The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
^ 7 ?< v?/ $ November 3 , 1972 To the Addressee: Enclosed is a reprint of Regulation Q, as amended effective January 1, 1971 , of the Board of Governors of the Federal Reserve System. It replaces your copies of the Regulation, as amended effective February 1 2 , 1970 , and the amendments thereto, effective June 3 0 , 1970 and January 1, 1971 (which is the latest amendment to the Regulation). Please retain your copy of the Supplement, effective June 2 ^-, 1970 , to Regulation Q. Circulars Division Federal Reserve Bank of New York BOARD OF GO VERNO RS of the FEDERAL R ESERVE S Y S T E M INTEREST ON DEPOSITS REG U LA TIO N Q (12 CFR 217) A s am ended effective January 1, 1971 f*A L A n y inquiry relating to this regulation should be addressed to the Federal R eserve Bank o f the Federal R eserve D istrict in w hich the inquiry arises. CONTENTS P age P age S e c . 2 1 7 .0 — S c o pe Pa of r t ........................................ 3 S e c . 2 1 7 .4 — P a y m e n t o f T i m e D e p o s i t s B efore Se c . 2 1 7 .1 — D e f in it io n s ............................................. ...3 (a) (b) (c) (d) (e) (f) Demand deposits ................................3 Time deposits......................................3 Time certificates of deposit................3 Time deposits, open account..............3 Savings deposits ..................................4 Deposits as including certain promissory notes .......................... 4 (g) Multiple maturity time deposit........ 4 M a t u r it y ( a ) T im e dep o sits p a y ab le o n a specified d a t e ........................................................... (b ) T im e dep o sits p ay ab le a fte r a specified p erio d ...................................................... (c ) T im e dep o sits p a y ab le a fte r a specified no tice ...................................................... (d ) P a y m e n t in em erg en cies ...................... (e ) L o an s u p o n secu rity o f tim e dep o sits S e c . 2 1 7 .5 — W S e c . 2 1 7 .2 — D em and D e p o s i t s ............................... S a v in g s D e p o s it s on T im e it h d r a w a l o f S a v in g s D e p o s it s and ( a ) R e q u irem en ts reg a rd in g n o tice o f w ith d ra w a l ............................................. 5 S e c . 2 1 7 .6 — A d v e r t i s i n g o f I n t e r e s t o n ................................................................... 7 ( a ) A n n u a l ra te o f sim ple in terest .......... 7 D e p o s its 5 5 5 5 (b ) P erce n ta g e yields b ased o n o n e y e a r 7 ( c ) P erce n tag e yields b ased on p erio d s in excess o f o n e y e ar ........................... ( d ) T im e o r a m o u n t re q u ire m e n ts .......... (e ) P r o f i t .............................................................. (g) Time deposits of foreign governmental entities and international organiza tions .............................................. 5 (g ) S o licitatio n o f dep o sits fo r b a n k s . . . ent, M a x im u m 6 (b ) L o an s on secu rity o f savings dep o sits 7 (f) No interest after maturity or ex piration of notice ........................ 5 e p o s it s , 6 5 (a) Maximum rate .................................. (b) Modification of contracts to conform to regulation.................................. (c) Member banks limited to maximum rate for State banks .................... (d) Grace periods in computing interest on savings deposits ...................... (e) Computation of interest.................... S a v in g s D 6 6 6 6 6 ( c ) M a n n e r o f p a y m e n t o f savings dep o sits 7 ......................................................... [S e c . 2 1 7 . 7 — S u p p l e m 6 5 (a) Interest prohibited ............................ 5 (b) Meaning of interest.......................... 5 S e c . 2 1 7 .3 — In t e r e s t ...................................................... R ates is p r in te d se p a r a te ly .] of (f) A c c u ra c y o f a d v ertisin g ...................... Statutory A p p e n d ix In t e r e st P ayable by ...................................................... M em ber Banks on T im e 8 8 8 8 8 9 and REGULATION Q (12 C F R 217) As amended effective January 1, 1971 INTEREST ON DEPOSITS* (1) O n a c e rta in d ate, specified in th e in s tru m en t, n o t less th a n 30 days a fte r d a te o f th e dep o sit, o r (2) A t th e e x p ira tio n o f a c e rta in specified tim e n o t less th a n 30 days a fte r th e d a te o f th e in stru m e n t, o r (3) U p o n n o tic e in w ritin g w h ich is actu a lly re q u ire d to be given n o t less th a n 30 days b efo re th e d a te o f re p a y m e n t an d (4) In all cases o nly u p o n p re s e n ta tio n a n d su rre n d e r o f th e in stru m e n t. (d) T im e deposits, open accou n t. T h e te rm “ tim e d ep o sit, o p en a c c o u n t” m e a n s a deposit, o th e r th a n a “tim e certificate o f d e p o sit”, w ith re sp ec t to w h ich th e re is in fo rc e a w ritte n c o n