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FEDERAL RESERVE BANK OF DALLAS DALLAS, TEXAS February 6, 1961 T o All Banks in the Eleventh Federal Reserve D istrict: The Board o f Governors has reprinted Regulations G and J, as amended, effective A u gu st 21, 1959 and A u gu st 10, 1960, respec tively, to con form w ith the style appearing in the Code o f Federal Regulations. Regulation G (12 CFR 207) relates to the collection o f noncash item s, and Regulation J (12 CFR 210) relates to the collection o f cash items. B y w ay o f explanation, the Federal R eserve System has been assigned Parts 200 to 299 o f Title 12 in the Code o f Federal R egu lations and the regulations follow in numerical order. Part 207 has been assigned to Regulation G and P art 210 to Regulation J. U nder each P art the sections bear the same numbers as sections o f the Board’s lettered regulations except that a decimal system is used so that section 1 o f Regulation G has now becom e 207.1, section 2 has now becom e 207.2, etc. M em ber banks are requested to substitute the enclosed re printed Regulations G and J in the ring binder containing the regulations o f the Board o f Governors and bulletins o f this bank. N onm em ber banks are requested to place the revised regulations in the red ring binder w hich has been previously furnished, containing em ergency bulletins o f the Federal Reserve Bank o f Dallas. It would be appreciated i f you will acknowledge receipt o f the revised regulations by signing and returning the enclosed postal card. Y ours very truly, W atrous H. Irons 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 COLLECTION OF NONCASH ITEMS T REGULATION G (1 2 CFR 207) As amended, effective August 21, 1959 ☆ . 111 P rin t o f N o v e m b e r 1 9 6 0 INQUIRIES REGARDING THIS REGULATION Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the district in which the inquiry arises. REGULATION G (12 C F R 207) As amended, effective August 21, 1959 COLLECTION OF NONCASH ITEMS* AUTHORITY FOR REGULATION This regulation is based upon and issued pursuant to the provisions of subsec tion (i) of section 11, the first paragraph of section 13, and the 14th and 15th paragraphs of section 16, and other relevant provisions of the Federal Reserve Act. SECTION 207.1—D E F IN IT IO N OF NONCASH ITEM S As used in this part, the term “ noncash items” means any items of the following classes when payable in any Federal Reserve D istrict:1 (a) Maturing notes, acceptances, bankers’ acceptances, certifi cates of deposit, bills of exchange, and drafts with or without securities, bills of lading, or other documents attached; (b) Drafts and orders on savings deposits with pass books attached; (c) Checks, drafts, and other cash items which have previously been dishonored or on which special advice of payment or dis honor is required;2 (d) Maturing bonds and coupons (other than obligations of the United States and its agencies which are redeemed by Federal Reserve banks as fiscal agents); (e) State and municipal warrants, including both orders to pay addressed to officers of States and political subdivisions thereof and any special or general obligations of States and political subdivisions thereof; (/) All other evidences of indebtedness and orders to pay, except checks and bank drafts handled under the provisions of Part 210 of this chapter 2 and checks and bank drafts drawn on or payable by a nonmember bank which cannot be collected at par in funds acceptable to the Federal Reserve bank of the dis trict in which such nonmember bank is located.3 * The text corresponds to the Code of Federal Regulations, Title 12, Chapter II, Part 207; cited as 12 CFR 207. 1 For the purposes of this part, any dependency, insular possession or part of the United States outside the States of the United States and the District of Columbia shall be deemed to be in or o f such Federal Reserve Reserve district as the Board of Governors may designate. 2 Any check, draft, or other item which is normally handled as a cash item will not be han dled as a noncash item unless special conditions require that this be done, and the Federal Reserve bank will decide whether such special conditions exist. 8 Checks and bank drafts drawn on or payable by a nonmember bank which cannot be col lected at par in funds acceptable to the Federal Reserve bank of the district in which such nonmember bank is located, and which may not be received under the terms of Part 210 of this chapter, likewise may not be received as noncash items under the terms of this part. 1 2 REGULATION G S ecs . 207.2-207.3 SECTION 207.2— R E C E IPT OF ITE M S FOR COLLECTION Each Federal Reserve bank may receive for collection noncash items from member and nonmember clearing banks in its district, from other Federal Reserve banks, and from all member and non member clearing banks in other Federal Reserve districts which are authorized to route direct for the credit of their respective Federal Reserve banks, subject to the terms and conditions of this part. SECTION 207.3—T E R M S OF CO LLECTION (a) Agreement of sending bank.