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Circular No. 81-35
Dated; 2/18/81
I M P O R T A N T
N O T I C E
ATTENTION ALL NONMEMBER BANKS,
SAVINGS & LOANS, AND CREDIT UNIONS:
The Federal Reserve Bank of Dallas is in the process of preparing new binders
of Regulations of the Board of Governors of the Federal R eserve System and
Bulletins of the Federal Reserve Bank of Dallas which will be forwarded to you
in the future.
In the interim , it is very im portant th a t you retain the enclosed
m aterial for the purpose of updating the binders. Upon receipt of your binders,
all m aterial should be inserted, making the binders current.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Ubrary (FedHistory@dal.frb.org)
F ederal Reser ve Bank
DALLAS, TEXAS
of
Dallas
75222
Circular No. 81-35
February 18, 1981
REVISED REGULATION Q PAMPHLET AND SUPPLEMENT
TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has
issued the revised Regulation Q pamphlet and supplement as amended
effective January 15, 1981.
The enclosed pamphlet and supplement should be filed in your
Regulations Binder, and the previous pamphlet, supplement, and amend
ments should be destroyed.
Additional copies of this m aterial will be furnished upon
request to our Bank and Public Information D epartm ent, Ext. 6266.
Sincerely yours,
William H. Walllace
First Vice President
Enclosures
Banks and others are encouraged to use the following incoming W A TS numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.
BOARD O F GO VERNO RS O F TH E FEDERAL RESERVE SYSTEM
SUPPLEMENT TO REGULATION Q
t
As amended effective January 15, 1981
SECTION 217.7— MAXIMUM RATES OF
INTEREST PAYABLE BY MEMBER BANKS ON
TIME AND SAVINGS DEPOSITS
Pursuant to the provisions of Section 19 of the
Federal Reserve Act and § 217.3 of this Part, the
Board of Governors of the Federal Reserve System
hereby prescribes the following maximum rates' of
interest per annum payable by member banks of the
Federal Reserve System on time and savings de
posits:
(a) Time deposits of $100,000 or more. There
is no maximum rate of interest presently prescribed
on any time deposit of $100,000 or more.
(b) Fixed ceiling time deposits of less than
$100,000. Except as provided in paragraphs (a),
(d), (e), (f), and (g). no member bank shall pay
interest on any time deposit at a rate in excess of
the applicable rate under the following schedule:
Maturity
Maximum p tr cent
14 days or more but less
than 90 days
5 'A
90 days or more but less
than 1 year
53A
1 year or more but less
than 2'h years
2[/i years or more but
less than 4 years
6 '/2
4 years or more but
less than 6 years
7 '/4
drawal. the issuance of which is authorized by Fed
eral law.
(d) G overnm ental unit time deposits of less
than $100,000. Except as provided in paragraphs
(a), (f), and (g), no member bank shall pay interest
on any time deposit which consists of funds depos
ited to the credit of, or in which the entire benefi
cial interest is held by, the United States, any State
of the United States, or any county, municipality or
political subdivision thereof, the District of Co
lumbia, the Commonwealth of Puerto Rico, the
Virgin Islands, American Samoa, Guam, or politic
al subdivision thereof, at a rate in excess of 8 per
cent.2
(e) Individual Retirement Account and Keogh
(H.R. 10) Plan deposits of less than $100,000.
Except as provided in paragraphs (a) and (g). a
member bank may pay interest on any time deposit
with a maturity of three years or more that consists
of funds deposited to the credit of, or in which the
entire beneficial interest is held by, an individual
pursuant to an Individual Retirement Account
agreement or Keogh (H.R. 10) Plan established
pursuant to 26 U.S.C. (I.R.C. 1954) §§ 408 . 401.
at a rate not in excess of 8 per cent.2
( 0 26-w eek m oney m a rk e t tim e deposits of
less th a n $100,000. Except as provided in para
graphs (a), (b) and (d), a member bank may pay
interest on any nonnegotiable time deposit of
$10,000 or more, with a maturity of 26 weeks at a
rate not to exceed the rates set forth below:
Rate established (auction
Maximum Per Cent
average on a discount
basis) fo r U .S. Treasury
8 years or more
VA
bills with maturities o f 26
weeks issued on or imme
diately
prior to the date of
(c)
Saving deposits. No member bank shall pay
deposit
("B ill R ate")
interest at a rate in excess of 5 lA per cent on any
7.75
7.50 per cent or below
savings deposit. No member bank shall pay interest
at a rate in excess of 5[A per cent on any savings
Bill Rate plus oneAbove 7.50 per cent
deposit that is subject to negotiable orders of with
q uarter o f one per
1 The lim itation on rates o f interest payable by m em ber
cent
6 years or more but less
than 8 years
V /2
banks o f the F ederal R eserve S ystem on tim e and savings
d ep osits, as prescribed h erein, are not applicable to any
d eposit w hich is payable only at an office o f a m em ber
bank located outside the S tates o f the U nited States and
the D istrict o f C olum bia.
2 T h e ceilin g rate on this categ o ry is th e h ig h est fixed
c e ilin g r a te th a t m ay b e p a id o n tim e d e p o s its u n d e r
$ 1 0 0 ,0 0 0 by any F ederally insured com m ercial ban k, m u
tual savings b an k , o r savin gs and loan association.
JANUARY 1981
t D estroy any previous S upplem ents.
Rounding rates to the next higher rate is not per
mitted and interest may not be compounded during
the term of this deposit. A member bank may offer
this category o f time deposit to all depositors.
However, a member bank may pay interest on any
nonnegotiable time deposit of $10,000 or more
with a m aturity of 26 weeks which consists of
funds deposited to the credit of, or in which the en
tire beneficial interest is held by:
(1) the United States, any State of the United
States, or any county, municipality or political sub
division thereof, the D istrict of C olum bia, the
Commonwealth of Puerto Rico, the Virgin Islands,
American Samoa, Guam, or political subdivision
thereof; or
(2) an individual pursuant to an Individual Re
tirement Account agreement or Keogh (H. R. 10)
Plan established pursuant to 26 U.S.C. (IRC 1954)
§§ 408, 401,
(1) the United States, any State of the United
States, or any county, municipality or political sub
division thereof, the D istrict of Colum bia, the
Commonwealth of Puerto Rico, the Virgin Islands,
American Samoa, Guam, or political subdivision
thereof; or
(2) an individual pursuant to an Individual Re
tirement Account agreement or Keogh (H. R. 10)
Plan established pursuant to 26 U .S.C . (I.R .C .
