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Regulation
CC
Availability Of Funds And Collection Of Checks - Appendix E
VIII. Section 229.14 Payment of Interest
A. 229.14(a) In General
1. This section requires that a depositary
bank begin accruing interest on interest-bearing accounts not
later than the day on which the depositary bank receives credit
for the funds deposited.3 A depositary bank generally
receives credit on checks within one or two days following deposit.
A bank receives credit on a cash deposit, an electronic payment,
and the deposit of a check that is drawn on the depositary bank
itself on the day the cash, electronic payment, or check is received.
In the case of a deposit at a contractual branch, credit is received
on the day the depositary bank receives credit for the amount
of the deposit, which may be different from the day the contractual
branch receives credit for the deposit.
3 This section implements section 606 of the Act (12 U.S.C.
4005). The Act keys the requirement to pay interest to the time
the depositary bank receives provisional credit for a check. Provisional
credit is a term used in the U.C.C. that is derived from the Code's
concept of provisional settlement. (See U.C.C. 4-214 and 4-215.)
Provisional credit is credit that is subject to charge-back if
the check is returned unpaid; once the check is finally paid,
the right to charge back expires and the provisional credit becomes
final. Under Subpart C, a paying bank no longer has an automatic
right to charge back credits given in settlement of a check, and
the concept of provisional settlement is no longer useful and
has been eliminated by the regulation. Accordingly, this section
uses the term credit rather than provisional credit, and this
section applies regardless of whether a credit would be provisional
or final under the U.C.C. Credit does not include a bookkeeping
entry (sometimes referred to as deferred credit) that does not
represent funds actually available for the bank's use.
2. Because account includes only transaction
accounts, other interest-bearing accounts of the depositary bank,
such as money market deposit accounts, savings deposits, and time
deposits, are not subject to this requirement; however, a bank
may accrue interest on such deposits in the same way that it accrues
interest under this paragraph for simplicity of operation. The
Board intends the term interest to refer to payments to or for
the account of any customer as compensation for the use of funds,
but to exclude the absorption of expenses incident to providing
a normal banking function or a bank's forbearance from charging
a fee in connection with such a service. (See 12 CFR 217.2(d).)
Thus, earnings credits often applied to corporate accounts are
not interest payments for the purposes of this section.
3. It may be difficult for a depositary
bank to track which day the depositary bank receives credit for
specific checks in order to accrue interest properly on the account
to which the check is deposited. This difficulty may be pronounced
if the bank uses different means of collecting checks based on
the time of day the check is received, the dollar amount of the
check, and/or the paying bank to which it must be sent. Thus,
for the purpose of the interest accrual requirement, a bank may
rely on an availability schedule from its Federal Reserve Bank,
Federal Home Loan Bank, or correspondent to determine when the
depositary bank receives credit. If availability is delayed beyond
that specified in the availability schedule, a bank may charge
back interest erroneously accrued or paid on the basis of that
schedule.
4. This paragraph also permits a depositary
bank to accrue interest on checks deposited to all of its interest-bearing
accounts based on when the bank receives credit on all checks
sent for payment or collection. For example, if a bank receives
credit on 20 percent of the funds deposited in the bank by check
as of the business day of deposit (e.g., ``on us'' checks), 70
percent as of the business day following deposit, and 10 percent
on the second business day following deposit, the bank can apply
these percentages to determine the day interest must begin to
accrue on check deposits to all interest-bearing accounts, regardless
of when the bank received credit on the funds deposited in any
particular account. Thus, a bank may begin accruing interest on
a uniform basis for all interest-bearing accounts, without the
need to track the type of check deposited to each account.
5. This section is not intended to limit
a policy of a depositary bank that provides that interest accrues
only on balances that exceed a specified amount, or on the minimum
balance maintained in the account during a given period, provided
that the balance is determined based on the date that the depositary
bank receives credit for the funds. This section also is not intended
to limit any policy providing that interest accrues sooner than
required by this paragraph.