tr a c t w ith th e d ep o sito r th a t n e ith e r th e w hole n o r a n y p a rt o f such d ep o sit m ay be w ith d raw n , b y ch eck o r oth erw ise, p rio r to th e d ate o f m a tu rity , w h ich shall be n o t less th a n 30 days a fte r th e d a te o f th e d e p o sit o r p rio r to th e e x p ira S E C T IO N 2 1 7 .0 — S C O P E O F P A R T ( a ) T his [P art] is issued u n d e r au th o rity o f provisions o f sectio n 19 o f th e F e d e ra l R eserve A ct w hich, to g eth e r w ith rela te d p ro v isio n s o f law , are cited in th e [A ppendix]. (b ) T h is P a rt relates to th e p a y m e n t o f d e p osits a n d in terest th e re o n by m e m b e r b an k s of th e F e d e ra l R eserve S ystem a n d n o t to th e c o m p u ta tio n a n d m a in te n a n c e o f th e reserves w hich m em b er b an k s are re q u ire d to m a in ta in against deposits. T h e rules c o n c e rn in g reserv es o f m em b er b an k s are co n ta in e d in P a rt 204 o f this ch ap te r. (c) T h e p rovisio n s o f this P a rt do n o t ap p ly to any dep o sit w h ic h is p ay ab le o n ly a t an office o f a m em b er b an k lo ca te d o u tsid e o f th e S tates o f the U n ite d S tates a n d th e D istrict o f C o lu m b ia. ,1 S E C T IO N 2 1 7 .1 — D E F IN IT IO N S ,2 (a) D em and deposits. T h e te rm “a n y d ep o sit w hich is p ay ab le on d e m a n d ” , h e re in a fte r re fe rre d to as a “d e m an d d ep o sit” , in clu d es every d ep o sit w hich is n o t a “tim e d e p o sit” o r “savings d e p o sit” , as defined in this section. (b) Tim e deposits. T h e te rm “tim e d ep o sits” m ean s “tim e certificates o f d e p o sit” a n d “ tim e deposits, o pen a c c o u n t” , as defined in th is section. (c) T im e certificates o f deposit. T h e te rm “tim e certificate o f d ep o sit” m ean s a d ep o sit ev id en ced by a n eg o tiab le o r n o n -n eg o tia b le in stru m e n t w hich p rovides on its face th a t th e a m o u n t o f such d ep o sit is p ay ab le to b e a re r o r to an y sp eci fied p erson o r to his o rd e r: * The text corresponds to the Code o f Federal Regula tions, Title 12, Chapter II, Part 217; cited as 12 CFR 217. The words “this Part”, as used herein, mean Regulation Q. 1 A deposit with respect to which the bank merely re serves the right to require notice o f not less than 30 days before any withdrawal is made is not a “time certificate of deposit” within the meaning o f the above definition. 2 Deposits, such as Christmas club accounts and vacation club accounts, which are made under written contracts providing that no withdrawal shall be made until a certain number of periodic deposits have been made during a period o f not less than 3 months constitute “time deposits, open account”, even though som e o f the deposits are made within 30 days from the end o f the period. 3 REGULATION Q § 217.1 th a t a re fu lly g u a ra n te e d as to p rin c ip al an d in terest by, th e U n ite d S tates o r an y agency th e re o f th a t th e b a n k is o b lig ated to rep u rc h a se ; ( ) (i) b ea rs o n its face, in b o ld -face ty p e, th e follow ing: tio n o f th e p erio d o f n o tice w h ich m u st be given by th e d ep o sito r in w ritin g n o t less th a n 30 days in ad v an ce o f w ith d ra w a l (e) Savings deposits. T h e te rm “ savings d e p o sit” m ean s a dep o sit— ( ) w h ich consists o f fu n d s d ep o sited to the cre d it o f o n e o r m o re in d iv id u als, o r o f a c o rp o ra tio n , associatio n , o r o th e r o rg a n iz a tio n o p e ra te d p rim a rily fo r religious, p h ila n th ro p ic , ch a ritab le, ed u catio n al, fra te rn a l, o r o th e r sim ilar p u rp o ses an d n o t o p e ra te d fo r p ro fit o r in w h ich the en tire beneficial in te re st is h eld by o n e o r m o re in dividuals o r by su ch a c o rp o ra tio n , asso ciatio n , o r o th e r o rg an iz a tio n ; a n d ( ) w ith resp e c t to w h ich th e d e p o sito r is n o t re q u ire d by th e d ep o sit c o n tra c t b u t m ay a t any tim e be re q u ire d by th e b a n k to give n o tice in w ritin g o f an in ten d e d w ith d ra w a l n o t less th a n 30 d ays b e fo re su ch w ith d raw al is m ad e an d w h ich is n o t p a y ab le on a specified d ate o r a t th e ex p ira tio n o f a specified tim e a fte r th e d a te of deposit. (f) D eposits as including certain prom issory notes and other obligations. F o r th e p u rp o se s of this P a rt, th e te rm “ d e p o sits” also in clu d es a m e m b e r b a n k ’s liab ility o n an y p ro m isso ry note, ack n o w led g m en t o f ad v a n ce , d u e bill, o r sim ilar o b lig atio n (w ritten o r o ral) th a t is issued o r u n d e r ta k e n by a m em b e r b a n k p rin c ip a lly as a m ean s o f o b ta in in g fu n d s to be used in its b a n k in g business, ex cep t an y su ch o b lig a tio n th a t: ( ) is issued to (o r u n d e rta k e n w ith re sp e c t to) a n d h eld fo r th e a c c o u n t o f (i) a b a n k o r an in s titu tio n th e tim e dep o sits o f w h ich a re ex em p t fro m § 2 1 7 .7 p u rs u a n t to § 217.3(g) o r (ii) an agency o f th e U n ite d S tates o r th e G o v e rn m e n t D ev elo p m e n t B an k fo r P u e rto R ico; ( ) evidences an in d eb te d n ess a risin g fro m a tra n sfe r o f d ire c t o b lig atio n s of, o r o b lig atio n s .3 3 1 “T his obligation is not a deposit and is not insured by the Federal D ep osit Insurance C orporation”; ;4 2 5 2 1 2 s A deposit with respect to which the bank merely re serves the right to require notice o f not less than 30 days before any withdrawal is made is not a “time deposit, open account”, within the meaning of the above definition. 