1954) §§ 408, 401,
at a rate not to exceed the ceiling rate payable on the
same category of deposit by any Federally insured
savings and loan association or mutual savings bank.4
(h)
O bligations of the parent bank holding
company of a member bank. Notwithstanding the
above, interest may be paid on a deposit as defined
in § 217.1(h) of this Part at a rate not to exceed the
following schedule:
at a rate not to exceed the ceiling rate payable on the Original
same category of deposit by any Federally insured Maturity or
savings and loan association or mutual savings bank.3 Redemption
(g)
Tim e deposits of less than $100,000 with Period
m aturities of 2'/z years o r m ore. Except as pro
vided in paragraphs (a), (b), (d) and (e), a member 2Vi to
bank may pay interest on any nonnegotiable time 4 years
deposit with a maturity of 2Vi years or more that is
issued on or after Thursday <ef every other week at
a rate not to exceed the higher of one-quarter of
one per cent below the average 2 Vi year yield for
United States Treasury securities as determined and
announced by the United States Department of the
Treasury immediately prior to such Thursday, or
9.25 per cent. The average 2Vi year yield will be
rounded by the United States Department of the
Treasury to the nearest 5 basis points. Except as
provided below, in no event shall the rate of inter
est paid exceed 11.75 per cent. A member bank
may offer this category of time deposit to all de
positors. However, a member bank may pay inter
est on any nonnegotiable time deposit with a matu
rity of 2 Vi years or more which consists of funds
deposited to the credit of, or in which the entire
beneficial interest is held by:
Maximum Per Cent
For an obligation that is not redeem
able prior to maturity, interest may be
paid at the rate established for 2 Vz
year variable ceiling time deposits
pursuant to the provisions of §
217.7(g) in effect at the time the obli
gation is issued. For an obligation
that is redeemable prior to maturity,
the maximum rate of interest that may
be paid from the date of issuance until
the first date on which the obligation
may be redeemed shall not exceed the
rate established for IVi year variable
ceiling time deposits pursuant to the
provisions of § 217.7(g) in effect at
the time the obligation is issued. For a
successive period thereafter, interest
may be paid during such period until
the next date on which the obligation
may be redeemed at a rate not to ex
ceed the rate that would be in effect
on the first day of such period for 2Vi
year variable ceiling time deposits
established pursuant to the provisions
of § 217.7(g) in effect at the time the
obligation was issued.
3 The ceiling rate o f interest payable for this category o f de
posit by Federally insured savings and loan associations and
m utual savings banks is 7.75 per cent when the Bill Rate is
7.25 per cent o r low er, one-half o f one per cent above the Bill
Rate when the Bill Rate is above 7.25 per cent but below 8.50
* T he ceiling rate o f interest payable for this category o f de
per cent, 9.00 per cent when the Bill Rate is 8.50 per cent or
posit by Federally insured savings and loan associations and
above but below 8.75 per cent, and one-quarter o f one per
m utual savings banks is one-quarter of one per cent above the
cent above the Bill Rate when the Bill Rate is 8.75 per cent or
rate that may be paid by m em ber banks.
above.
26 weeks or For an obligation that is not redeem
able prior to maturity, interest may be
more but
paid at the rate established for 26less than
week money market time deposits
2'/: vears
pursuant to the provisions of §
(SKXOOO
217.7(f) in effect at the time the obli
minimum
gation is issued. For an obligation
denomina
that is redeemable prior to maturity,
tion
the maximum rate of interest that may
required)
be paid from the date of issuance until
the first date on which the obligation
may be redeemed shall not exceed the
rate established for 26-week money
market time deposits pursuant to the
provisions of § 217.7(f) in effect at
the time the obligation is issued. For a
successive period thereafter interest
may be paid during such period until
the next date on which the obligation
may be redeemed at a rate not to ex
ceed the rate that would be in effect
on the first day of such period for
Original
Maturity or
Redemption
Period
Maximum Per Cent
26-week money market time deposits
established pursuant to the provisions
of § 217.7(f) in effect at the time the
obligation was issued.
14 days or
more but
less than
2Vi years
(No mini
mum de
nomination
required)
Interest may be paid at the ceilings
established pursuant to the provisions
of § 217.7(b) in effect at the time the
obligation is issued.
less than
14 days
No interest may be paid.
BOARD OF GOVERNORS
o f the
FEDERAL RESERVE SYSTEM
INTEREST ON DEPOSITS
REGULATION Q
(12 CER 217)
As amended effective January 15, 1981
Any inquiry relating to this regulation should be addressed to the Federal
Reserve Bank of the Federal Reserve District in which the inquiry arises.
JANUARY 1981
CONTENTS
Page
Page
Sec.
Sec.
2 1 7 . 0 — Scope o f P a r t ..........................
2 1 7 . 1 — D e f i n i t i o n s ..........................................
(a)
(b)
(c)
(d)
(e)
(0
3
3
Demand d e p o sits...........................
Time deposits................................
Time certificates of deposit........
Time deposits, open account. . . .
Savings deposits.............................
Deposits as including certain
promissory notes.........................
Multiple maturity time deposit ..
Obligations issued by the parent
bank holding company of a
member b a n k ............................
Credit balances.............................
Foreign bank..................................
3
3
3
3
4
S ec . 217.2— Demand Deposits .......................
(a) Interest prohibited..........................
(b) Meaning of in te re s t.....................
6
6
6
(g)
(h)
(i)
(j)
S ec . 217.3— Interest on T ime and
Savings D e po sit s ........................................
(a) Maximum r a t e .............................
(b) Modification of contracts to con
form to regulation......................
(c) Member banks limited to max
imum rate for Statebanks . . . .
(d) Grace periods in computing in
terest on savings deposits.........
(e) Computation of in terest...............
( 0 No interest after maturity or ex
piration of n o tic e .....................
(g) Time deposits of foreign govern
mental entities and interna
tional organizations.................
S ec . 217.4— Payment of T ime D eposits
Before Maturity .........................................
4
5
5
5
5
6
6
6
6
6
6
7
7
(a) Time deposits payable on a
specified d a te .............................
(b) Time deposits payable after a
specified p e rio d .........................
(c) Time deposits payable after a
specified notice...........................
(d) Penalty for early withdrawals . . .
(e) Disclosure of early withdrawal
penalty.........................................
(f) Loans upon security of time de
posits ...........................................
S e c . 2 1 7 .5 — W
it h d r a w a l o f
7
7
7
7
9
9
S a v in g s
D e p o s i t s ...........................................................................
9
(a) Requirements regarding notice of
w ithdraw al.............................
(b) Loans on security of savings de
posits ........................................
(c) Manner of payment of savings
deposits....................................
S e c . 2 1 7 . 6 — A d v e r t is in g
of
In t e r e s t
(a) Annual rate of simple interest. . .
(b) Percentage yields based on one
y e a r..........................................
(c) Percentage yields based on per
iods in excess of one year . . . .