B. 229.14(b) Special Rule for Credit Unions
1. This provision implements a requirement
in section 606(b) of the Act, and provides an exemption from the
payment-of-interest requirements for credit unions that do not
begin to accrue interest or dividends on their customer accounts
until a later date than the day the credit union receives credit
for those deposits, including cash deposits. These credit unions
are exempt from the payment-of-interest requirements, as long
as they provide notice of their interest accrual policies in accordance
with Sec. 229.16(d). For example, if a credit union has a policy
of computing interest on all deposits received by the 10th of
the month from the first of that month, and on all deposits received
after the 10th of the month from the first of the next month,
that policy is not superseded by this regulation, if the credit
union provides proper disclosure of this policy to its customers.
2. The Act limits this exemption to credit
unions; other types of banks must comply with the payment-of-interest
requirements. In addition, credit unions that compute interest
from the day of deposit or day of credit should not change their
existing practices in order to avoid compliance with the requirement
that interest accrue from the day the credit union receives credit.
C. 229.14(c) Exception for Checks Returned Unpaid
1. This provision is based on section
606(c) of the Act (12 U.S.C. 4005(c)) and provides that interest
need not be paid on funds deposited in an interest-bearing account
by check that has been returned unpaid, regardless of the reason
for return.
IX. Section 229.15 General Disclosure Requirements
A. 229.15(a) Form of Disclosures
1. This paragraph sets forth the general
requirements for the disclosures required under Subpart B. All
of the disclosures must be given in a clear and conspicuous manner,
must be in writing, and, in most cases, must be in a form the
customer may keep. Disclosures posted at locations where employees
accept consumer deposits, at ATMs, and on preprinted deposit slips
need not be in a form that the customer may keep. A depositary
bank satisfies the written disclosure requirement by sending an
electronic disclosure that displays the text and is in a form
that the customer may keep, if the customer agrees to such means
of disclosure. Information is in a form that the customer may
keep if, for example, it can be downloaded or printed.Appendix
C of the regulation contains model forms, clauses, and notices
to assist banks in preparing disclosures.
2. Disclosures concerning availability
must be grouped together and may not contain any information that
is not related to the disclosures required by this subpart. Therefore,
banks may not intersperse the required disclosures with other
account disclosures, and may not include other account information
that is not related to their availability policy within the text
of the required disclosures. Banks may, however, include information
that is related to their availability policies. For example, a
bank may inform its customers that, even when the bank has already
made funds available for withdrawal, the customer is responsible
for any problem with the deposit, such as the return of a deposited
check.
3. The regulation does not require that
the disclosures be segregated from other account terms and conditions.
For example, banks may include the disclosure of their specific
availability policy in a booklet or pamphlet that sets out all
of the terms and conditions of the bank's accounts. The required
disclosures must, however, be grouped together and highlighted
or identified in some manner, for example, by use of a separate
heading for the disclosures, such as ``When Deposits are Available
for Withdrawal.''
B. 229.15(b) Uniform Reference to Day of Availability
1. This paragraph requires banks to
disclose in a uniform manner when deposited funds will be available
for withdrawal. Banks must disclose when deposited funds are available
for withdrawal by stating the business day on which the customer
may begin to withdraw funds. The business day funds will be available
must be disclosed as ``the ________________ business day after''
the day of deposit, or substantially similar language. The business
day of availability is determined by counting the number of business
days starting with the business day following the banking day
on which the deposit is received, as determined under Sec. 229.19(a),
and ending with the business day on which the customer may begin
to withdraw funds. For example, a bank that imposes delays of
four intervening business days for nonlocal checks must describe
those checks as being available on ``the fifth business day after''
the day of the deposit.
C. 229.15(c) Multiple Accounts and Multiple Account Holders
1. This paragraph clarifies that banks
need not provide multiple disclosures under the regulation. A
single disclosure to a customer that holds multiple accounts,
or a single disclosure to one of the account holders of a jointly
held account, satisfies the disclosure requirements of the regulation.
D. 229.15(d) Dormant or Inactive Accounts
1. This paragraph makes clear that banks
need not provide disclosure of their specific availability policies
to customers that hold accounts that are either dormant or inactive.