— Each member and nonmember clearing bank which sends noncash items to any Federal Reserve bank for collection shall by such action be deemed: (1) to authorize the Federal Reserve banks to handle such items subject to the terms and conditions of this part; (2) to warrant its own authority to give the Federal Reserve banks such authority; (3) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (includ ing but not limited to attorneys’ fees and expenses of litigation) re sulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty of prior en dorsements, or resulting from any action taken by the Federal Reserve bank within the scope of its authority for the purpose of collecting such noncash items; and (4) to guarantee all prior endorsements on such items whether or not a specific guaranty is incorporated in an endorsement of the sending bank. (b ) Federal Reserve bank as agent.— A Federal Reserve bank will act only as agent of the bank from which it receives such noncash items and will assume no liability except for its own negligence and its guaranty of prior endorsements. (c) Presentation of items by Federal Reserve bank.— A Federal Reserve bank may present such noncash items with any accompanying documents for payment direct to the person, firm, or corporation on which they are drawn or by or through which they are payable or collectible, or may present them for payment or forward them for col lection direct to the bank on which they are drawn, at which they are payable, or through which they are payable or collectible; or, in its discretion, may forward them to another agent with similar authority to present them for payment or forward them for collection. The bank upon which any such noncash item may be drawn, or at which the same may be payable or through which the same may be payable or collectible shall be deemed to be a proper agent for collection within the meaning of this part. (d ) Items payable in other districts.— Noncash items received by S ec. 207.3 REGULATION G 3 a Federal Reserve bank payable in other districts will be forwarded for collection to the Federal Reserve bank of the district in which such items are payable; except that, when in the judgment of the Federal Reserve bank the size or character of the items or other special cir cumstances justify such action, any such items, in the discretion of the Federal Reserve bank, may be forwarded for collection direct to the bank on which they are drawn, at which they are payable, or through which they are payable or collectible, or may be forwarded for collection to another agent with authority to present them for payment direct to the person, firm, or corporation on which they are drawn or by or through which they are payable or collectible or to present them for payment direct to the bank on which they are drawn, at which they are payable, or through which they are payable or collectible. (e) Forms of payment accepted by Federal Reserve bank.—A Federal Reserve bank may, in its discretion and at its option, accept from any bank in payment of or from any collecting agent in remit tance for such noncash items, cash, checks, bank drafts, transfers of funds or bank credits, or other forms of payment or remittance, accept able to the collecting Federal Reserve bank. The Federal Reserve bank shall not be liable for the failure of any bank or any agent to collect, or to pay, or to remit for, such noncash items, nor for any loss result ing from the acceptance from any bank or any agent, in lieu of cash, of any other form of payment or remittance authorized herein, nor for the nonpayment of, or failure to realize upon, any bank draft or other medium of payment or remittance which may be accepted from any bank or any collecting agent. (/) Collection of remittances for noncash items.— Bank drafts and other forms of payment or remittance received by a Federal Re serve bank in payment of or in remittance for noncash items handled under the terms of this part will be collected, at the option of the Fed eral Reserve bank, either under the terms and conditions of this part or under the terms and conditions of Part 210 of this chapter. (g) Suspension or closing of paying or remitting bank.— No draft, authorization to charge, or other order, upon any reserve balance, clearing account, deposit account, or other funds of a paying, remit ting, or collecting bank in the possession of a Federal Reserve bank, issued for the purpose of settling items handled under the terms of this part will be paid, acted upon, or honored after receipt by such Federal Reserve bank of notice or suspension or closing of such pay ing, remitting, or collecting bank. 4 REGULATION G S ecs . 207.3-207.4 (h) Items sent direct to Federal Reserve bank in another dis trict.— With respect to any noncash item sent direct by a member or nonmember clearing bank in one district to a Federal Reserve bank in another district, the relationships and the rights and liabilities existing between the member or nonmember clearing bank, the Federal Re serve bank of its district, and the Federal Reserve bank to which the noncash item is sent will be the same, and the relevant provisions of this part will apply, as though the member or nonmember clearing bank had sent such noncash item to the Federal Reserve bank of its district with its endorsement and guaranty of prior endorsements and such Federal Reserve bank had sent the noncash item to the other Federal Reserve bank with its endorsement and guaranty of prior endorsements. SECTION 207.4—O T H E R RULES Each Federal Reserve bank may also promulgate rules not incon sistent with the terms of the law or of this part, governing the de tails of its noncash collection operations. Such rules may be set forth' by each Federal Reserve bank in circulars to its member and non member clearing banks and shall be binding upon any member or nonmember clearing bank which send any noncash item to such Fed eral Reserve bank for collection or to any other Federal Reserve bank for the account of such Federal Reserve bank for collection. REGULATION G 5 D ESIG N A TIO N OF F E D E R A L RESER VE D ISTR ICTS Section 207.52 Designation of Federal Reserve District for the Virgin Islands.