(d) Time or amount requirements . . .
(e) Penalty for early withdrawals . . .
(f) P ro fit............................................
(g) Accuracy o f advertising............
(h) Solicitation of deposits for
banks ....................................
(i) Money market time d epo sits_
d ix
9
9
on
D e p o s i t s ...........................................................................
Sta tu to ry A p p e n
9
..............................................
10
10
10
10
10
10
11
11
11
11
11
[S ec . 217.7— S upplement, M aximum Rates of Interest Payable by Member Banks on Time and
S avings D eposits, is printed separately.]
REGULATION Q
(12 CFR 217)
As amended effective January 15, 1981
INTEREST ON DEPOSITS*
SECTION 217.0— SCOPE OF PART
(a) This Part is issued under authority of provi
sions o f section 19 of the Federal Reserve Act
which, together with related provisions of law. are
cited in the Appendix.
(b) This Part relates to the payment of deposits
and interest thereon by member banks of the Fed
eral Reserve System and not to the computation
and maintenance of the reserves which member
banks are required to maintain against deposits.
The rules concerning reserves of member banks are
contained in Part 204 of this chapter.
(c) Under authority of the provisions of sec
tion 7 of the International Banking Act of 1978
(12 U.S.C. § 3105), the provisions of this Part ap
ply to a Federal branch or agency of a foreign bank
and to a State uninsured branch or agency of a for
eign bank in the same manner and to the same ex
tent as if the branch or agency were a member
bank, except as may be otherwise provided by the
Board, if (i) its parent foreign bank has total world
wide consolidated bank assets in excess of SI bil
lion; (ii) its parent foreign bank is controlled by a
foreign company which owns or controls foreign
banks that in the aggregate have total worldwide
consolidated bank assets in excess of SI billion; or
(iii) its parent foreign bank is controlled by a group
of foreign companies that own or control foreign
banks that in the aggregate have total worldwide
consolidated bank assets in excess of SI billion.
(d) The provisions of this Part do not apply to
any deposit that is payable only at an office located
outside of the States of the United States and the
District of Columbia of a member bank or of a for
eign bank.
SECTION 217.1— DEFINITIONS
(a)
D em and deposits. The term “ any deposit
which is payable on demand” , hereinafter referred
3
to as a “ demand deposit” , includes every deposit
which is not a “ tim e deposit” or “ savings de
posit” , as defined in this section.
(b) Time deposits. The term “ time deposits”
means “ time certificates of deposit” and “ time de
posits, open account” , as defined in this section.
(c) T im e c e rtific a te s o f d ep o sit. The term
“ time certificate of deposit” means a deposit evi
denced by a negotiable or non-negotiable instru
ment which provides on its face that the amount of
such deposit is payable to bearer or to any specified
person or to his order
(1) On a certain date, specified in the instru
ment, not less than 14 days after date of the de
posit, or
(2) At the expiration of a certain specified
time not less than 14 days after the date of the in
strument, or
(3) Upon notice in writing which is actually
required to be given not less than 14 days before
the date of repayment,1 and
(4) In all cases only upon presentation and
surrender of the instrument.
(d) T im e d ep o sits, open accou nt. The term
“ time deposit, open account” means a deposit,
other than a “ time certificate of deposit” , with re
spect to which there is in force a written contract
with the depositor that neither the whole nor any
part of such deposit may be withdrawn, by check
or otherwise, prior to the date of maturity, which
shall be not less than 14 days after the date of the
deposit,2 or prior to the expiration of the period of
*
The text correspond) to the Code of Federal Regulations.
Tide 12. Chapter n . Pan 217; trued as 12 CFR 217. Oie words
"this P a n ", as used herein, mean Regulation Q.
1 A deposit with respect to which the bank merely reserves the
right to require notice of not less than 14 days, before any with
drawal is made is not a “ time certificate of deposit” within the
meaning of the above definition.
2 Deposits, such as Christmas club accounts and vacation club
accounts, which are made under written contracts providing that
§ 217.1
notice which must be given by the depositor in
writing not less than 30 days in advance of with
drawal.3
(e)
S aving d ep o sits. The term “ savings de
posits” means a deposit—
(1) That consists of funds deposited to the
credit of or in which the entire beneficial interest is
held by one or more individuals, or of a corpora
tion, association, or other organization operated pri
marily for religious, philanthropic, charitable, edu
cational, fraternal, or other similar purposes and
not operated for profit;4 or that consists of funds
deposited to the credit of or in which the entire
beneficial interest is held by the United States, any
State of the United States, or any county, munici
pality, or political subdivision thereof, the District
of Columbia, the Commonwealth of Puerto Rico,
the Virgin Islands, American Samoa, Guam, or po
litical subdivision thereof; or that consists of funds
deposited to the credit of, or in which any benefi
cial interest is held by a corporation, association, or
other organization not qualifying above to the ex
tent such funds do not exceed $130,000 per such
depositor at a member bank; and
(2) With respect to which the depositor is not
required by the deposit contract but may at any
time be required by the bank to give notice in writ
ing of an intended withdrawal not less than 14 days
before such withdrawal is made3 and which is not
payable on a specified date or at the expiration of a
specified time after the date of deposit.
(3) In those States where banks are permitted
to offer deposits subject to negotiable orders of
withdrawal, such deposits may be maintained if
such deposits consist of funds deposited to the
credit of or in which the entire beneficial interest is
held by one or more individuals, or a corporation,
association, or other organization operated primar
no withdrawal shall be made until a certain number o f periodic
deposits have been m ade during a period o f not less than 3
months constitute "tim e deposits, open account", even though
some of the deposits are made within 14 days from the end of
the period.
’ A deposit with respect to which the bank merely reserves the
right to require notice o f not less than 14 days before any with
drawal is made is not a “ time deposit, open account” , within the
meaning of the above definition.
* Deposits in joint accounts of two or more individuals may be
classified as savings deposits if they meet the other requirements
of the above definition. Deposits of a partnership operated for
profit may also be classified as savings to the extent such de
posits do not exceed 5150,000 per partnership at a member bank.
3 The exercise by the bank of its rights to require such notice
shall not cause the deposit to cease to be a savings deposit.
REGULATION Q
ily for religious, philanthropic, charitable, educa
tional, fraternal, or other similar purposes and not
operated for profit. Deposits in which any benefi
cial interest is held by a corporation, partnership,
association or other organization operated for profit
or not operated prim arily for religious, philan
thropic, charitable, educational, fraternal, or other
similar purposes may not be classified as deposits
subject to negotiable orders of withdrawal.