4 Deposits in joint accounts of two or more individuals may be classified as savings deposits if they m eet the other requirements o f the above definition, but deposits of a partnership operated for profit may not be so classified. Deposits to the credit o f an individual o f funds in which any beneficial interest is held by a corporation, partner ship, association, or other organization operated for profit or not operated primarily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes may not be classified as savings deposits. & The exercise by the bank of its right to require such notice shall not cause the deposit to cease to be a savings deposit. states expressly th a t it is su b o rd in a ted to th e claim s o f d ep o sito rs a n d ineligible as co lla te ral fo r a lo an by th e issuing b an k ; is u n secu red ; h as an o rig in al m a tu rity o f 7 years o r m o re; is in an a m o u n t o f at least $500; an d h as been ap p ro v ed by th e C o m p tro lle r o f the C u rren c y , in the case o f a n a tio n a l b an k , o r by th e B o ard o f G o v ern o rs, in th e case o f a S tate m e m b e r b an k , as an a d d itio n to th e b a n k ’s cap ital stru c tu re ; o r (ii) m eets all o f th e re q u ire m e n ts in th e p rec ed in g clause except m a tu rity a n d w ith resp ect to w hich th e C o m p tro ller, in th e case o f a n a tio n a l b an k , o r th e B o ard , in th e case o f a S tate m e m b e r b an k , has d ete rm in e d th a t exig en t circu m sta n c e s re q u ire th e issu an ce o f su ch o b lig atio n w ith o u t re g a rd to the p ro v isio n s o f this P a rt; o r (iii) w as issued o r p u b licly offered b efo re Ju n e 30, 1970, w ith an o rig in al m a tu rity o f m o re th a n years; o r (4) arises fro m a b o rro w in g by a m e m b e r b an k fro m a d e a le r in securities, fo r one business day, o f p ro ceed s o f a tra n sfe r o f d ep o sit c re d it in a F e d e ra l R eserv e B ank (o r o th e r im m ed iately av ail able fu n d s), co m m o n ly re fe rre d to as “F e d eral fu n d s” , receiv ed by such d e aler o n the d ate of th e lo an in c o n n e c tio n w ith clea ran c e o f se c u ri ties tran sactio n s. T h is p a ra g ra p h shall n o t, how ever, affect (i) an y in s tru m e n t issued b efo re Ju n e 27, 1966, o r (ii) a n y in stru m e n t th a t evidences an in d e b te d ness arisin g fro m a tra n sfe r o f assets u n d e r re p u rc h a se a g re em en t issued b efo re Ju ly 25, 1969. (g) M ultiple maturity tim e deposit. T h e term “ m u ltip le m a tu rity tim e d e p o sit” m ean s any tim e d ep o sit ( ) th a t is p ay ab le at th e d e p o sito r’s o p tio n o n m o re th a n one d ate, w h e th er on a specified d a te o r at th e e x p ira tio n o f a specified tim e a fte r th e d a te o f d ep o sit (e.g., a d ep o sit p ay ab le at the o p tio n o f th e d ep o sito r e ith e r th re e m o n th s o r six m o n th s a fte r th e d ate o f d eposit), ( ) th a t is p a y ab le a fte r w ritte n n o tice o f w ith d raw al, o r (3) w ith resp ect to w h ich th e u n d erly in g in s tru m en t o r c o n tra c t o r an y in fo rm al u n d e rsta n d in g o r ag re e m e n t p ro v id es fo r a u to m a tic ren ew al at m a tu rity . 4 1 2 § § 217.2-217.3 REGULATION Q d ep o sit u n d e r th e p ro v isio n s o f this P a rt, w h ic h ev er shall first o ccu r; a n d a m e m b e r b a n k m ay p a y in te re st o n a savings d ep o sit w ith d ra w n d u r ing its last 3 business day s o f an y c a le n d a r m o n th en d in g a re g u la r q u a rte rly o r sem ian n u a l in te re st p e rio d a t th e ap p licab le m ax im u m ra te p re sc rib e d p u rs u a n t to p a ra g ra p h (a) o f th is sectio n c a l c u lated to th e e n d o f such c a le n d a r m o n th . S E C T IO N 2 1 7 .2 — D E M A N D D E P O S IT S (a) Interest prohibited. E x c ep t as p ro v id e d by section 19 o f the F e d e ra l R eserv e A c t, n o m e m b er b a n k o f th e F e d e ra l R eserv e System shall, d irectly o r in d irectly , by a n y device w h atso ev er, p ay any in terest o n any d e m an d deposit. (b) M eaning o f interest. W ith in th is P a rt, any p a y m e n t to o r fo r th e a c c o u n t o f an y d ep o sito r as c o m p en satio n fo r th e use o f fu n d s co n stitu tin g a d