— For purposes of this part, the Virgin Islands shall be deemed to be in or of the Second Federal Reserve District. Section 207.53 Designation of Federal Reserve District for Puerto Rico.— For purposes of this part, Puerto Rico shall be deemed to be in or of the Second Federal Reserve District. Section 207.54 Designation of Federal Reserve District for Guam.— For purposes of this part, Guam shall be deemed to be in or of the Twelfth Federal Reserve District. BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM CHECK CLEARING AND COLLECTION T REGULATION J (1 2 CFR 210) As amended, effective August 10, 1960 P r in t o f N o v ^ n tb n r 1 9 6 0 INQUIRIES REGARDING THIS REGULATION Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the district in which the inquiry arises. REGULATION J (12 CFR 210) As amended, effective August 10, 1960 CHECK CLEARING AND COLLECTION* SECTIO N 210.1— STATU TO RY PROVISIONS Section 16 of the Federal Reserve Act (38 Stat. 265; 12 U.S.C. 248o) authorizes the Board of Governors of the Federal Reserve System to require each Federal Reserve bank to exercise the functions of a clear ing house for its member banks, and section 13 of the Federal Reserve Act, as amended by the Act approved June 21, 1917 (40 Stat. 235; 12 U.S.C. 342), authorizes each Federal Reserve bank to receive from any nonmember bank or trust company, solely for the purposes of exchange or of collection, deposits of current funds in lawful money, nationalbank notes, Federal Reserve notes, checks and drafts payable upon presentation, or maturing notes and bills, provided such nonmember bank or trust company maintains with its Federal Reserve bank a balance sufficient to offset the items in transit held for its account by the Federal Reserve bank. SECTION 210.2—G E N E R A L RE Q U IREM EN TS (a) In pursuance of the authority vested in it under these pro visions of law, the Board of Governors of the Federal Reserve System, desiring to afford both to the public and to the various banks of the country a direct, expeditious, and economical system of check collec tion and settlement of balances, has arranged to have each Federal Reserve bank exercise the functions of a clearing house and collect checks for such of its member banks as desire to avail themselves of its privileges and for such nonmember State banks and trust companies as may maintain with the Federal Reserve bank balances sufficient to qualify them under the provisions of section 13 to send items to Federal Reserve banks for purposes of exchange or of collection. Such nonmember State banks and trust companies will hereinafter be referred to as nonmember clearing banks. (b) Each Federal Reserve bank shall exercise the functions of a clearing house and collect checks under the general terms and condi tions set forth in this part, and each member bank and nonmember clearing bank shall cooperate fully in the system of check clearance and collection for which provision is made in this part. * The text corresponds to the Code of Federal Regulations, Title 12, Chapter II, Part 210; cited as 12 CFR 210. 1 2 REGULATION J S e c s . 210.3-210.4 SECTION 210.3— CHECK S R E C E IV E D FOR COLLECTION (a) Each Federal Reserve bank shall receive at par from member and nonmember clearing banks in its district,1 from other Federal Reserve banks, and from all member and nonmember clearing banks in other Federal Reserve districts which are authorized to route direct for the credit of their respective Federal Reserve banks, checks18 drawn on all member and nonmember clearing banks of its district, and checks drawn on all other nonmember banks of its district which are collectible at par in funds acceptable to it. (b) Each Federal Reserve bank may receive at par from member and nonmember clearing banks in its district, checks drawn on all member and nonmember clearing banks in other Federal Reserve districts, and checks drawn on all other nonmember banks in other Federal Reserve districts which are collectible at par in funds accept able to the collecting Federal Reserve bank. (c ) No Federal Reserve bank shall receive on deposit or for col lection any check drawn on any nonmember bank which cannot be collected at par in funds acceptable to the Federal Reserve bank. SECTION 210.4— 'T IM E SCHEDULE AN D A V A IL A B IL IT Y OF C R E D IT S (a) Each Federal Reserve bank will publish a time schedule show ing the time at which any item sent to it will be counted as reserve and become available for withdrawal or other use by the sending bank. For all checks received, the sending bank