(f)
Deposits as including certain promissory
notes and other obligations. For the purposes of
this Part, the term “ deposits" also includes any
member bank’s liability on any promissory note,
acknowledgment of advance, due bill, or similar
obligation (written or oral) that is issued or under
taken by a member bank principally as a means of
obtaining funds to be used in its banking business,
except any such obligation that:
(1) Is issued to (or undertaken with respect to)
and held for the account of (i) a bank or an institu
tion the time deposits of which are exempt from
§ 217.7 pursuant to §217.3(g), or (ii) the United
States or an agency thereof, or the Government De
velopment Bank for Puerto Rico;
(2) Evidences an indebtedness arising from a
transfer of direct obligations of. or obligations that
are fully guaranteed as to principal and interest by,
the United States or any agency thereof that the
bank is obligated to repurchase, and
(a) is issued in denominations of S 100,000
or more; or
(b) is issued in denominations of less than
$100,000, matures in less than 90 days and is not
automatically renewable or extended;5*
(3) (i) Bears on its face, in bold-face type the
following:
“This obligation is not a deposit and is not in*
sored by the Federal Deposit Insurance Cor
poration” ;
is subordinated to the claims of depositors, is unse
cured, and is ineligible as collateral for a loan by
the issuing bank and also expressly states said pro
visions on its face; has an original maturity of at
least seven years, or, in the case of an obligation or
issue that provides for any type of scheduled repay'• A member bank with such obligations issued in denomina
tions of less than S 100.000 with maturities of 90 days or more
may continue to issue such obligations until August I. 1982.
w ithout regard to this subparagraph. However, the aggregate
amount o f such obligations outstanding on a m ember bank's
books may not exceed the total of such obligations outstanding
on its books on August I. 1979.
§ 217.1
REGULATION Q
ments of principal, has an average maturity” of at
least seven years7 and provides that once any such
repayment of principal begins, all scheduled repay*
ments shall be made at least annually and the
amount repaid in each year is no less than in the
prior year; is issued subject to a requirement that
no repayment (other than a regularly scheduled re
payment already approved by the appropriate Fed
eral bank regulatory agency), including but not lim
ited to a paym ent pursuant to acceleration of
maturity, may be made without the prior written
approval of the appropriate Federal bank regulatory
agency;8 is in an amount of at least S500, Except,
That the appropriate Federal bank regulatory
agency may approve the issuance of an obligation
that is less than S500 if such lesser amount is nec
essary (a) to satisfy the preemptive rights of share
holders in the case of a convertible debt obligation,
(b) to maintain a ratable unit offering to holders of
preemptive rights in the case of an obligation is
sued exclusively as part of a unit including shares
of stock which are subject to such preemptive
rights, or (c) to satisfy shareholders’ ratable claims
in the case of an obligation issued wholly or parti
ally in exchange for shares of voting stock or assets
pursuant to a plan of merger, consolidation, reor
ganization, or other transaction where the issuer
will acquire either a majority of such shares of vot
ing stock or all or substantially all of the assets of
the entity whose assets are being acquired; and has
been approved by the appropriate Federal bank reg
ulatory agency as an addition to the capital struc
ture of the issuing bank; or (i) meets all of the re
quirem ents in the preceding clause except the
maturity requirement or the requirement that sched
uled repayments shall be in amounts at least equal
to those made in a previous year; and with respect
to which the appropriate Federal bank regulatory
agency has determined that exigent circumstances
require the issuance of such obligations without re
gard to the provisions of this Part; or (ii) was is
sued or publicly offered before June 30, 1970. with
an original maturity of more than two years; or
(4) A rises from a borrow ing by a member
°T he “ average m aturity" of an obligation or issue repayable
in scheduled periodic payments shall be the weighted average of
the maturities of all such scheduled repayments.
7 In a serial issue the member bank may offer no note with
maturity of less than five years.
' For the purposes of this Pan. the " appropriate Federal bank
regulatory ag ency" is the Com ptroller o f the Currency in the
case of a national bank and the Board of Governors in the case
of a Stale member bank.
5
bank from a dealer in securities, for one business
day, of proceeds of a transfer of deposit credit in a
Federal Reserve Bank (or other immediately availa
ble funds), commonly referred to as “ Federal
funds” , received by such dealer on the date of the
loan in connection with clearance of securities
transactions.
This paragraph shall not, however, affect (i) any
instrument issued before June 27, 1966. or (ii) any
instrument that evidences an indebtedness arising
from a transfer of assets under a repurchase agree
ment issued before July 25, 1969.
(g) M ultiple m aturity time deposit. The term
“ multiple maturity time deposit” means any time
deposit (1) that is payable at the depositor’s option
on more than one date, whether on a specified date
or at the expiration of a specified time after the
date of deposit (e.g., a deposit payable at the op
tion of the depositor either three months or six
months after the date of deposit), (2) that is pay
able after written notice of withdrawal, or (3) with
respect to which the underlying instrument or con
tract or any informal understanding or agreement
provides for automatic renewal at maturity.
(h) O b lig atio n s issued by th e p a re n t bank
holding company of a member bank. For the pur
poses of this Part, the “ deposits” of a member
bank also includes an obligation that is (I) issued
in a denomination of less than SI00.000; (2) re
quired to be registered with the Securities and Ex
change Commission under the Securities Act of
1933; (3) issued or guaranteed in whole or in part
as to principal or interest by the member bank’s
parent which is a bank holding company under the
Bank Holding Company Act of 1956. as amended
(12 U.S.C. §§ 1841-1850), regardless of the use of
the proceeds; and (4) issued with an original matu
rity of 4 years or less, or which is redeemable at
intervals of 4 years or less at the option of the
holder. The term “ deposits” does not include those
obligations of a bank holding company that are
subject to interest rate limitations imposed pursuant
to P.L. 89-597.
(i) C redit balances. For purposes of this Part,
the term “ deposits” also includes the credit bal
ances of a United States branch or agency of a for
eign bank.
(j) Foreign bank. “ Foreign bank” means any
bank organized under the laws of any country other
than the United States (including its States and the
District of Columbia), or organized under the laws
§ 217.2
of Puerto Rico, Guam. American Samoa, the Vir
gin Islands, or a territory of the United States.
SECTION 217.2— DEMAND DEPOSITS
(a) Interest prohibited. Except as provided by
section 19 of the Federal Reserve Act, no member
bank of the Federal Reserve System shall, direcdy
or indirectly, by any device whatsoever, pay any
interest on any demand deposit.
(b) Meaning of interest. Within this Part, any
payment to or for the account of any depositor as
compensation for the use of funds constituting a de
posit shall be considered interest.