ep o sit shall be c o n sid ered interest. (e) C om putation o f interest. In th e c o m p u ta tio n o f sim ple daily in terest, th e tim e fa c to r sh o u ld be ex p ressed as a fra c tio n in w h ich th e a c tu a l n u m b e r o f days th e fu n d s e a rn in te re st is th e n u m e ra to r, a n d th e d e n o m in a to r is eith e r 360, 365, o r, in a leap y ear, 366. H o w ev er, w hen a d ep o sit m a tu re s in o n e m o n th (or m u ltip les th ere o f), th e b a n k m ay use 30 days in th e n u m e ra to r (o r c o rre sp o n d in g m u ltip les th ereo f). S E C T IO N 2 1 7 .3 — IN T E R E S T O N T IM E A N D S A V IN G S D E P O S IT S (a) M axim um rate. E x c ep t as p ro v id ed in this section, n o m e m b e r b a n k shall, d irectly o r in d irectly, by an y device w h atso ev er, p a y in terest o n any tim e o r savings d ep o sit at a ra te in excess o f su ch ap p licab le m a x im u m ra te as th e B o ard of G o v e rn o rs o f th e F e d e ra l R eserv e System shall p rescrib e fro m tim e to tim e in § 2 1 7 .7 . In as ce rta in in g th e ra te o f in terest p aid , th e effects o f co m p o u n d in g o f in te re st m ay be d isreg ard ed . (b) M odification o f contracts to conform to regulation. N o certificate o f d ep o sit o r o th e r c o n tra c t shall be ren ew e d o r e x ten d ed unless it be m odified to c o n fo rm to th e p ro v isio n s o f this P a rt, an d ev ery m e m b e r b a n k shall tak e such actio n as m a y be necessary , as soon as possible c o n sistently w ith its c o n tra c tu a l o b lig atio n s, to b rin g all o f its o u tsta n d in g certificates o f d ep o sit o r o th e r c o n tra c ts in to c o n fo rm ity w ith th e p ro v i sions o f this P a rt. (c) M em ber banks lim ited to m axim um rate for State banks. T h e ra te o f in terest p aid by a m em b er b a n k u p o n a tim e d ep o sit o r savings d ep o sit shall n o t in an y case exceed ( ) th e ap p licab le m a x i m u m ra te p re sc rib e d p u rs u a n t to th e pro v isio n s o f p a ra g ra p h (a) o f this sectio n , o r ( ) th e a p p li cable m a x im u m ra te a u th o riz e d by law to be p aid u p o n such dep o sits by S tate b a n k s o r tru st c o m pan ies o rg an ized u n d e r th e law s o f th e S tate in w hich such m e m b e r b a n k is lo cated , w h ich ev er m ay be less. (d) G race periods in com puting interest on sav ings deposits. A m e m b e r b an k m ay p ay in terest on a savings d ep o sit received d u rin g th e first c a le n d a r days o f an y c a le n d a r m o n th at the ap p licab le m a x im u m ra te p rescrib ed p u rs u a n t to p a ra g ra p h (a) o f this sectio n calc u la te d fro m the first d ay o f such c a le n d a r m o n th u n til such d e p osit is w ith d raw n o r ceases to c o n stitu te a savings (f) N o interest after maturity or expiration o f notice. A fte r th e d a te o f m a tu rity o f an y tim e deposit, su ch d ep o sit is a d e m a n d dep o sit, an d n o in te rest m ay be p aid on su ch d ep o sit fo r an y p e rio d su b se q u e n t to su ch d ate. A fte r th e e x p ira tio n o f th e p e rio d o f n o tice given w ith resp ect to th e rep a y m e n t o f an y tim e d ep o sit o r savings deposit, such d ep o sit is a d em a n d d ep o sit a n d n o in te rest m ay be p aid o n such d ep o sit fo r an y p e rio d su b se q u e n t to th e e x p ira tio n o f su ch notice, ex cep t th a t, if the o w n er o f su ch d ep o sit advise th e b a n k in w ritin g th a t th e d ep o sit will n o t be w ith d ra w n p u rs u a n t to su ch n o tice o r th a t th e dep o sit will th e re a fte r ag ain be su b je c t to th e c o n tra c t o r re q u ire m e n ts ap p licab le to such d e posit, th e d ep o sit will a g ain c o n stitu te a tim e dep o sit o r savings deposit, as th e case m ay be, a fte r th e d ate u p o n w hich such advice is receiv ed by th e b ank . 1 (g) T im e deposits o f foreign governm ental en tities and international organizations. S ection 2 1 7 .7 d oes n o t a p p ly to th e ra te o f in te re st th a t m ay be p aid by a m e m b e r b a n k on a tim e d ep o sit h av in g a m a tu rity o f y e ars o r less a n d re p resen tin g fu n d s d ep o sited a n d o w n ed by ( ) a fo reig n n a tio n al g o v ern m en t, o r an agency o r in s tru m e n tality th e re o f 5a en g ag ed p rin c ip ally in activ ities w h ich are o rd in a rily p e rfo rm e d in th e U n ite d S tates by g o v e rn m e n tal entities, (2) an in te rn a tio n al en tity o f w h ich th e U n ited S tates is a m e m b er, o r (3) any o th e r fo re ig n , in te rn a tio n a l, 2 2 10 1 sa Other than States, provinces, municipalities or other regional or local governmental units, or agencies or instrumentalities thereof. 