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 nonproprietary ATM, credit generally is received
on the day the bank that operates the ATM credits the depositary bank
for the amount of the deposit. 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.
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.
9-181
1. This provision implements
a requirement in section 606(b) of the EFA 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 section
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 EFA 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.
9-182
1. This provision is based on section 606(c) of the EFA 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.