SECTION 217.3— INTEREST ON TIME AND
SAVINGS DEPOSITS
(a) Maximum rate. Except as provided in this
section, no member bank shall, directly or indi
rectly, by any device whatsoever, pay interest on
any time or savings deposit at a rate in excess of
such applicable maximum rate as the Board of
Governors of the Federal Reserve System shall pre
scribe from time to time in § 217.7. In ascertaining
the rate of interest paid, the effects of compounding
of interest may be disregarded. The maximum rate
of interest that may be paid by a member bank on
an additional deposit to any existing time deposit
shall not exceed the maximum rate that may be
paid in accordance with § 217.7 on the date the
additional deposit is made.
(b) M odification of contracts to conform to
regulation. No certificate of deposit or other con
tract shall be renewed or extended unless it be
modified to conform to the provisions of this Pan.
and every member bank shall take such action as
may be necessary, as soon as possible consistently
with its contractual obligations, to bring ail of its
outstanding certificates of deposit or other contracts
into conformity with the provisions of this Part.
(c) Member bank limited to maximum rate
for State banks. The rate of interest paid by a
member bank upon a time deposit or savings de
posit shall not in any case exceed (1) the applicable
maximum rate prescribed pursuant to the provisions
of paragraph (a) of this section, or (2) the applica
ble maximum rate authorized by law to be paid
upon such deposits by State banks or trust com
panies organized under the laws of the State in
which such member bank is located, whichever
may be less.
REGULATION Q
(d) Grace periods in computing interest on
savings deposits. A member bank may pay interest
on a savings deposit received during the first 10
calendar days of any calendar month at the applica
ble maximum rate prescribed pursuant to paragraph
(a) of this section calculated from the first day of
such calendar month until such deposit is with
drawn or ceases to constitute a savings deposit un
der the provisions of this Part, whichever shall first
occur; and a member bank may pay interest on a
savings deposit withdrawn during its last 3 business
days of any calendar month ending a regular quar
terly or semiannual interest period at the applicable
maximum rate prescribed pursuant to paragraph (a)
of this section calculated to the end of such calen
dar month.
(e) Computation of interest. In the computation
of simple daily interest, the time factor should be
expressed as a fraction in which the actual number
of days the funds earn interest is the numerator,
and the denominator is either 360, 365, or, in a
leap year, 366. However, when a deposit matures
in one month (or multiples thereof), the bank may
use 30 days in the num erator (or corresponding
multiples thereof).
(f) No interest after maturity or expiration of
notice. After the date of maturity of any time de
posit, such deposit is a demand deposit, and no in
terest may be paid on such deposit for any period
subsequent to such date. After the expiration of the
period of notice given with respect to the repay
ment of any time deposit or savings deposit, such
deposit is a demand deposit and no interest may be
paid on such deposit for any period subsequent to
the expiration of such notice, except that, if the
owner of such deposit advises the bank in writing
that the deposit will not be withdrawn pursuant to
such notice or that the deposit will thereafter again
be subject to the contract or requirements applica
ble to such deposit, the deposit will again constitute
a time deposit or savings deposit, as the case may
be, after the date upon which such advice is re
ceived by the bank. On each certificate, passbook,
or other document representing a time deposit, the
bank shall have printed or stamped a conspicuous
statement indicating that no interest will be paid on
the deposit after the maturity date or, in the case of
a time deposit that is automatically renewable, a
conspicuous statement indicating that the contract
will be renewed automatically upon maturity, and
indicating the terms of such renewal.
Provided, however, that a member bank may
REGULATION Q
provide in any time deposit contract that if the de
posit, or any portion thereof, is withdrawn not
more than seven days after a maturity date, interest
will be paid thereon at the originally specified con
tract rate. A member bank may specify in the time
deposit contract that interest will be paid at any
other lower rate. However, in no event may the
rate specified be less than the current rate paid on
savings deposits by the member bank.
(g)
Time deposits of foreign governmental en
tities an d in te rn a tio n a l o rgan ization s. Section
217.7 does not apply to the rate of interest that
may be paid by a member bank on a time deposit
having a maturity of 2 years or less and represent
ing funds deposited and owned by (1) a foreign na
tional government, or an agency or instrumentality
thereof9 engaged principally in activities which are
ordinarily performed in the United States by gov
ernmental entities, (2) an international entity of
which the United States is a member, or (3) any
other foreign, international, or supranational entity
specifically designated by the Board as exempt
from § 217.7. All certificates of deposit issued by
member banks to such entities on which the con
tract rate o f interest exceeds the maximum pre
scribed under §217.7 shall provide that (1) in the
event of transfer, the date of transfer, attested to in
writing by the transferor, shall appear on the certif
icate, and (2) the maximum rate lim itations of
§217.7 in effect at the date of issuance of the cer
tificate shall apply to the certificate for any period
during which it is held by a person other than an
entity exempt therefrom under the foregoing sen
tence.10 Upon the presentment of such a certificate
for payment, the bank may pay the holder the con
tract rate of interest on the deposit for the time that
the certificate was actually owned by an entity so
exempt.
SECTION 217.4— PAYMENT OF TIME
DEPOSITS BEFORE MATURITY
(a) Time deposits payable on a specified date.
No member bank shall pay any time deposit, which
9 Other than States, provinces, municipalities or other regional
or local governm ental units, or agencies or instrum entalities
thereof.
10 A new certificate not maturing prior to the maturity date of
the original certificate may be issued by the member bank to the
transferee, in which event the original must be retained by the
bank. The new certificate may not provide for interest after the
date o f transfer at a rate in excess o f the applicable maximum
rate authorized by 9 217.7 as of the date of issuance of the origi
nal certificate.
§ 217.4
is payable on a specified date, before such speci
fied date, except as provided in paragraph (d) of
this section.
(b) Tim e deposits payable a fte r a specified
p eriod. No member bank shall pay any time de
posit, which is payable at the expiration of a cer
tain specified period, before such specified period
has expired, except as provided in paragraph (d) of
this section.
(c) Time deposits payable after a specified no
tice. No member bank shall pay any time deposit,
with respect to which notice is required to be given
a certain specified period before any withdrawal is
made, until such required notice has been given
and the specified period thereafter has expired, ex
cept as provided in paragraph (d) of this section.
(d) Penalty for early withdrawals.
(1)
(i) For time deposit contracts entered into
before July 1, 1979, that have not been renewed or
extended on or after July 1, 1979, the following
minimum early withdrawal penalty shall apply:
Where a time deposit, or any portion thereof, is
paid before maturity, a member bank may pay in
terest on the amount withdrawn at a rate not to ex
ceed that prescribed in § 217.7 for a savings de
posit and, in addition, the depositor shall forfeit
three months of interest payable at such rate. If,
however, the amount withdrawn has remained on
deposit for three months or less, all interest shall be
forfeited.