5 REGULATION Q § § 217.3-217.4-217.5 to th e d ep o sito r, a m e m b e r b a n k m a y p ay b efo re m a tu rity a tim e d ep o sit o r th e p o rtio n th e re o f n ecessary to m e e t such em erg en cy : P ro vid ed , T h a t b efo re m ak in g su ch p a y m e n t th e d ep o sito r shall sign a n a p p lic a tio n d escrib in g fully th e c ir cu m sta n ce s c o n stitu tin g th e em erg en cy w h ich is d e e m e d to ju stify th e p a y m e n t o f th e d ep o sit b e fo re m a tu rity , w h ich a p p lica tio n shall be a p p ro v ed by a n officer o f th e b a n k w h o shall c ertify th at, to th e b est o f his k n o w led g e a n d belief, th e sta te m e n ts in th e a p p lic a tio n are tru e . S u ch a p p li c a tio n shall be re ta in e d in th e b a n k ’s files an d m a d e av ailab le to th e ex a m in e rs a u th o riz e d to ex am in e th e b a n k . W h e re a tim e d ep o sit is p aid b e fo re m a tu rity th e d e p o sito r shall fo rfe it a c c ru ed an d u n p a id in te re st fo r a p e rio d o f n o t less th a n 3 m o n th s on th e a m o u n t w ith d ra w n if an a m o u n t e q u al to th e a m o u n t w ith d ra w n h a s b een on d ep o sit 3 m o n th s o r lon g er, a n d shall fo rfe it all a c cru e d a n d u n p a id in te re st on th e a m o u n t w ith d ra w n if an a m o u n t eq u al to th e a m o u n t w ith d ra w n h as b een on d ep o sit less th a n 3 m o n th s. W h en a p o rtio n o f a tim e certificate o f d ep o sit is p a id b efo re m a tu rity , th e certificate shall be can celed a n d a new certificate shall be issued fo r th e u n p a id p o rtio n o f th e d e p o sit w ith th e sam e term s, ra te , d ate, an d m a tu rity as th e orig in al deposit. o r su p ra n a tio n a l e n tity specifically d esig n ated by th e B oard as ex em p t fro m § 21 7 .7 . A ll certificates o f d ep o sit issued by m e m b e r b an k s to su ch e n ti ties on w hich th e c o n tra c t ra te o f in te re st exceeds th e m ax im u m p re sc rib e d u n d e r § 2 1 7 .7 shall p r o vide th a t ( ) in th e ev en t o f tra n sfe r, th e d a te of tra n sfe r, a ttested to in w ritin g by th e tra n sfe ro r, shall a p p e a r on th e certificate, a n d ( ) th e m a x i m u m ra te lim itatio n s o f § 2 1 7 .7 in effect a t th e d ate o f issuan ce o f th e c ertificate shall a p p ly to th e certificate fo r an y p e rio d d u rin g w h ich it is h eld by a p erso n o th e r th a n an e n tity ex em p t th e re fro m u n d e r th e fo re g o in g se n te n c e U pon th e p re s e n tm e n t o f su ch a c ertificate fo r p a y m en t, th e b a n k m a y p a y th e h o ld e r th e c o n tra c t ra te o f in te re st on th e d ep o sit fo r th e tim e th a t th e certificate w as a c tu a lly o w n ed by an e n tity so exem pt. 1 2 .0 S E C T IO N 2 1 7 .4 — P A Y M E N T O F T IM E D E P O S IT S B E F O R E M A T U R IT Y (a) Time deposits payable on a specified date. N o m e m b e r b a n k sh all p ay a n y tim e dep o sit, w h ich is p ay ab le on a specified d a te , b e fo re such specified d ate, ex cep t as p ro v id e d in p a ra g ra p h (d) o f this section. (b) Time deposits payable after a specified period. N o m e m b e r b a n k shall p a y an y tim e d eposit, w h ich is p a y ab le at th e e x p ira tio n o f a c e rta in specified p e rio d , b e fo re su ch specified p erio d h as ex p ired , e x cep t as p ro v id e d in p a ra g rap h (d) o f th is section. (c) Time deposits payable after a specified notice. N o m e m b e r b a n k shall p a y a n y tim e deposit, w ith re sp e c t to w h ich n o tic e is re q u ire d to be given a c e rtain specified p e rio d b e fo re any w ith d raw al is m ad e, u n til su ch re q u ire d no tice has been given an d th e specified p erio d th e re a fte r has ex pired, e x c e p t as p ro v id e d in p a ra g ra p h (d) (e) Loans upon security of time deposits. A m e m b e r b a n k m ay m a k e a lo an to th e d e p o sito r u p o n th e secu rity o f his tim e d ep o sit p ro v id ed th a t th e ra te o f in te re st on su ch lo an shall be n o t less th a n p e r c e n t p e r a n n u m in excess of th e ra te o f in te re st on th e tim e deposit. 2 S E C T IO N 2 1 7 .5 — W IT H D R A W A L O F S A V IN G S D E P O S IT S (a) Requirements regarding notice of with drawal. W h e th e r o r n o t in te re st is p aid , no m e m o f th is section. (d) Payment in emergencies. In an em erg en cy w h ere it is n e cessary to p re v e n t g rea t h a rd sh ip b e r shall re q u ire o r w aive n o tice o f w ith d raw al as to an y a m o u n t o r p e rc en tag e o f th e savings d ep o sit o f a n y d e p o sito r u n less it shall sim ilarly re q u ire o r w aive su ch n o tice as to th e sam e a m o u n t o r p erce n ta g e o f th e savings dep o sits o f ev ery o th e r d e p o sito r w h ich a re su b jec t to th e sam e c o n tra c tu a l p ro v isio n s w ith resp ec t to n o tice o f w ith d raw al. I f a m em b e r b a n k , w ith o u t re q u ir ing n o tic e o f w ith d raw a l, p ays in terest th a t has 8 A new certificate not maturing prior to the maturity date o f 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 § 217.7 as o f the date o f issuance o f the original certificate. 