will be given immedi ate credit, or deferred credit, in accordance with such time schedule, and as provided below. (b ) For all such checks as are received for immediate credit in accordance with such time schedule, immediate credit, subject to final payment, will be given upon the books of the Federal Reserve bank at full face value in the reserve account or clearing account upon day of receipt, and the proceeds will at once be counted as reserve and become available for withdrawal or other use by the sending bank; Provided, however, That the Federal Reserve bank may in its discre tion refuse at any time to permit the withdrawal or other use of credit 1 For the purposes of this part, any dependency, insular possession or part of the United States outside the States of the United States and the District of Columbia shall be deemed to be in or of such Federal Reserve district as the Board o f Governors may designate. la A check is generally defined as a draft or order upon a bank or banking house, purport ing to be drawn upon a deposit of funds, for the payment at all events of a certain sum of money to the order of a certain person therein named, or to him or his order, or to bearer, and payable on demand. S e c s . 210.4-210.5 REGULATION J 3 given for any item for which the Federal Rserve bank has not yet received payment in actually and finally collected funds. (c ) For all such checks as are received for deferred credit in accord ance with such time schedule, deferred credit, subject to final pay ment, will be entered upon the books of the Federal Reserve bank at full face value, but the proceeds will not be counted as reserve nor become available for withdrawal or other use by the sending bank until such time as may be specified in such time schedule,2 at which time credit will be transferred from the deferred account to the re serve account or clearing account subject to final payment and will then be counted as reserve and become available for withdrawal or other use by the sending bank; Provided, however, That the Federal Reserve bank may in its discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which the Federal Reserve bank has not yet received payment in actually and finally collected funds. SECTION 210.5— T E R M S OF COLLECTION The Board of Governors of the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and non member clearing bank which sends checks to any Federal Reserve bank for deposit or collection shall by such action be deemed to authorize the Federal Reserve banks to handle such checks subject to the following terms and conditions; to warrant its own authority to give the Federal Reserve banks such authority; to agree to indem nify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses of litiga tion) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty of prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope of its authority for the purpose of collecting such checks; and to guarantee all prior endorsements on such checks whether or not a specific guaranty is incorporated in an endorsement of the sending bank. (a) A Federal Reserve bank will act only as agent of the bank from which it receives such checks and will assume no liability except for its own negligence and its guaranty of prior endorsements. (b) A Federal Reserve bank may present such checks for payment 2 For rules for computation o f reserves and penalties for deficiencies in reserves, see §§ 204.2 and 204.3 of this chapter. 4 REGULATION J S e c . 210.5 or send such checks for collection direct to the bank on which they are drawn or at which they are payable, or in its discretion may forward them to another agent with authority to present them for payment or send them for collection direct to the bank on which they are drawn or at which they are payable. A Federal Reserve bank, or any agent to which such checks are forwarded by a Federal Reserve bank, may present such checks pursuant to any special collection agreement not inconsistent with the terms of this regulation or may present them through a clearing house subject to the rules and prac tices thereof. (c) A Federal Reserve bank may, in its discretion and at its option, either directly or through or from an agent, accept in payment of or in remittance for such checks, cash, bank drafts, transfers of funds or bank credits, or other forms of payment or remittance, acceptable to the collecting Federal Reserve bank. The Federal Reserve bank shall not be liable for the failure of the drawee bank or any agent to pay or remit for such checks, nor for any loss resulting from the accept ance from the drawee bank or any collecting agent, in lieu of cash, of any other form of payment or remittance authorized herein, nor for the nonpayment of, or failure to realize upon, any bank draft or other medium of payment or remittance which may be accepted from the drawee bank or any collecting agent. (d) Any check which a Federal Reserve bank or an agent thereof presents to the drawee bank for payment or sends to the drawee bank for collection, and for which remittance or settlement is made by the drawee bank on the day on which it receives3 such check, may be returned for credit or refund at any time prior to midnight of the drawee’s next business day following such day of receipt