The determination that certain accounts are dormant or inactive
must be made by the bank. If a bank considers an account dormant
or inactive for purposes other than this regulation and no longer
provides statements and other mailings to an account for this
reason, such an account is considered dormant or inactive for
purposes of this regulation.
X. Section 229.16 Specific Availability Policy Disclosure
A. 229.16(a) General
1. This section describes the information
that must be disclosed by banks to comply with Secs. 229.17 and
229.18(d), which require that banks furnish notices of their specific
policy regarding availability of deposited funds. The disclosure
provided by a bank must reflect the availability policy followed
by the bank in most cases, even though a bank may in some cases
make funds available sooner or impose a longer delay.
2. The disclosure must reflect the policy
and practice of the bank regarding availability as to most accounts
and most deposits into those accounts. In disclosing the availability
policy that it follows in most cases, a bank may provide a single
disclosure that reflects one policy to all its transaction account
customers, even though some of its customers may receive faster
availability than that reflected in the policy disclosure. Thus,
a bank need not disclose to some customers that they receive faster
availability than indicated in the disclosure. If, however, a
bank has a policy of imposing delays in availability on any customers
longer than those specified in its disclosure, those customers
must receive disclosures that reflect the longer applicable availability
periods.A bank may establish different availability policies for
different groups of customers, such as customers in a particular
geographic area or customers of a particular branch. For purposes
of providing a specific availability policy, the bank may allocate
customers among groups through good faith use of a reasonable
method. A bank may also establish different availability policies
for deposits at different locations, such as deposits at a contractual
branch.
3. A bank may disclose that funds are
available for withdrawal on a given day notwithstanding the fact
that the bank uses the funds to pay checks received before that
day. For example, a bank may disclose that its policy is to make
funds available from deposits of local checks on the second business
day following the day of deposit, even though it may use the deposited
funds to pay checks prior to the second business day; the funds
used to pay checks in this example are not available for withdrawal
until the second business day after deposit because the funds
are not available for all uses until the second business day.
(See the definition of available for withdrawal in Sec. 229.2(d).)
B. 229.16(b) Content of Specific Policy Disclosure
1. This paragraph sets forth the items
that must be included, as applicable, in a bank's specific availability
policy disclosure. The information that must be disclosed by a
particular bank will vary considerably depending upon the bank's
availability policy. For example, a bank that makes deposited
funds available for withdrawal on the business day following the
day of deposit need simply disclose that deposited funds will
be available for withdrawal on the first business day after the
day of deposit, the bank's business days, and when deposits are
considered received.
2. On the other hand, a bank that has
a policy of routinely delaying on a blanket basis the time when
deposited funds are available for withdrawal would have a more
detailed disclosure. Such blanket hold policies might be for the
maximum time allowed under the federal law or might be for shorter
periods. These banks must disclose the types of deposits that
will be subject to delays, how the customer can determine the
type of deposit being made, and the day that funds from each type
of deposit will be available for withdrawal.
3. Some banks may have a combination
of next-day availability and blanket delays. For example, a bank
may provide next-day availability for all deposits except for
one or two categories, such as deposits at nonproprietary ATMs
and nonlocal personal checks over a specified dollar amount. The
bank would describe the categories that are subject to delays
in availability and tell the customer when each category would
be available for withdrawal, and state that other deposits will
be available for withdrawal on the first business day after the
day of deposit. Similarly, a bank that provides availability on
the second business day for most of its deposits would need to
identify the categories of deposits which, under the regulation,
are subject to next- day availability and state that all other
deposits will be available on the second business day.
4. Because many banks' availability policies
may be complex, a bank must give a brief summary of its policy
at the beginning of the disclosure. In addition, the bank must
describe any circumstances when actual availability may be longer
than the schedules disclosed. Such circumstances would arise,
for example, when the bank invokes one of the exceptions set forth
in Sec. 229.13 of the regulation, or when the bank delays or extends
the time when deposited funds are available for withdrawal up
to the time periods allowed by the regulation on a case- by-case
basis. Also, a bank that must make certain checks available faster
under Appendix B (reduction of schedules for certain nonlocal
checks) must state that some check deposits will be available
for withdrawal sooner because of special rules and that a list
of the pertinent routing numbers is available upon request.
