408, 401, or non-transferable time deposits held by an employer as part of an unfunded deferred . 1815) is required to maintain reserves in accordance with this part as a nonmember depository institution. These transactions are intended to lower the transaction reserves of the larger depository institution and leave the economic position of the smaller depository institutions unaffected, and have no apparent purpose other than to reduce required reserves of the larger institution. (a) Summary. 372) of the depository institution held by. (1) Depository institution means an institution that maintains reservable transaction accounts or nonpersonal time deposits and is: ( i ) An insured bank as defined in section 3 of the FDI Act ( 12 U.S.C. 1813(h)) or any bank that is eligible to apply to become an insured bank under section 5 of such Act (12 U.S.C. The procedures must consider only the positive balances in individual trust accounts without netting negative balances except in those limited circumstances where loans are legally permitted from one trust to another, or where offsetting is permitted pursuant to trust law or written agreement, or where the amount that caused the overdraft is still available in a settlement, suspense or other trust account within the trust department and may be used to offset the overdraft. [11] The designated entities are specified in 12 CFR 204.125. Under current provisions, funds held in a fiduciary capacity (either by an individual fiduciary or by a corporate fiduciary such as a bank trust department or a trustee in bankruptcy), including those awaiting distribution or investment, may be held in the form of NOW accounts if all of the beneficiaries are otherwise eligible to maintain NOW accounts. The amount that may be deducted may not exceed the amount of gross transaction accounts. (a) The Federal Reserve Act, as amended by the Monetary Control Act of 1980 (Title I of Pub. (dd) Term deposit means those funds of an eligible institution that are maintained by that institution for a specified maturity at a Federal Reserve Bank pursuant to section 204.10(e) of this part. An obligation issued for the purpose of raising funds to purchase business premises, equipment, supplies, or similar assets is not a deposit; (v) Hypothecated deposits created by payments on an installment loan where. According to 12 USCS 461 (1) (D), the term nonpersonal time deposits means "a transferable time deposit or account or a time deposit or account representing funds deposited to the credit of, or in which any beneficial interest is held by, a depositor who is not a natural person.". 1813(f), (g)); (iii) Any insured credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. The entities referred to in 204.2(c)(1)(iv)(E) and 204.8(a)(2)(i)(B)(5) are: Central American Bank for Economic Integration. This document is available in the following developer friendly formats: Information and documentation can be found in our (a) Authority. However, an IBF of a U.S. depository institution may not purchase assets from, or sell such assets to, any U.S. affiliate of the institution establishing the IBF; an IBF of an Edge or Agreement corporation may not purchase assets from, or sell assets to, any U.S. affiliate of the Edge or Agreement corporation or to U.S. branches of the Edge or Agreement corporation or to U.S. branches of the Edge or Agreement corporation other than the branch[2] establishing the IBF; and an IBF of a U.S. branch or agency of a foreign bank may not purchase assets from, or sell assets to any U.S. affiliates of the foreign bank or to any other U.S. branch or agency of the same foreign bank.2 (This would not prevent an IBF from purchasing (or selling) assets directly from (or to) any IBF, including an IBF of an affiliate, or to the institution establishing the IBF; such purchases from the institution establishing the IBF would continue to be subject to Eurocurrency reserve requirements except during the initial four-week transition period.) nonpersonal time deposits (including applicable savings deposits) are subject to reserve requirements, there is currently no reserve requirement imposed on them. [46 FR 32429, June 23, 1981, as amended at 51 FR 9636, Mar. "Reserve Requirements," Page 1. (2) Depository institution does not include international organizations such as the World Bank, the Inter-American Development Bank, and the Asian Development Bank. 204.126 Depository institution participation in Federal funds market. Demand deposits may be in the form of: (ii) Certified, cashier's, teller's, and officer's checks (including such checks issued in payment of dividends); (iii) Traveler's checks and money orders that are primary obligations of the issuing institution; (iv) Checks or drafts drawn by, or on behalf of, a non-United States office of a depository institution on an account maintained at any of the institution's United States offices; (v) Letters of credit sold for cash or its equivalent; (vi) Withheld taxes, withheld insurance and other withheld funds; (vii) Time deposits that have matured or time deposits upon which the contractually required notice of withdrawal as given and the notice period has expired and which have not been renewed (either by action of the depositor or automatically under the terms of the deposit agreement); and. This part relates to reserve requirements imposed on depository institutions for the purpose of facilitating the implementation of monetary