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2000 - Rules and Regulations
{{8-31-98 p.2311}}
PART 329—INTEREST ON DEPOSITS
Sec.
329.0
Scope.
329.1
Definitions.
329.2
Payment of interest.
329.3
Exception to prohibition on payment of interest.
329.101
Tranfers not included within the six transfers allowed for nondemand
deposits pursuant to § 329.1(b)(3).
329.102
Deposits described in § 329.1(b)(3).
329.103
Premiums.
329.104
Ten-day grace period.
AUTHORITY: 12 U.S.C. 1819,
1828(g) and
1832(a).
SOURCE: The provisions of this Part 329 appear at 51 Fed. Reg.
10808, March 31, 1986, effective April 1, 1986, except as otherwise
noted.
§ 329.0 Scope.
This part applies to any deposit which is payable by a bank within
the States of the United States or the District of Columbia, or which
is directly or indirectly accessible by check, draft, or order payable
within the States of the United States or the District of Columbia,
which check, draft or order is drawn on an account maintained at a bank
office located within the States of the United States or the District
of Columbia. An "international banking facility time deposit," as
defined by the Board of Governors of the Federal Reserve System in
§ 204.8(a)(2) of this title,
is not a "deposit" within the meaning of this part.
[Codified to 12 C.F.R. § 329.0]
§ 329.1 Definitions.
(a) The term "bank" includes:
(1) Any state bank, as defined in section 3(a) of the Federal
Deposit Insurance Act, 12 U.S.C.
1813(a), the deposits in which are insured by the Corporation,
and which is not a member of the Federal Reserve System;
(2) Any state branch of a foreign bank, the deposit obligations
in which branch are insured by the Corporation; and
(3) Any noninsured bank in a state if the total amount of time
and savings deposits held in all such banks in the state, plus the
total amount of deposits, shares, and withdrawable accounts held in all
building and loan, savings and loan, and homestead associations
(including cooperative banks) in the state which are not members of a
federal home loan bank, is more than 20 per centum of the total amount
of such deposits, shares, and withdrawable accounts held in all banks
and building and loan, savings and loan, and homestead associations
(including cooperative banks) in the state.
(b) The term "demand deposit" includes:
(1) any deposit that has a maturity or required-notice period of
less than seven days;
(2) any deposit regarding which the bank does not reserve the
right to require at least seven days' written notice prior to
withdrawal or transfer of any funds from the account; or
(3) any other deposit from which, under the terms of the deposit
contract, the depositor is authorized to make, during any month or
statement cycle of at least four weeks, more than six transfers by
means of a preauthorized or automatic transfer or telephonic (including
data transmission) agreement, order or instruction, which transfers are
made to another account of the depositor at the same bank, to the bank
itself, or to a third party: provided, that any deposit
specified in this paragraph (3) will be deemed to be a "demand
deposit" if more than three of the six authorized transfers are
authorized to be made by check, draft, debit card or similar order made
by the depositor; and provided further, that no deposit
specified in this paragraph (3) will be deemed to be a
"demand
{{8-31-98 p.2312}}deposit" if the
entire beneficial interest of the deposit is held by a depositor
identified in paragraph (2) of section 2(a) of Pub. L. 93-100
(12 U.S.C.
1832(a)(2)). 1
(c) The term "interest" means any payment to or for the
account of any depositor as compensation for the use of funds
constituting a deposit. A bank's absorption of expenses incident to
providing a normal banking function or its forbearance from charging a
fee in connection with such a service is not considered a payment of
interest.
[Codified to 12 C.F.R. § 329.1]
[Section 329.1 amended at 53 Fed. Reg. 47523, November 23,
1988]
§ 329.2 Payment of interest.
No bank shall, directly or indirectly, by any device whatsoever, pay
interest on any demand deposit.
[Codified to 12 C.F.R. § 329.2]
§ 329.3 Exception to prohibition on payment of interest.
Section 329.2 shall not apply to the payment of interest or other
remuneration on any deposit which, if held by a member bank, would be
allowable under 12 U.S.C. 371a
and 461, or by regulation of the
Board of Governors of the Federal Reserve System.
[Codified to 12 C.F.R. § 329.3]
[Section 329.3 removed at 58 Fed. Reg. 27922 May 12, 1993,
effective June 21, 1993; added at 63 Fed. Reg. 8342, February 19, 1998,
effective April 1, 1998]
§ 329.101 Transfers not included within the six transfers
allowed for nondemand deposits pursuant to § 329.1(b)(3).
This interpretive rule describes certain transfers that are not
included as any of the six transfers allowed pursuant to
§ 329.1(b)(3).
(a) Transfers from a deposit described in § 329.1(b)(3) that are
made to the bank are not deemed to be included within the six transfers
permitted for a nondemand deposit by that paragraph (3) when the
transfers are made for the purpose of repaying loans and associated
expenses at the bank (as originator or servicer). This exemption does
not apply to transfers to the bank that are made for the purpose of
repaying loans that are made by the bank to the depositor's demand
account for the purpose of covering overdrafts.
(b) Transfers from a deposit described in § 329.1(b)(3) that are
made to another account of the same depositor at the bank are not
deemed to be included within the six transfers permitted for a
nondemand deposit by that paragraph (3) when the transfers are made by
mail, messenger, automated teller machine or in person.