5. Generally, a bank that distinguishes
in its disclosure between local and nonlocal checks based on the
routing number on the check must disclose to its customers that
certain checks, such as some credit union payable-through drafts,
will be treated as local or nonlocal based on the location of
the bank by which they are payable (e.g., the credit union), and
not on the basis of the location of the bank whose routing number
appears on the check. A bank is not required to provide this disclosure,
however, if it makes the proceeds of both local and nonlocal checks
available for withdrawal within the time periods required for
local checks in Secs. 229.12 and 229.13.
6. The business day cut-off time used
by the bank must be disclosed and if some locations have different
cut-off times the bank must note this in the disclosure and state
the earliest time that might apply. A bank need not list all of
the different cut-off times that might apply. If a bank does not
have a cut-off time prior to its closing time, the bank need not
disclose a cut-off time.
7. A bank taking advantage of the extended
time period for making deposits at nonproprietary ATMs available
for withdrawal under Sec. 229.12(f) must explain this in the initial
disclosure. In addition, the bank must provide a list (on or with
the initial disclosure) of either the bank's proprietary ATMs
or those ATMs that are nonproprietary at which customers may make
deposits. As an alternative to providing such a list, the bank
may label all of its proprietary ATMs with the bank's name and
state in the initial disclosure that this has been done. Similarly,
a bank taking advantage of the cash withdrawal limitations of
Sec. 229.12(d), or the provision in Sec. 229.19(e) allowing holds
to be placed on other deposits when a deposit is made or a check
is cashed, must explain this in the initial disclosure.
8. A bank that provides availability
based on when the bank generally receives credit for deposited
checks need not disclose the time when a check drawn on a specific
bank will be available for withdrawal. Instead, the bank may disclose
the categories of deposits that must be available on the first
business day after the day of deposit (deposits subject to Sec.
229.10) and state the other categories of deposits and the time
periods that will be applicable to those deposits. For example,
a bank might disclose the four-digit Federal Reserve routing symbol
for local checks and indicate that such checks as well as certain
nonlocal checks will be available for withdrawal on the first
or second business day following the day of deposit, depending
on the location of the particular bank on which the check is drawn,
and disclose that funds from all other checks will be available
on the second or third business day. The bank must also disclose
that the customer may request a copy of the bank's detailed schedule
that would enable the customer to determine the availability of
any check and must provide such schedule upon request. A change
in the bank's detailed schedule would not trigger the change in
policy disclosure requirement of Sec. 229.18(e).
C. 229.16(c) Longer Delays on a Case-by-Case Basis
1. Notice in specific policy disclosure.
a. Banks that make deposited funds available
for withdrawal sooner than required by the regulation--for example,
providing their customers with immediate or next-day availability
for deposited funds--and delay the time when funds are available
for withdrawal only from time to time determined on a case-by-case
basis, must provide notice of this in their specific availability
policy disclosure. This paragraph outlines the requirements for
that notice.
b. In addition to stating what
their specific availability policy is in most cases, banks that
may delay or extend the time when deposits are available on a
case-by-case basis must: state that from time to time funds may
be available for withdrawal later than the time periods in their
specific policy disclosure, disclose the latest time that a customer
may have to wait for deposited funds to be available for withdrawal
when a case-by-case hold is placed, state that customers will
be notified when availability of a deposit is delayed on a case-by-case
basis, and advise customers to ask if they need to be sure of
the availability of a particular deposit.
c. A bank that imposes delays on a case-by-case
basis is still subject to the availability requirements of this
regulation. If the bank imposes a delay on a particular deposit
that is not longer than the availability required by Sec. 229.12
for local and nonlocal checks, the reason for the delay need not
be based on the exceptions provided in Sec. 229.13. If the delay
exceeds the time periods permitted under Sec. 229.12, however,
then it must be based on an exception provided in Sec. 229.13,
and the bank must comply with the Sec. 229.13 notice requirements.