6 § 217.5-217.6 REGULATION Q (v) u p o n th e d e a th o f th e d e p o sito r, to an y p erso n a u th o riz e d by law to receiv e th e dep o sit; o r (vi) in terest p a id to a th ird p e rso n p u rs u a n t to w ritte n in stru c tio n o r assig n m en t by th e d e p o sito r acc ep ted by th e b a n k , a n d p lace d on file th ere in . (2) N o tw ith sta n d in g th e p ro v isio n s o f s u b p a ra g ra p h ( ) o f th is p a ra g ra p h , n o w ith d ra w al shall be p e rm itte d b y a m e m b e r b a n k to be m ad e fro m a savings dep o sit, th ro u g h p a y m e n t to th e b a n k itself o r th ro u g h tra n sfe r o f c re d it to a d e m a n d o r o th e r d ep o sit a c c o u n t o f th e sam e d e p o sito r (o th er th a n o f in terest o n th e savings dep o sit) if su ch p a y m e n t o r tra n s fe r is m a d e p u rs u a n t to an y ad v ertised p lan o r a n y ag re e m e n t, w ritte n or oral, (i) w h ich a u th o riz e s su ch p a y m en ts o r tra n sfe rs o f c re d it to be m ad e as a n o rm a l p ra c tic e in o rd e r to c o v er ch eck s o r d ra fts d ra w n by th e d e p o sito r u p o n th e b an k ; o r (ii) w h ich p ro v id es th a t such p a y m e n ts o r tra n s fe r o f c re d it shall be m a d e a t daily, m o n th ly , or o th e r su ch p e rio d ic in terv als, e x cep t w h ere m ad e to en ab le th e b an k , on th e d e p o sito r’s b e h a lf an d p u rs u a n t to his w ritte n in stru c tio n s, to effect th e p a y m e n t o f in stalm en ts o f p rin c ip al, in te re st, o r o th e r ch arg es (in clu d in g tax es o r in su ra n c e p re m ium s) d u e on a re a l e state lo an o r m o rtg ag e. (3) W h e re a savings d ep o sit is ev id en c ed by a p assb o o k , ev ery w ith d raw al m a d e u p o n p re s e n ta tio n o f th e p assb o o k shall be e n tere d in th e p ass b o o k at th e tim e o f w ith d ra w al, a n d ev ery o th e r w ith d ra w a l fro m su ch a d ep o sit shall be e n te red in th e p assb o o k as soon as p ra c tic a b le a fte r th e w ith d ra w a l is m ad e. a ccru ed on a savings d ep o sit d u rin g th e p re c e d in g in terest p erio d , it shall, u p o n re q u e st an d w ith o u t re q u irin g such n o tic e , p a y in te re st th a t h as a c c ru ed d u rin g said p e rio d o n th e savings deposits o f ev ery o th e r d ep o sito r. N o m em b e r b a n k shall c h an g e its p ra c tic e w ith resp e c t to th e re q u irin g o r w aiving o f n o tice o f w ith d raw al o f savings deposits fo r th e p u rp o se o f d iscrim in a tin g in fa v o r o f o r ag ain st an y d e p o sito r o r d ep o sito rs, an d n o su ch chan g e o f p ra c tic e shall be m ad e ex cep t p u rs u a n t to d u ly re c o rd e d a c tio n o f th e b a n k ’s b o a rd o f d ire c to rs o r a p ro p e rly a u th o riz e d c o m m ittee th ereo f. (b) Loans on security of savings deposits. If it is n o t th e p ra c tic e o f a m em b e r b a n k to re q u ire n o tice o f w ith d raw a l o f savings deposits, n o restrictio n s are im p o sed by th is P a r t u p o n lo an s by such b a n k to its d e p o sito rs u p o n th e secu rity o f such deposits. I f it is th e p ra c tic e o f a m e m b e r b a n k to re q u ire n o tice o f w ith d ra w al o f a savings deposit, such b a n k m ay m ak e lo an s to a d e p o sito r u p o n th e secu rity o f su ch dep o sit, b u t th e ra te o f in terest on su ch loan s shall be n o t less th a n per cen t p e r a n n u m in excess o f th e ra te o f in te re st p a id on such deposit. (c) Manner of payment of savings deposits. (1) S u b ject to th e p ro v isio n s o f su b p a ra g ra p h ( ) o f this p a ra g ra p h , a m e m b e r b a n k m a y p e rm it w ith d raw als to be m ad e fro m a savings d ep o sit only th ro u g h p a y m e n t to th e d e p o sito r h im self (but n o t to an y o th e r p e rso n w h e th e r o r n o t actin g fo r th e dep o sito r), ex cep t (i) w h ere th e dep o sit is re p re se n te d by a p a ss boo k, to an y p erso n p re se n tin g th e passb o o k ; (ii) to an ex ecu to r, a d m in istra to r, tru ste e , o r o th e r fid u ciary h o ld in g th e savings d ep o sit as p a rt o f a fid u ciary estate, o r to a p erso n , o th e r th a n th e b a n k , h o ld in g a g en eral p o w e r o f a tto rn e y g ran ted by th e dep o sito r; (iii) to an y p erso n , in clu d in g th e b a n k , th a t h as ex ten d ed cred it to th e d ep o sito r o n th e secu rity o f th e savings dep o sit, w h ere su ch p a y m e n t is m ad e in o rd e r to en ab le th e c re d ito r to realize u p o n such security; (iv) p u rs u a n t to th e o rd e r o f a c o u rt o f c o m p e te n t ju risd ictio n ; 1 2 2 7 7 S E C T IO N 2 1 7 .6 — A D V E R T IS IN G O F IN T E R E S T O N D E P O S IT S E v ery ad v e rtise m en t, a n n o u n c e m e n t, o r solici ta tio n re la tin g to th e in terest p aid on d ep o sits in m e m b e r b a n k s shall be g o v ern ed by th e follow ing rules: (a) Annual rate of simple interest. In te re st ra te s shall be sta te d in term s o f th e a n n u a l ra te of sim ple in terest. In n o case shall a ra te be a d v e r tised th a t is in excess o f th e ap p licab le m a x im u m ra te fo r th e p a rtic u la r deposit. 