policy by the Federal Reserve System. Section 19(b) establishes general reserve requirements on transaction accounts and nonpersonal time deposits. (iii) Homeowners and condominium owners associations described in section 528 of the Internal Revenue Code (26 U.S.C. (c) Cash items forwarded to a Federal Reserve Bank for collection and credit are not included in an institution's balance maintained to satisfy its reserve balance requirement until the expiration of the time specified in the appropriate time schedule established under Regulation J, Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers Through Fedwire (12 CFR part 210). (3) Balances maintained in an excess balance account may not be used for general payments or other activities. (1) For purposes of this section, a depository institution, a U.S. branch or agency of a foreign bank, or an Edge or Agreement corporation is located in the Federal Reserve District that contains the location specified in the institution's charter, organizing certificate, license, or articles of incorporation, or as specified by the institution's primary regulator, or if no such location is specified, the location of its head office, unless otherwise determined by the Board under paragraph (g)(2) of this section. (3) A term deposit may not be used for general payments or settlement activities. The Electronic Code of Federal Regulations (eCFR) is a continuously updated online version of the CFR. Under section 19(b)(1)(F), the Board also is authorized to determine, by regulation or order, that an account or deposit is a transaction account if such account is used directly or indirectly for the purpose of making payments to third persons or others. Regulation D imposes reserve requirements on three types of deposits or other liabilities: transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities. In addition, any other foreign bank's branch located in the United States that is eligible to apply to become an insured bank under section 5 of the Federal Deposit Insurance Act (12 U.S.C. "Published Edition". The arrangement may be marketed as providing the customer unlimited access to its funds with a high rate of interest. (ii) X's Bank's suggestion to use four savings deposits in the name of X in this example is appropriate, and the third party transfers from one account should not be considered in determining whether the transfer and withdrawal limit was exceeded on any other account. Fax: (202) 452-3819 or . Under the arrangement, X deposits funds in the first account and then draws three checks against that account. (bb) Balance maintained to satisfy a reserve balance requirement means the average balance held in an account at a Federal Reserve Bank by or on behalf of an institution over a reserve maintenance period to satisfy a reserve balance requirement of this part. A nonpersonal time deposit is a time deposit account that is held by a depositor who is not a natural person, such as a corporation . 1781); (iv) Any member as defined in section 2 of the Federal Home Loan Bank Act (12 U.S.C. Through this interpretation, the Board is clarifying that such transactions should be treated as deposits for purposes of Regulation D. (b) These transactions involve the sale (or placement) of a short-term loan by a depository institution that has been made under a long-term commitment of the depository institution to advance funds. Non-Personal Time Deposits with No Penalty | Bankers Online Under this account arrangement, at the end of the day funds over a specified balance in each depositor's transaction account are swept from the transaction account into a commingled time deposit. Bull. eCFR :: 12 CFR Part 204 - Interpretations The larger depository institution places funds in a demand deposit at a small domestic depository institution. developer resources. (ii) With a pass-through correspondent in accordance with 204.5(d). In order to meet the requirements of Regulation D, a depository institution must have procedures to determine the aggregate of trust department transaction account balances for Regulation D on a daily basis. (2) International banking facility time deposit or IBF time deposit means a deposit, placement, borrowing or similar obligation represented by a promissory note, acknowledgment of advance, or similar instrument that is not issued in negotiable or bearer form, and, (A) That must remain on deposit at the IBF at least overnight; and. The 3 percent not transferred to the larger depository institution is the amount of the larger depository institution's deposit that the small depository institution must maintain as transaction account reserves. (3) The following types of organizations described in the cited provisions of the Internal Revenue Code are among those not eligible to maintain NOW accounts: (i) Credit unions and other mutual depository institutions described in section 501(c)(14) of the Internal Revenue Code (26 U.S.C. (a) Questions have been raised concerning the extent to which international banking facilities may purchase (or sell) IBF-eligible assets such as loans (including loan participations), securities, CDs, and bankers' acceptances from (or to) third parties. Multiple savings deposits treated as a transaction account. E-mail: regs.comments@federalreserve.gov. (2) The term demand deposit also means deposits or accounts on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and from which the depositor is authorized to make withdrawals or transfers in excess of the withdrawal or transfer limitations specified in paragraph (d)(2) of this section for such an account and the account is not a NOW account, or an ATS account or other account that meets the criteria specified in either paragraph (b)(3)(ii) or (iii) of this section. A depository institutions's supplemental reserve requirement shall be maintained by the Federal Reserve Banks in an Earnings Participation Account. 