or prior to the time provided by applicable clearing house rule or special collec tion agreement, whichever is earlier, except that this paragraph shall not apply to checks presented over the counter. (e) Checks received by a Federal Reserve bank which are pay able in its own district will ordinarily be forwarded or presented direct to the banks on which they are drawn, and such banks will be required to remit or pay therefor at par in such one or more of the forms of payment or remittance authorized under paragraph (c) hereof as may be acceptable to the Federal Reserve bank. ( j ) Checks received by a Federal Reserve bank payable in other 8 A check received by a drawee bank on a day other than its business day, or received on a business da.y after its regular business hours or during afternoon or evening periods when it has reopened (or remained open) for limited functions, shall be deemed to have been received on its next succeeding business day. S ec . 210.5 REGULATION J 5 districts will ordinarily be forwarded for collection to the Federal Reserve bank of the district in which such checks are payable; Pro vided, however, That, where arrangements can be made satisfactory to the collecting bank or agent and to the Federal Reserve bank of the district in which such checks are payable, any such checks may be forwarded for collection direct to the bank on which they are drawn or at which they are payable, or may be forwarded for col lection to another agent with authority to present them for payment direct to the bank on which they are drawn or at which they are payable. All such checks shall be handled subject to all the terms and conditions of this part. (g) With respect to any check sent direct by a member or non member clearing bank in one district to a Federal Reserve bank in another district, the relationships and the rights and liabilities existing between the member or nonmember clearing bank, the Federal Reserve bank of its district and the Federal Reserve bank to which the check is sent will be the same, and the relevant provisions of this part will apply, as though the member or nonmember clearing bank had sent such check to the Federal Reserve bank of its district with its endorse ment and guaranty of prior endorsements and such Federal Reserve bank had sent the check to the other Federal Reserve bank with its endorsement and guaranty of prior endorsements. (h) Bank drafts received by a Federal Reserve bank in payment of or in remittance for checks handled under the terms of this part shall likewise be handled for collection subject to all the terms and conditions of this part. (i) The amount of any check for which payment in actually and finally collected funds is not received shall be charged back to the forwarding bank, regardless of whether or not the check itself can be returned. In such event, neither the owner or holder of any such check, nor the bank which sent such check to the Federal Reserve bank for collection shall have any right of recourse upon, interest in, or right of payment from, any reserve balance, clearing account, deposit account, or other funds of the drawee bank or of any bank to which such checks have been sent for collection, in the possession of the Federal Reserve bank. No draft, authorization to charge, or other order, upon any reserve balance, clearing account, deposit account, or other funds of a paying, remitting, or collecting bank in the possession of a Federal Reserve bank, issued for the purpose of settling items handled under the terms of this part will be paid, acted upon, or honored after receipt by such Federal Reserve bank of notice of suspension or closing of such paying, remitting or collecting bank. 6 REGULATION J S ec . 210.6 SECTION 210.6— O TH ER RULES AN D REGU LATIO NS Each Federal Reserve Bank may also promulgate rules not incon sistent with the terms of the law or of the regulations of this part, governing the details of its operations in clearing and collecting checks and other cash items. Such rules may, among other things, prescribe the types of checks and other items that will be received as cash items under this regulation, classify cash items, require separate sorts and cash letters, and provide different closing times for the receipt of different types or classes of cash items. Such rules shall be set forth by the Federal Reserve Bank in its letters of instruction to its mem ber and nonmember clearing banks and shall be binding upon any member or nonmember clearing bank which sends any check or other cash item to such Federal Reserve Bank for collection or to any other Federal Reserve Bank for the account of such Federal Reserve Bank for collection. REGULATION J 7 D ESIG N A TIO N OF F E D E R A L RESER VE D ISTR ICTS Section 210.52 Designation of Federal Reserve District for the Virgin Islands.— For purposes of this part, the Virgin Islands shall be deemed to be in or of the Second Federal Reserve District. Section 210.53 Designation of Federal Reserve District for Puerto Rico.— For purposes of this part, Puerto Rico shall be deemed to be in or of the Second Federal Reserve District. Section 210.54 Designation of Federal Reserve District for Guam. — For purposes of this part, Guam shall be deemed to be in or of the Twelfth Federal Reserve District.