paid
or to which payments upon maturity or expiration of a required notice
period are made from an account issued under this paragraph must be not
-6 -
less than those imposed on such overdrafts for customers that do not
possess an account issued under this paragraph at the same institution.
(3)
(i)
Where all or any part of a time deposit issued
under this paragraph is paid before maturity or expiration of the
required notice period, a depositor shall forfeit an amount at least
equal to the greater of
(A) all interest earned on the amount withdrawn
from the most recent of the date of deposit, date of maturity, or date on
which notice was given, or
(B) all interest that could have been earned on
the amount withdrawn during a period equal to one-half the maturity
period or required notice period.
(ii)
Where all or any part of a time deposit
under this paragraph is withdrawn within one business day after the
maturity date of the deposit or the date of expiration of notice of
withdrawal, no early withdrawal penalty is required to be applied on the
amount withdrawn.
(4) Additional deposits to an account issued under this
paragraph with a fixed maturity must be maintained in the account for a
period at least equal to the original term of the account and may be
regarded as having matured individually and having been redeposited at
intervals equal to such period.
For accounts issued under this paragraph
that are subject to a notice period, additional deposits must remain in
the account for a period equal to at least the notice period before such
funds may be withdrawn without the imposition of an early
withdrawal
penalty.
(5) Deposits to any account issued under this paragraph
may not be made by automatically transferring funds from another account
of the depositor at the same institution where thetransfer
is initiated
by the level of the balance in any account.
(6) (i)
Withdrawals
paragraph may not be made
from any account
issued
under
this
(A) by check, draft, or other third party payment
instrument or instruction drawn or issued by the depositor, or
(B) by automatically transferring funds to
another account of the depositor where the transfer is initiated by the
level of balance in any account held by the depositor.
(ii)
by
Payments at maturity or withdrawals may be paid
is
-7 -
(A) check or cash to the depositor,
(B) cash, draft, or electronic transfer
the institution to a third party, or
(C)
transfer
to any other
account held
issued by
by
the
depositor.
(iii)
Notice of withdrawal from an
under this paragraph may be delivered by the depositor to the institution
by telephone or other telecommunication, mail, messenger, standing order,
or by appearance in person at the offices or premises of the institution.
(m)
Money market deposit accounts.
(1)
Notwithstanding
paragraph (c) , a member bank may pay interest at any rate on a deposit
account as described in this paragraph with an initial balance of no less
than $2,500 and an average deposit balance
(as computed in
paragraph (m)(2)) of no less than $2,500.
However, for an account with
an average balance of less than $2,500, a member bank shall not pay
interest in excess of the ceiling rate specified for NOW accounts under
paragraph (c) (2)(i) of this section for the entire computation period, as
described in paragraph (m)(2) of this section.
(2) The average balance for this account may be calculated
on the basis of the average daily balance over any computation period
selected by the member bank that is not longer than one month.
(For
purposes of this paragraph, a "month" shall mean, at a member bank's
option, either a calendar month or a statement cycle.
A statement cycle
is normally 28 to 31 days, but may occasionally be as long as 35 days.)
(3) A member bank is not required to establish a maturity
on this account.
However, it may do so, provided that the maturity is no
longer than one month.
Furthermore, a member bank may not obligate
itself to pay any interest rate or obligate itself to employ any method
of calculation of an interest rate on this account for a period longer
than one month.
A member bank may not condition the interest rate paid
or the method of calculation of the interest rate paid upon the period of
time funds remain on deposit in this account, if that period is longer
than one month.
(4)
A member bank must reserve the right to require at
least seven days' notice prior to withdrawal or transfer of any funds in
this account.
If such a requirement for a notice period is imposed by a
member bank on one depositor, it must be applied equally to all other
depositors holding this account at the same institution.
(5)
(i) A member bank is not required to limit the number
of transfers of funds from this account to another account of the same
depositor when made by mail, messenger, automated teller machine or in
person.
A member bank is not required to limit the number of withdrawals
account
iss
-8 -
(i_.e., payments directly to the depositor) from this account when made by
mail, telephone (via check mailed to the depositor), messenger, automated
teller machine or in person.
A member bank must restrict all
preauthorized (including automatic) transfers of funds from this account
to a maximum of six per month.
Three of such transfers may be by check,
draft or similar device drawn by the depositor to third parties.
Telephone transfers to third parties or to another account of the same
depositor are regarded as preauthorized transfers.
There is no required
minimum denomination for the transfers allowed by this paragraph.
(ii)
In order to ensure that no more than the
permitted number of transfers are made, a member bank must either:
(A) prevent transfers of funds in this account
that are in excess of the limits established by this subparagraph, or
(B) adopt procedures to monitor those transfers on
an ex post basis and contact customers who exceed the limits established
by this paragraph on more than an occasional basis.
For customers who
continue to violate those limits after being contacted by the member
bank, the bank will be required to either close the account or take away
the account's transfer and draft capacities.
(iii)
A member bank, at its option,
consistent basis either the date on a check or the date
applying the limit
on checks
established by this
may use on a
it is paid in
subparagraph
(5).
(iv)
The rate of
interest or other charges imposed on
an overdraft credit arrangement on an account to which withdrawals from
this account can be paid must be not less than those imposed on
overdrafts for customers who do not maintain this account.
(6) A member bank may offer the account authorized by this
paragraph to any depositor.
(7)
A member bank is not required to impose restrictions
on the number of additional deposits (including sweeps from other
accounts) into this account.
depositor
(8) A member bank isnot permitted to lend funds
to meet the $2,500 balance
requirement of this account.
By order of the Board of Governors, December 28, 1982.
(signed) William W. Wiles
William W. Wiles
Secretary of the Board
[SEAL]
to
a
@FedFRASER