461(a)), the Board is authorized to define the terms used in section 19, and to prescribe regulations to implement and prevent evasions of the requirements of that section. (1) The Federal Reserve Act, as amended by the Monetary Control Act of 1980 (title I of Pub. (a) Federal Reserve Banks are authorized to assess charges for deficiencies at a rate of 1 percentage point per year above the primary credit rate, as provided in 201.51(a) of this chapter, in effect for borrowings from the Federal Reserve Bank on the first day of the calendar month in which the deficiencies occurred. nonpersonal time deposits, defines such deposits, and requires the collection of FR 2900 report by the Federal Reserve. The Code of Federal Regulations (CFR) is the official legal print publication containing the codification of the general and permanent rules published in the Federal Register by the departments and agencies of the Federal Government. In addition, Regulation D at 204.2(a)(1)(vii)(A) exempts from the definition of deposit any liability of a depository institution on a promissory note or similar obligation that is issued or undertaken and held for the account of an office located in the United States of another depository institution. Consequently, negative balances in individual trust accounts should not be netted against positive balances in other individual trust accounts, and the balance in any transaction account containing commingled trust balances should reflect positive or zero balances for each individual trust. (1) Savings deposit means a deposit or account with respect to which the depositor is not required by the deposit contract but may at any time be required by the depository institution to give written notice of an intended withdrawal not less than seven days before withdrawal is made, and that is not payable on a specified date or at the expiration of a specified time after the date of deposit. (3) Except as may be otherwise provided by the Board, an Edge Corporation (12 U.S.C. While the institution has the use of the funds from the time of the transfer, the trust department's normal posting procedures may not reflect receipt of the cash collateral by the individual account until the next day. (E) Arises from the creation, discount and subsequent sale by a depository institution of its bankers' acceptance of the type described in paragraph 7 of section 13 of the Federal Reserve Act (12 U.S.C. X's Bank did not suggest or otherwise promote the arrangement. (b) Consistent with the Board's intent, IBFs may purchase IBF-eligible assets[1] from, or sell such assets to, any domestic or foreign customer provided that the transactions are at arm's length without recourse. (a) In determining the reserve requirement under this part, the amount of cash items in process of collection and balances subject to immediate withdrawal due from other depository institutions located in the United States (including such amounts due from United States branches and agencies of foreign banks and Edge and Agreement corporations) may be deducted from the amount of gross transaction accounts. (2) If the location specified in paragraph (g)(1) of this section, in the Board's judgment, is ambiguous, would impede the ability of the Board or the Federal Reserve Banks to perform their functions under the Federal Reserve Act, or would impede the ability of the institution to operate efficiently, the Board will determine the Federal Reserve District in which the institution is located, after consultation with the institution and the relevant Federal Reserve Banks. (o) Foreign bank means any bank or other similar institution organized under the laws of any country other than the United States or organized under the laws of Puerto Rico, Guam, American Samoa, the Virgin Islands, or other territory or possession of the United States. They typically pay modest amounts of interest at fixed time intervals and for a specified period of time. (i) X opens four savings accounts with Bank. To be regarded by the Board as acting as a conduit and, thus, be eligible for participation in the Federal funds market, an investment company or trust must meet each of the following conditions: (1) The entire beneficial interest in the investment company or trust must be held by depository institutions, as defined in Regulation D. These institutions presently may participate directly in the Federal funds market. This contact form is only for website help or website suggestions. is required to comply with the provisions of this part in the same manner and to the same extent as a member bank. Such term includes demand deposits, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts. A deposit arises thereafter, if after three business days from the date of issuance of the obligation, the depository institution does not deliver the securities purchased or does not fully collateralize its obligation with securities similar to the securities purchased.
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