(ii)
For time deposit contracts entered into,
renewed, or extended on or after July 1, 1979, but
prior to June 2. 1980, that have not been renewed
or extended on or after June 2. 1980. the following
minimum early withdrawal penalty shall apply:
(A) Where a time deposit with an origi
nal maturity or required notice period of one year
or less, or any portion thereof, is paid before matu
rity or before the expiration of the required notice
period, a depositor shall forfeit at least three
months of interest on the amount withdrawn at the
rate being paid on the deposit. If the amount with
drawn has remained on deposit for less than three
months, ail interest on the amount withdrawn shall
be forfeited.
(B) Where a time deposit with an original
maturity or required notice period of more than one
year, or any poition thereof, is paid before maturity
or before the expiration of the required notice per
iod, a depositor shall forfeit at least six months of
interest on the amount withdrawn at the rate being
paid on the deposit. If the amount has remained on
§ 217.4
deposit for less than six months, ail interest on the
amount withdrawn shall be forfeited. (The provi
sions of this subparagraph (ii) may be applied, with
the consent of the depositor, to time deposits speci
fied in subparagraph (i) above.)
(iii)
For time deposit contracts entered
renewed, or extended on or after June 2. 1980, the
following minimum early withdrawal penalty shall
apply:
(A) Where a time deposit with an origi
nal maturity or required notice period of less than
three months, or any portion thereof, is paid before
maturity, a depositor shall forfeit an amount at least
equal to the amount of interest that could have been
earned on the amount withdrawn at the nominal
(simple interest) rate being paid on the deposit had
the funds remained on deposit until maturity.
(B) Where a time deposit with an original
maturity or required notice period of three months
or more to one year, or any portion thereof, is paid
before maturity, a depositor shall forfeit an amount
at least equal to three months of interest earned, or
that could have been earned, on the amount with
drawn at the nominal (simple interest) rate being
paid on the deposit, regardless of the length of time
the funds withdrawn have remained on deposit.
(C) Where a time deposit with an original
maturity or required notice period of more than one
year, or any portion thereof, is paid before matu
rity, a depositor shall forfeit an amount at least
equal to six months of interest earned, or that could
have been earned, on the amount withdrawn at the
nominal (simple interest) rate being paid on the de
posit, regardless of the length of time the funds
withdrawn have remained on deposit.
(2) Notwithstanding the provisions of para
graph (d)(1), where a time deposit, or any portion
thereof, maintained in an Individual Retirement Ac
count
established
in
accordance
with
26 U .S.C. $ 408 is paid before maturity within
seven days after the establishment of the Individual
Retirement Account pursuant to the provisions of
26 CFR § 1.408( l)(d)(4), or where a time deposit,
or any portion thereof, m aintained in a Keogh
(H.R. 10) Plan account established in accordance
with 26 U .S.C . § 401 is paid before maturity
within seven days after the establishment of the
Keogh (H.R. 10) Plan, a depositor shall forfeit an
amount at least equal to the interest earned on the
amount withdrawn at the nominal (simple interest)
rate being paid on the deposit.
(3) A member bank, with the depositor’s con
REGULATION Q
sent, may compute the minimum penalty required
to be imposed on withdrawals from time deposits
opened prior to June 2. 1980, on the basis of the
nominal (simple interest) rate.
(4) Where necessary to comply with the re
quirements of this paragraph, any interest already
into,
paid to or for the account of the depositor shall be
deducted from the amount requested to be with
drawn.
(5) Any amendment of a time deposit contract
that results in an increase in the rate of interest paid
or in a reduction in the maturity of the deposit con
stitutes a payment of the time deposit before matu
rity.
(6) For purposes of computing the penalty re
quired to be imposed under this paragraph, under a
time deposit agreement that provides that subse
quent deposits reset the maturity of the entire ac
count. 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 individ
ually and been redeposited at intervals equal to
such period. 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.
(7) A member bank may permit a depositor to
withdraw interest credited to a time deposit during
any term at any time during such term without pen
alty. If the deposit or account is automatically re
newed on the same terms (including at the same
rate of interest), interest credited during the preced
ing term or terms as well as the renewal term may
be paid at any time during the renewal term with
out penalty, unless the deposit agreement specifi
cally provides otherwise. If the rate of interest paid
during the renewal term or the maturity period of
the renewal term is different, interest in the account
at the commencement of the renewal term shall be
treated as principal, and only interest for the re
newal term may be paid at any time without pen
alty during such term.
(8) A time deposit, or a portion thereof, may
be paid before maturity without a forfeiture of in
terest as prescribed by this paragraph in the follow
ing circumstances:
(i)
Where a member bank pays all or a por
tion of a time deposit representing funds contrib
uted to an Individual Retirem ent Account or a
Keogh (H. R. 10) Plan established pursuant to
26 U.S.C. (I.R.C. 1954) §§ 408, 401 when the indi
vidual for whose benefit the account is main
REGULATION Q
§ 217.5
tained attains age 59Vi or is disabled (as defined in
ber bank shall require or waive notice of with
26 U.S.C. (I.R.C. 1954) § 72(m)(7)) or thereafter;
drawal as to any amount or percentage of the
or
savings deposit of any depositor unless it shall sim
(ii)
Where a member bank pays that portion
ilarly require or waive such notice as to the same
of a time deposit on which Federal deposit insur
amount or percentage of the savings deposits of
ance has been lost as the result of the merger of
every other depositor which are subject to the same
contractual provisions with respect to notice of
two or more Federally insured banks in which the
withdrawal. If a member bank, without requiring
depositor previously maintained separate time de
notice of withdrawal, pays interest that has accrued
posits, for a period of one year from the date of the
merger.
on a savings deposit during the preceding interest
(9)
A time deposit, or the portion thereof reperiod, it shall, upon request and without requiring
such notice, pay interest that has accrued during
quested, must be paid before maturity without a
forfeiture of interest as prescribed by this paragraph
said period on the savings deposits of every other
depositor. No member bank shall change its prac
in the following circumstances:
tice with respect to the requiring or waiving of no
(i) Where requested, upon the death of any
owner11 of the time deposit funds; or
tice of withdrawal of savings deposits for the pur
pose of discriminating in favor of or against any
(ii) Where requested, when the owner11 of
depositor or depositors, and no such change of
the time deposit is determined to be legally incom
practice shall be made except pursuant to duly re
petent by a court or other administrative body of
corded action of the bank’s board of directors or a
competent jurisdiction.
(e) Disclosure of early withdrawal penalty. At
properly authorized committee thereof.