(c) Withdrawals from a deposit described in § 329.1(b)(3) are not
deemed to be included within the six transfers permitted for a
nondemand deposit by that paragraph (3)
{{2-27-98 p.2312.01}}when the withdrawals
are made by mail, messenger, telephone (via check mailed to the
depositor), automated teller machine, or in person.
[Codified to 12 C.F.R. § 329.101]
§ 329.102 Deposits described in § 329.1(b)(3).
This interpretive rule explains the second proviso of
§ 329.1(b)(3).
(a) No deposit described in § 329.1(b)(3) that is held by an
organization that is not organized for profit and that is described in
paragraphs 501(c)(3) through (13) and (19) and
{{8-29-97 p.2313}}section 528 of the Internal
Revenue Code of 1954 (26 U.S.C. 501(c)(3)--(13) & (19), & 528) is
deemed to be a demand deposit. Actual Internal Revenue Service
documentation of the organization's tax-exempt status is not required;
it is merely an aid in making the determination.
(b) No deposit described in § 329.1(b)(3) that is held by a
depositor identified in section 2(a)(2) of Pub. L. 93-100
(12 U.S.C. 1832(a)(2))--whether
the deposit is used for business purposes or otherwise--is deemed to be
a demand deposit.
(c) No deposit described in § 329.1(b)(3) that represents funds
held in a fiduciary capacity (whether the fiduciary is a natural person
or otherwise) is deemed to be a demand deposit if all the beneficiaries
of the account are natural persons.
[Codified to 12 C.F.R.
§ 329.102]
§ 329.103 Premiums.
This interpretive rule describes certain payments that are not
deemed to be "interest" as defined in § 329.1(c).
(a) Premiums, whether in the form of merchandise, credit, or cash,
given by a bank to the holder of a deposit will not be regarded as
"interest" as defined in § 329.1(c) if:
(1) The premium is given to the depositor only at the time of the
opening of a new account or an addition to an existing account;
(2) No more than two premiums per deposit are given in any
twelve-month interval; and
(3) the value of the premium (in the case of merchandise, the
total cost to the bank, including shipping, warehousing, packaging, and
handling costs) does not exceed $10 for a deposit of less than $5,000
or $20 for a deposit of $5,000 or more.
(b) The costs of premiums may not be averaged.
(c) A bank may not solicit funds for deposit on the basis that the
bank will divide the funds into several accounts for the purpose of
enabling the bank to pay the depositor more than two premiums within a
twelve-month interval on the solicited funds.
(d) The bank must retain sufficient information for examiners to
determine that the requirements of this section have been satisfied.
(e) Notwithstanding paragraph (a) of this section, any premium that
is not, directly or indirectly, related to or dependent on the balance
in a demand deposit account and the duration of the account balance
shall not be considered the payment of interest on a demand deposit
account and shall not be subject to the limitations in paragraph (a) of
this section.
[Codified to 12 C.F.R. § 329.103]
[Section 329.104 amended at 62 Fed. Reg. 40732, July 30,
1997]
§ 329.104 Ten-day grace period.
This interpretive rule provides for 10-day grace periods during
which interest may be paid on a deposit without violating § 329.2.
(a) During the ten calendar days following the maturity of a time
deposit, the bank may continue to pay interest on the matured deposit
at the contract rate of the deposit, or at any lesser rate, if the
deposit contract provides for such post-maturity interest. The payment
of such post-maturity interest will not be regarded as the payment of
interest on a demand deposit.
(b) If a time deposit is renewed within ten calendar days after
maturity, the renewed deposit may be dated back to the maturity date of
the matured deposit and may draw interest from that date. The payment
of such additional interest will not be regarded as the payment of
interest on a demand deposit.
{{8-29-97 p.2314}}
(c) If a time or savings deposit is renewed within ten days after
expiration of the period of notice given with respect to its repayment,
the renewed deposit may draw interest from the date such notice period
expired. The payment of such additional interest will not be regarded
as the payment of interest on a demand deposit.
[Codified to 12 C.F.R. § 329.104]
[The page following this is 2351.]
1 Paragraph (1) of 12 U.S.C. 1832(a) authorizes banks to let
certain depositors make withdrawals from interest-bearing deposits by
negotiable or transferable instruments for the purpose of making
transfers to third parties--i.e., to hold deposits commonly
called "NOW accounts." 12 U.S.C. 1832(a)(1).
Paragraph (2) of 12 U.S.C. 1832(a) provides: "Paragraph (1)
shall apply only with respect to deposits or accounts which consist
solely of funds in which the entire beneficial interest is held by one
or more individuals or by an organization which is operated primarily
for religious, philanthropic, charitable, educational, political or
other similar purposes and which is not operated for profit, and with
respect to deposits of public funds by an officer, employee, or agent
of the United States, any state, county, municipality, or political
subdivision thereof, the District of Columbia, the Commonwealth of
Puerto Rico, American Samoa, Guam, any territory or possession of the
United States, or any political subdivision thereof." 12 U.S.C.
1832(a)(2). Go Back to Text
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