7 Payment from a savings deposit or presentation o f a passbook may be m ade over the counter, through the mails, or otherwise. 7 (b) Percentage yields based on one year. W h ere a p e rc en tag e yield ach iev ed b y c o m p o u n d in g in REGULATION Q § 217.6 (e) Profit. T h e te rm “p ro fit” shall n o t be used in re fe rrin g to in te re st p a id on deposits. terest d u rin g one y e a r is a d v ertise d , th e an n u al ra te of sim ple in te re st shall be state d w ith eq u al p ro m in en ce, to g e th e r w ith a re feren c e to th e basis of co m p o u n d in g . N o m e m b e r b a n k shall advertise a p e rc e n ta g e yield b ased o n th e effect o f grace p erio d s p e rm itte d in § 2 17.3(d). (c) Percentage yields based on periods in excess of one year. N o a d v e rtise m en t shall in clu d e an y in d icatio n o f a to ta l p e rc e n ta g e yield, c o m p o u n d e d o r sim ple, based on a p e rio d in excess o f a y ear, o r an av erag e a n n u a l p e rc e n ta g e yield ach ie v ed by co m p o u n d in g d u rin g a p e rio d in excess o f a y ear. (d) Time or amount requirements. If a n ad v e r tised ra te is p a y a b le o n ly o n d ep o sits th a t m ee t tim e o r a m o u n t re q u ire m e n ts, su ch re q u ire m e n ts shall be clea rly a n d c o n sp icu o u sly stated . W h ere th e tim e re q u ire m e n t fo r a n ad v ertise d ra te is in excess o f a y e ar, th e re q u ire d n u m b e r o f y ears fo r th e ra te to a pp ly shall be sta ted w ith eq u al p ro m in en ce, to g e th e r w ith an in d ic a tio n o f an y low er ra te o r ra te s th a t w ill a p p ly if th e d ep o sit is w ith d raw n at a n e a rlie r m a tu rity . (f) Accuracy of advertising. N o m e m b e r b a n k shall m ak e a n y ad v ertise m e n t, a n n o u n c e m e n t, or so licitatio n re la tin g to th e in te re st p a id on d e posits th a t is in a c c u ra te o r m islead in g o r th a t m isrep rese n ts its d e p o sit c o n tracts. (g) Solicitation of deposits for banks. A n y p e r son o r o rg a n iz a tio n th a t solicits dep o sits fo r a m e m b e r b a n k shall b e b o u n d by th e ru les c o n ta in e d in th is sectio n w ith re sp e ct to a n y a d v e r tisem en t, an n o u n c e m e n t, o r so licitation rela tin g to such deposits. N o su c h p e rso n o r o rg an iza tio n shall ad v ertise a p e rc e n ta g e yield on an y d eposit it solicits fo r a m e m b e r b a n k th a t is n o t a u th o r ized to be p a id a n d ad v ertise d by su ch b an k . (S E C T IO N 2 1 7 .7 — M A X IM U M R A T E S O F IN T E R E S T P A Y A B L E B Y M E M B E R B A N K S O N T IM E A N D S A V IN G S D E P O S IT S , is p rin te d sep arately .) 8 STATUTORY APPENDIX REGULATION Q a n y p u b lic in stru m e n ta lity , agency, o r officer of th e foreg o in g , as is in co n siste n t w ith th e p ro v i sions o f this section as a m en d e d , is h e re b y re pealed. STATUTORY APPENDIX S ection 19 o f th e F e d e ra l R eserv e A c t pro v id es in p a rt as follow s: (a) T h e B o ard is a u th o riz e d fo r th e p u rp o ses o f this sectio n to define th e te rm s used in this section, to d eterm in e w h a t shall be d eem ed a p a y m e n t o f interest, to d e te rm in e w h a t ty p es o f obligations, w h e th e r issued d irectly by a m em b e r b a n k o r in d irectly by a n affiliate o f a m e m b e r b a n k o r by o th e r m ean s, shall be d eem e d a deposit, an d to p rescrib e su ch re g u latio n s as it m ay deem n ecessary to effectu ate the p u rp o ses o f this section an d to p re v e n t evasions th ere o f. [U .S.C., title 12, sec. 371a.] (j) T h e B o ard m ay fro m tim e to tim e, a fte r c o n su ltin g w ith th e B o ard o f D ire c to rs o f th e F e d e ra l D ep o sit In su ra n c e C o rp o ra tio n a n d th e F e d e ra l H o m e L o an B an k B o ard , p re sc rib e ru les g o v ern in g th e p a y m e n t a n d ad v e rtise m en t o f in terest o n deposits, in clu d in g lim itatio n s on th e ra tes o f in te re st w h ich m ay be p aid by m em b e r b an k s o n tim e a n d savings deposits. T h e B o ard m ay p rescrib e d ifferen t ra te lim itatio n s fo r d if [U .S.C., title 12, sec. 461.] fe re n t classes o f deposits, fo r deposits o f d ifferen t ❖* * a m o u n ts o r w ith d ifferen t m a tu ritie s o r su b ject (i) N o m em b e r b a n k shall, d irectly o r ind irectly , to d ifferen t co n d itio n s re g a rd in g w ith d ra w al o r by a n y device w h atso ev er, p ay an y in te re st on re p a y m en t, a c c o rd in g to th e n a tu re o r lo catio n an y deposit w hich is p a y a b le o n d em an d : P ro vid ed , o f m e m b e r b an k s o r th e ir d ep o sito rs, o