(b) Loans on security of savings deposits. If it
the time a depositor enters into a time deposit con
tract with a member bank, the bank shall provide a
is not the practice of a member bank to require no
tice of withdrawal of savings deposits, no restric
written statement of the effect of the penalty pre
tions are imposed by this Part upon loans by such
scribed in paragraph (d) of this section, which shall
bank to its depositors upon the security of such de
(1) state clearly that the customer has contracted to
keep his fund*on deposit for the stated maturity,
posits. If it is the practice of a member bank to re
quire notice of withdrawal of a savings deposit,
and (2) describe fully and clearly how such penalty
such bank may make loans to a depositor upon the
provisions apply to time deposits in such bank, in
security of such deposit, but the rate of interest on
the event the bank, notwithstanding the contract
such loans shall be not less than 1 per cent per an
provisions, permits payment before maturity. Such
num in excess of the rate of interest paid on such
statements shall be expressly called to the attention
of the customer.
deposit.
(c) Manner of payment of savings deposits.
(f) Loans upon security of time deposits. A
member bank may make a loan to the depositor
(1) Subject to the provisions of subparagraphs
upon the security of his time deposit provided that
(2) and (3) of this paragraph, a member bank may
the rate of interest on such loan shall be not less
permit withdrawals to be made from a savings de
than 1 per cent per annum in excess of the rate of
posit only through payment12 to the depositor him
interest on the time deposit.
self (but not to any other person whether or not act
ing for the depositor), except
(i) where the deposit is represented by a
SECTION 217.5— WITHDRAWAL OF
passbook, to any person presenting the passbook;12
SAVINGS DEPOSITS
(ii) to any executor, administrator, trustee,
(a)
Requirem ents regarding notice of with or other fiduciary holding the savings deposit as
part of a fiduciary estate, or to a person, other than
drawal. Whether or not interest is paid, no memthe bank, holding a general power of attorney
11 For the purposes of this provision, an “ owner" of time de granted by the depositor
posit funds is any individual who died or was determined to be
(iii) to any person, including the bank, that
incompetent on o r after August 1, 1979. and who at the time of
his or her death or determination of incompetence had full legal
and beneficial title to all or a portion of such funds or, at the
time o f his o r her death or determination of incompetence, had
beneficial title to all or a portion o f such funds and full power of
disposition and alienation with respect thereto.
12 Payment from a savings deposit or presentation of a pass
book m iy be made over the counter, through the mails, or other
wise.
§ 217.6
has extended credit to the depositor on the security
o f the savings deposit, where such payment is
made in order to enable the creditor to realize upon
such security;
(iv) pursuant to the order of a court of com
petent jurisdiction;
(v) upon the death of the depositor, to any
person authorized by law to receive the deposit;
(vi) interest paid to a third person pursuant
to written instruction or assignment by the deposi
tor accepted by the bank, and placed on file
therein; or
(vii) pursuant to nontransferable withdrawal
orders or authorizations received from a depositor
by a member bank for the payment of amounts
from such deposits to third parties, including the
bank (except as prohibited by subparagraph 2), pe
riodically or otherwise. Any such withdrawal order
or authorization that may be honored as a with
drawal request for payment to a third party may, if
so authorized by the third party, be honored as a
transfer to an account of such third party. Any
form for such withdrawal order or authorization
shall contain language in boldface type of reason
able size to the effect that it is not negotiable or
transferable.
(2) Notwithstanding the provisions of subpara
graph (1) of this paragraph, withdrawals may be
permitted by a member bank to be made automati
cally or as a normal practice from a savings deposit
that consists only of funds in which the entire bene
ficial interest is held by one or more individuals
through payment to the bank itself or through trans
fer of credit to a demand deposit or other account
pursuant to written authorization from the depositor
to make such payments or transfers in order to
cover checks or drafts drawn upon the bank or to
maintain a specified balance in or to make periodic
transfers to such accounts. In accordance with
§ 217.1(e)(2) of this Part, a member bank must re
serve the right to require the depositor to give no*
tice in writing of an intended withdrawal not less
than 14 days before such withdrawal is made. Such
notice shall be prominently disclosed and specifi
cally brought to the depositor’s attention at the time
the autom atic transfer service is authorized. A
mem ber bank may not require a depositor to
authorize such automatic transfer to be made from
savings deposits.
(3) A member bank may permit depositors to
maintain deposits subject to negotiable orders of
withdrawal where authorized by Federal law.
REGULATION Q
(4)
Where a savings deposit is evidenced by a
passbook, every withdrawal made upon presenta
tion of the passbook shall be entered in the pass
book at the time of withdrawal, and every other
withdrawal for such a deposit shall be entered in
the passbook as soon as practicable after with
drawal is made.
SECTION 217.6— ADVERTISING OF
INTEREST ON DEPOSITS
Every advertisement, announcement, or solicita
tion relating to the interest paid on deposits in
member banks shall be governed by the following
rules:
(a) A nnual ra te of sim ple in te re st. Interest
rates shall be stated in terms of the annual rate of
simple interest. In no case shall a rate be advertised
that is in excess of the applicable maximum rate for
the particular deposit.
(b) P e rc e n ta g e yields based on one y e a r.
Where a percentage yield achieved by compound
ing interest during one year is advertised, the an
nual rate of simple interest shall be stated with
equal prominence, together with a reference to the
basis of compounding. No member bank shall ad
vertise a percentage yield based on the effect of
grace periods permitted in § 217.3(d).
(c) Percentage yields based on periods in ex
cess of one year. No advertisement shall include
any indication of a total percentage yield, com
pounded or simple, based on a period in excess of
a year, or an average annual percentage yield
achieved by compounding during a period in excess
of a year.
(d) Time or amount requirements. If an adver
tised rate is payable only on deposits that meet time
or amount requirements, such requirements shall be
clearly and conspicuously stated. Where the time
requirement for an advertised rate is in excess of a
year, the required number of years for the rate to
apply shall be stated with equal prominence, to
gether with an indication of any lower rate or rates
that will apply if the deposit is withdrawn at an
earlier maturity.
(e) Penalty for early withdrawals. Any adver
tisement, announcement, or solicitation relating to
interest paid by a member bank on time deposits
shall include clear and conspicuous notice that the
bank is prohibited from allowing payment of a time
deposit before maturity unless substantial interest is
forfeited. Such notice may state that.
STATUTORY APPENDIX
REGULATION Q
“ Substantial interest penalty is required for early
withdrawal.”
(f) Profit. The term “ profit” shall not be used
in referring to interest paid on deposits.
(g) Accuracy of advertising. No member bank
shall make any advertisement, announcement, or
solicitation relating to the interest paid on deposits
that is inaccurate or misleading or that misrepre
sents its deposit contracts.
(h) Solicitation of deposits for banks. Any per
son or organization that solicits deposits for a mem
ber bank shall be bound by the rules contained in
this section with respect to any advertisement, an
nouncement, or solicitation relating to such de
posits. No such person or organization shall adver
tise a percentage yield on any deposit it solicits for
a member bank that is not authorized to be paid
and advertised by such bank.