A bank that imposes delays on a case-by-case basis may avail itself
of the one-time notice provisions in Sec. 229.13(g)(2) and (3)
for deposits to which those provisions apply.
2. Notice at time of case-by-case delay.
a. In addition to including the disclosures
required by paragraph (c)(1) of this section in their specific
availability policy disclosure, banks that delay or extend the
time period when funds are available for withdrawal on a case-by-case
basis must give customers a notice when availability of funds
from a particular deposit will be delayed or extended beyond the
time when deposited funds are generally available for withdrawal.
In addition, the notice must include the account number, the date
of the deposit, and the amount of the deposit being delayed.
b. If notice of the delay was not given
at the time the deposit was made and the bank assesses overdraft
or returned check fees on accounts when a case-by-case hold has
been placed, the case-by-case hold notice provided to the customer
must include a notice concerning overdraft or returned check fees.
The notice must state that the customer may be entitled to a refund
of any overdraft or returned check fees that result from the deposited
funds not being available if the check that was deposited was
in fact paid by the payor bank, and explain how to request a refund
of any fees. (See Sec. 229.16(c)(3).)
c. The requirement that the case-by-case
hold notice state the day that funds will be made available for
withdrawal may be met by stating the date or the number of business
days after deposit that the funds will be made available. This
requirement is satisfied if the notice provides information sufficient
to indicate when funds will be available and the amounts that
will be available at those times. For example, for a deposit involving
more than one check, the bank need not provide a notice that discloses
when funds from each individual item in the deposit will be available
for withdrawal. Instead, the bank may provide a total dollar amount
for each of the time periods when funds will be available, or
provide the customer with an explanation of how to determine the
amount of the deposit that will be held and when the held funds
will be available for withdrawal.
d. For deposits made in person to an
employee of the depositary bank, the notice generally must be
given at the time of the deposit. The notice at the time of the
deposit must be given to the person making the deposit, that is,
the ``depositor.'' The depositor need not be the customer holding
the account. For other deposits, such as deposits received at
an ATM, lobby deposit box, night depository, through the mail,
or by armored car, notice must be mailed to the customer not later
than the close of the business day following the banking day on
which the deposit was made. Notice to the customer also may be
provided not later than the close of the business day following
the banking day on which the deposit was made if the decision
to delay availability is made after the time of the deposit.
3. Overdraft and returned check fees.
If a depositary bank delays or extends the time when funds from
a deposited check are available for withdrawal on a case-by-case
basis and does not provide a written notice to its depositor at
the time of deposit, the depositary bank may not assess any overdraft
or returned check fees (such as an insufficient funds charge)
or charge interest for use of an overdraft line of credit, if
the deposited check is paid by the paying bank and these fees
would not have occurred had the additional case-by-case delay
not been imposed. A bank may assess an overdraft or returned check
fee under these circumstances, however, if it provides notice
to the customer in the notice required by paragraph (c)(2) of
this section that the fee may be subject to refund, and refunds
the fee upon the request of the customer when required to do so.
The notice must state that the customer may be entitled to a refund
of any overdraft or returned check fees that are assessed if the
deposited check is paid, and indicate where such requests for
a refund of overdraft fees should be directed. Paragraph (c)(3)
applies when a bank provides a case-by-case notice in accordance
with paragraph (c)(2) and does not apply if the bank has provided
an exception hold notice in accordance with Sec. 229.13.
D. 229.16(d) Credit Union Notice of Interest Payment Policy
1. This paragraph sets forth the special
disclosure requirement for credit unions that delay accrual of
interest or dividends for all cash and check deposits beyond the
date of receiving provisional credit for checks being deposited.
(The interest payment requirement is set forth in Sec. 229.14(a).)
Such credit unions are required to describe their policy with
respect to accrual of interest or dividends on deposits in their
specific availability policy disclosure.
Subpart A - General
Subpart B -
Availability of Funds and Disclosure of Funds Availability Policies
Subpart C -
Collection of Checks
Appendices A
& B
Appendices C
& D
Appendix F
Credit
And Banking Laws Menu
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