r a c c o rd T h a t n o th in g h e re in c o n ta in e d shall be co n stru e d ing to such o th e r re a so n a b le bases as th e B o ard as p ro h ib itin g the p a y m e n t o f in te rest in a c c o rd m ay d eem desirab le in th e p u b lic in terest. N o an ce w ith the term s o f an y certificate o f d ep o sit m e m b e r b a n k shall p ay an y tim e d ep o sit b e fo re o r o th e r c o n tra c t e n tere d in to in good fa ith w hich its m a tu rity ex cep t u p o n su ch c o n d itio n s an d in is in fo rce o n th e d a te o n w h ich th e b a n k b eco m es a c c o rd a n c e w ith such ru les an d reg u la tio n s as m ay be p re sc rib e d by th e said B o ard , o r w aive su b ject to the p ro v isio n s o f th is p a ra g ra p h ; b u t an y re q u ire m e n t o f no tice b efo re p a y m e n t o f no such certificate o f d ep o sit o r o th e r c o n tra c t shall be renew ed o r e x ten d e d unless it shall be a n y savings d ep o sit e x cep t as to all savings d e posits h av in g th e sam e re q u ire m e n t: P ro vid ed , m odified to co n fo rm to this p a ra g ra p h , an d every m e m b e r b a n k shall ta k e su ch a ctio n as m ay be T h a t th e p ro v isio n s o f this p a ra g ra p h shall n o t n ecessary to c o n fo rm to th is p a ra g ra p h as soon a p p ly to an y d ep o sit w h ich is p a y ab le only a t an as possible con sisten tly w ith its c o n tra c tu a l o b li office o f a m e m b e r b a n k lo cated o u tsid e o f th e g ations: P ro vid ed fu rth e r, T h a t this p a ra g ra p h shall S tates o f th e U n ite d S tates an d the D istric t n o t apply to an y d ep o sit o f su ch b an k w hich is o f C o lu m b ia. D u rin g th e p e rio d co m m e n c in g on p ay ab le only at an office th e re o f lo cated ou tsid e O c to b er 15, 1962, an d en d in g on O c to b e r 15, o f th e S tates o f the U n ite d S tates a n d th e D istrict 1968, th e p ro v isio n s o f th is p a ra g ra p h shall n o t of C o lu m b ia : P ro v id ed fu rth e r, T h a t u n til th e ap p ly to th e ra te o f in te re st w h ich m a y be p aid ex p ira tio n o f tw o years a fte r th e d ate o f e n a c t by m em b e r b a n k s o n tim e d ep o sits o f fo reig n m en t o f the B an k in g A c t o f 1935 this p a ra g ra p h g o v ern m en ts, m o n e ta ry a n d fin an cial au th o ritie s shall n o t ap p ly ( ) to a n y d ep o sit m a d e by a o f fo reig n g o v ern m e n ts w h en actin g as such, o r savings b an k as defined in section 12B o f this in te rn a tio n a l financial in stitu tio n s o f w h ich th e A ct, as am en d ed , o r by a m u tu a l savings b an k , U n ite d S tates is a m em b er. o r ( ) to any dep o sit o f p u b lic fu n d s m a d e by [U .S.C., title 12, sec. 371b. The first two sentences o f this o r on b e h a lf o f an y S tate, co u n ty , school d istrict, paragraph are, in part, temporary, Unless section 7 o f the A ct o f September 21, 1966 (80 Stat. 825), as amended by the A ct o r o th e r subdivisio n o r m u n icip ality , o r to any o f Decem ber 23, 1969 (83 Stat. 371 ), is modified, on June 1, dep o sit o f tru st fu n d s if th e p a y m e n t o f in terest 1973, such sentences will read as follow s: “ The Board o f Governors o f the Federal Reserve System shall from time to w ith resp ect to such d ep o sit o f p u b lic fu n d s or time prescribe rules governing the payment and advertisement o f tru s t fu n d s is re q u ire d by S tate law . So m u ch o f interest on deposits, including limitations on the rate of interest which may be paid by member banks on time and of existing law as re q u ire s th e p a y m e n t o f in terest savings deposits, and shall prescribe different rates fo r such 1 2 paymejit on time and savings deposits having different maturi ties, or subject to different conditions respecting withdrawal or repayment, or subject to different conditions by reason o f different locations, or according to the varying discount rates o f member banks in the several Federal Reserve districts.” ] w ith resp ect to any fu n d s d ep o sited by th e U n ite d States, by any T e rrito ry , D istrict, o r possession th e re o f (in clu d in g th e P h ilip p in e Is la n d s), o r by 9 / STATUTORY APPENDIX REGULATION Q Section 24 o f the F e d e ra l R eserv e A c t p ro vides, w ith resp ect to n a tio n a l b an k in g asso cia tions, in p a rt as follow s: * * * A n y su ch asso ciatio n m ay co n tin u e h e re a fte r as h e re to fo re to receiv e tim e a n d sav ings depo sits a n d to p a y in te re st o n th e sam e, b u t th e rate o f in terest w h ich su ch a sso ciatio n m ay 10 p a y u p o n su ch tim e deposits o r u p o n savings o r o th e r d ep o sits shall n o t ex ceed th e m ax im u m ra te a u th o riz e d by law to be p a id u p o n such dep o sits by S tate b an k s o r tru s t co m p an ies o rg a n ized u n d e r th e law s o f th e S tate in w h ich such asso ciatio n is lo cated . [U .S.C., title 12, sec. 371.]
@FedFRASER