(i)
Money m arket time deposits. Any adver
tisement. announcement, or solicitation relating to
interest paid by a member bank on a time deposit
of S 10,000 or more with a maturity of 26 weeks at
a rate not in excess of the rate established (auction
average on a discount basis) for United States Trea
sury bills with maturities of six months shall in
clude a clear and conspicuous notice that Federal
regulations prohibit the compounding of interest
during the term of the deposit.
(SECTION 217.7— MAXIMUM RATES OF IN
TEREST PAYABLE BY MEMBER BANKS ON
TIME AND SAVINGS DEPOSITS, is printed sep
arately.)
STATUTORY APPENDIX
this paragraph as soon as possible consistently with
its contractual obligations: Provided further. That
this paragraph shall not«pp!y to any deposit of
such bank which is payable only at an office
thereof located outside of the States of the United
States and the District of Columbia: Provided fu r
ther, That until the expiration of two years after the
date of enactment of the Banking Act of 1935 this
paragraph shall not apply (1) to any deposit made
by a savings bank as defined in section 12B of this
Act. as amended, or by a mutual savings bank, or
(2) to any deposit of public funds made by or on
behalf of any State, county, school district, or other
subdivision or municipality, or to any deposit of
{U.S.C.. tide 12. mc. 461]
•
•
#
trust funds if the payment of interest with respect to
such deposit of public funds or of trust funds is re
(i)
No member bank shall, directly or indirectly, quired by State law. So much of existing law as re
by any device whatsoever, pay any interest on any
quires the payment of interest with respect to any
deposit which is payable on demand: Provided,
hinds deposited by the United States, by any Terri
That nothing herein contained shall be construed as
tory, District, or possession thereof (including the
prohibiting the payment of interest in accordance
Philippine Islands), or by any public instrumental
with the terms of any certificate of deposit or other
ity, agency, or officer of the foregoing, as is incon
contract entered into in good faith which is in force
sistent with the provisions of this section as
on the date on which the bank becomes subject to
amended, is hereby repealed.
the provisions of this paragraph; but no such certifi
(U.S.C.. title 12. sec. 3 7 li.|
cate of deposit or other contract shall be renewed
(j) The Board may from time to time, after con
or extended unless it shall be modified to conform
sulting with the Board of Directors of the Federal.
to this paragraph, and every member bank shall
Deposit Insurance Corporation and the Federal
take such action as may be necessary to conform to
Section 19 of the Federal Reserve Act provides
in part as follows:
(a)
The Board is authorized for the purposes of
this section to define the terms used in this section,
to determine what shall be deemed a payment of
interest, to determine what types of obligations,
whether issued directly by a member bank or indi
rectly by ait affiliate of a member bank or by other
means, and, regardless of the use of the proceeds,
shall be deemed a deposit, and to prescribe such
regulations as it may deem necessary to effectuate
the purposes of this section and to prevent evasions
thereof.
11
STATUTORY APPENDIX
REGULATION Q
Home Loan Bank Board, prescribe rules governing
the payment and advertisement of interest on de
posits, including limitations on the rates of interest
which may be paid by member banks on time and
savings deposits. The Board may prescribe different
rate limitations for different classes of deposits, for
deposits of different amounts or with different ma
turities or subject to different conditions' regarding
withdrawal or repayment, according to the nature
or location of member banks or their depositors, or
according to such other reasonable bases as the
Board may deem desirable in the public interest.
No member bank shall pay any time deposit before
its maturity except upon such conditions and in ac
cordance with such rules and regulations as may be
prescribed by the said Board, or waive any require
ment of notice before payment of any savings de
posits except as to ail savings deposits having the
same requirements: Provided, That the provisions
of this paragraph shall not apply to any deposit
which is payable only at an office of a member
bank located outside of the States of the United
States and the District of Columbia. During the
period commencing on October IS, 1962, and end
ing on October IS, 1968, the provisions of this par
agraph shall not apply to the rate of interest which
may be paid by member banks on time deposits of
foreign governments, monetary and financial au
thorities of foreign governments when acting as
such, or international financial institutions of which
the United States is a member.
IU .S.C .. title 12. sec. 371 fa. The first two sentences o f this paragraph
are. in part, tem porary. Unless section 7 nf the Act of Septem ber 21,
1966 (as amended by the Act of December 31. 1975) is modified, on De
cember 15. 1978. such sentences will read as follows: “The Board o f Gov
e rn o r of the Federal Reserve System shall from tim e to tim e prescribe
rules governing the payment and advertisement of interest on deposits, in*
eluding limitations on the rate of interest which may be paid by member
banks on time and savings deposits, and shall prescribe different rates for
snch payment on time and savings deposits having different maturities, or
subject to different conditions respecting withdrawal or repayment, or sub
ject to different conditions by mason of different locations, or according to
the varying discount rases of member banka in the severaj Federal Reserve
districts ” 1
12
The Depository Institutions Deregulation Act of
1980 provides in part as follows:
S e c . 203. (a) The authorities conferred by sec
tion 19(j) of the Federal Reserve Act (12 U.S.C.
371b). section 18(g) of the Federal Deposit Insur
ance Act (12 U.S.C. 1828(g)), and section 5B(a) of
the Federal Home Loan Bank Act (12 U .S.C.
142Sb(a)) or by any other provision of Federal law,
other than section 117 of the Federal Credit Union
Act (12 U.S.C. 1763), to prescribe rules governing
the payment of interest and dividends and the es
tablishment of classes of deposits or accounts, in
cluding limitations on the maximum rates of inter
est and dividends which may be paid on deposits
and accounts, and the authority conferred by the
provisions of section 102 of Public Law 94-200
(12 U.S.C. 461 note) are hereby transferred to the
Depository Institutions Deregulation Committee
(hereinafter in this title referred to as the “ Deregu
lation Committee” ).
(b) The Deregulation Committee shall consist of
the Secretary of the Treasury, the Chairman of the
Board of Governors of the Federal Reserve System,
the Chairman of the Board of Directors of the Fed
eral Deposit Insurance Corporation, the Chairman
of the Federal Home Loan Bank Board, and the
Chairman of the National Credit Union Administra
tion Board, who shall be voting members, and the
Comptroller of the Currency who shall be a nonvot
ing member of the Deregulation Committee. The
Deregulation Committee shall hold public meetings
at least quarterly. All meetings of the Deregulation
Committee shall be conducted in conformity with
the provisions of section 522b of Title 5. United
States Code. The Deregulation Committee may not
take any action unless such action is approved by a
majority vote of the voting members of the Deregu
lation Committee.
(c) The authorities conferred by this title on the
Deregulation Committee and its members may not
be delegated.
(U.S.C.. title 12. sec. 3502.1
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