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FED ER AL RESERVE BANK O F NEW YORK No. 8 3 7 9 1 [Circular June 29, 1978 J INTEREST ON DEPOSITS Technical Amendment to Regulation Q T o A ll M e m b e r B a n k s, an d O th e r s C o n ce rn ed , in th e S e c o n d F e d e r a l R e s e r v e D i s t r i c t : The Board of Governors of the Federal Reserve System has issued an amendment to Section 217.7(b) (1) of its Regulation Q, “Interest on Deposits,” to correct a technical deficiency in the re cently adopted amendment that created two new categories of time deposits. Enclosed is a revised Supplement to Regulation Q, which incorporates this change and the other outstanding amend ments to the Supplement. Printed below is an excerpt from the F e d e r a l R e g i s te r of June 20, regarding the technical amendment to Regulation Q. Questions on this matter may be directed to our Consumer Affairs and Bank Regulations Department (Tel. No. 212-791-5919). P aul A. V olcker, President. [Regulation Q ; Docket No. R-0161] INTEREST ON DEPOSITS Maximum Rates of Interest Payable Titla 12—Banks and Banking CHAPTER II—FEDERAL RESERVE SYSTEM SUBCHAPTER A — BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [Reg. Q; D ocket No. R -0161] PART 217—INTEREST ON DEPOSITS Maximum rates of Interest Payable AGENCY: Board of Governors of th e F ederal R eserve System . ACTION: T echnical am endm ent to final rule. SUM MARY: T h is rule change pro vides a technical am endm ent in th e form of an additional reference added to th e Board’s R egulation Q th a t is m ade necessary as th e result of th e re cen tly adopted am endm ent creating tw o new deposit categories. T his action will add a reference to th ese two new deposit categories to th e paragraph of R egulation Q th a t sets forth interest rate lim its on deposits of less th an $100,000. EFFECTIVE DATE: Ju ne 1, 1978. FO R FU R TH ER INFORM ATION, CONTACT: A llen L. R aiken A ssociate G eneral C ounsel or G ilbert T. Schwartz, Senior A ttorney, Legal Division, Board o f Governors of th e Federal R eserve System , W ashington, D.C. 20551 (202/452-3000). SUPPLEM ENTARY INFORMATION: On May 11, 1978, th e Board am ended R egulation Q (12 CFR Part 217) to create tw o qew deposit categories of tim e deposits th a t m em ber banks can offer to depositors (43 FR 21435). T h e rules, w hich were effective June 1, 1978, perm itted m em ber banks 1) to pay interest on tim e deposits of $1,000 or m ore w ith m aturities of eigh t years or longer at a m axim um rate of 7% percent and 2) to pay interest on tim e deposits of $10,000 or more w ith m atu rities of exactly six m onths (26 weeks) at a ceiling rate equal to th e auction average discount rate established for U nited S ta tes Treasury bills w ith m a turities of m onths issued on or im m e diately prior to th e date of deposit. In prom ulgating th e am endm ents to R eg u lation Q, th e announcem ent of th e Board’s action inadvertently failed to am end § 217.7(b)(1) to refer specifical ly to th e provisions o f R egulation Q th a t authorize m em ber banks’ to offer th e new deposit categories. T h is action provides th e necessary am endm ent to 8 217.7(b)(1). FEDERAL REGISTER, VOL. 4 3 , N O . 1 1 9 — TUESDAY, JUNE 2 0 , 1 9 7 8 * * * Board of Governors of the Federal Reserve System SUPPLEMENT TO REGULATION Q Effective June 1, 1978 SECTION 217.7—MAXIMUM RATES OF INTEREST PAYABLE BY MEMBER BANKS ON TIME AND SAVINGS DEPOSITS Pursuant to section 19 of the Federal Reserve Act and § 217.3 hereof, the Board of Governors of the Federal Reserve System hereby pre scribes the following maximum rates1 of inter est per annum payable by member banks of the Federal Reserve System on time and savings deposits: (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) Time deposits of less than $100,000. of four years or more, at a rate not to 7J4 percent.2 exceed (3) Investment Certificates—Member banks may pay interest on any time deposit of $1,000 or more, with a maturity of six years or more, at a rate not to exceed 7 1/ 2 percent.2 (4) Member banks may pay interest on any time deposit of $1,000 or more, with a maturity of eight years or more, at a rate not to exceed 7J4 percent.2 (1) Except as provided in paragraphs (a), (d ), (e), and (f), and subparagraphs (2 ), (3), and (4) of this paragraph, no member bank shall pay interest on any time deposit at a rate in excess of the applicable rate under the fol lowing schedule: (c) Savings deposits. No member bank shall pay interest at a rate in excess of 5 percent on any savings deposit including savings deposits that are subject to negotiable orders of with drawal, the issuance of which is authorized by Federal law. Maturity (d) Governmental unit time deposits of less than $100,000. Except as provided in para graphs (a) and (f), no member bank shall pay interest on any time deposit which 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, municipality, or political subdivision thereof, the District of Columbia,*the Common wealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or political subdivi sion thereof, at a rate in excess of the highest of any of the permissible rates that can be paid Maximum percent 30 days or more but less than 90 days 5 90 days or more but less than 1 year 5/a 1 year or more but less than 30 months 6 30 months or more 6*4 (2) Member banks may pay interest on any time deposit of $1,000 or more, with a maturity 1 T he lim itations on ra te s of in te rest payable by m em ber banks of the F e d e ral R eserve System on tim e and savings deposits, as prescribed herein, are not applicable to any deposit w hich is payable only a t an office of a m em ber bank located outside the S ta te s of the U n ited S ta te s and the D istric t of Colum bia. 2 T he $1,000 m inim um denom ination requirem ent does not apply to tim e deposits rep resen tin g funds co n trib uted to an Individual R etirem ent A ccount o r K eogh (H .R . 10) P la n established p u rsu a n t to 26 U .S .C . (I.R .C . 1954) §§ 408, 401. F o r this R egulation to be com plete, retain : 1) R egulation Q pam phlet, effective D ecem ber 4, 1975. 2) A m endm ents effective M arch 1, 1976, Ju ly 26, 1976, N ovem ber 8, 1976, M a rch 24, 1977, N ovem ber 23, 1977, D ecem ber 1, 1977, Ju ly 6, 1978, and N ovem ber 1, 1978. 3) T h is slip sheet. PRINTED IN NEW YORK [Enc. Cir. No. 8379] ( over) on time deposits under $100,000 with maturities in excess of six months (26 weeks) by any Federally insured commercial bank, mutual savings bank or savings and loan association.3 (e) Individual Retirement Account and Keogh (H.R. 10) Plan deposits of less than $100,000. Except as provided in paragraph (a), 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 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 in 3 The highest permissible rate is currently 8.00 per cent per annum (12 CFR 329.7 and 12 CFR 526.5). excess of the highest of any of the permissible rates that can be paid on time deposits under $100,000 with maturities in excess of six months (26 weeks) by any Federally insured commercial bank, mutual savings bank, or sav ings and loan association.3 (f) Variable rate time deposits of less than $100,000. Member banks may pay interest on any nonnegotiable time deposit of $10,000 or more, with a maturity of six months (26 weeks), at a rate not to exceed the rate estab lished (auction average on a discount basis) for United States Treasury bills with maturities of six months issued on or immediately prior to the date of deposit. Rounding such rate to the next higher rate is not permitted.
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