§ 329.6 Maximum rates of interest pay able on time and savings deposits by insured nonmember banks other than insured nonmember mutual savings banks.“ (a) Deposits of $100,000 or more. There is no maximum rate of interest presently prescribed on any time deposit of $100,000 or more. (b) Deposits of less than $100,000. (1) Except as provided in paragraphs (b) (2) and (3) of this section, no insured nonmember bank shall pay interest on any time deposit of less than $100,000 at a rate in excess of the applicable rate under the following schedule: "The maximum rates of interest payable by insured nonmember banks on time and savings deposits as prescribed herein are not applicable to any deposit which is payable only at an office of an insured nonmember bank located outside of the States of the United States and the District of Columbia. 234 The $1,000 minimum denomination requirement does not apply to time deposits consisting of funds contributed to an Individual Retirement Account established pursuant to 26 U.S.C. § 408 or to time deposits consisting of funds contributed to a Keogh (H.R. 10) plan established pursuant to 26 U.S.C. 401. (c) Savings deposits. No insured nonmember bank shall pay interest at a rate in excess of 5 percent per annum on any savings deposit, including savings deposits that are subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties. [38 FR 20247, July 30, 1973, as amended at 38 FR 20818, Aug. 3, 1973; 38 FR 29315, Oct. 24, 1973; 38 FR 34458, Dec. 14, 1973; 39 FR 42339, Dec. 5, 1974; 39 FR 43295, Dec. 12, 1974; 40 FR 57779, Dec. 12, 1975; 41 FR 50804, Nov. 18, 1976] NOTE: Foreign, international and supranational entities designated as exempt from § 329.6 are listed in Appendix A to this part. § 329.7 Maximum rates of interest or dividends payable on deposits by insured nonmember mutual savings banks." (a) Definition. For the purposes of this section, the term "mutual savings bank" includes any mutual savings bank and any guaranty savings bank which operates in the State of New Hampshire substantially under and pursuant to the laws of that State pertaining to mutual savings banks so long as such guaranty savings bank does not engage in commercial banking. (b) Maximum rates payable—(1) General. (i) Except as provided in paragraphs (b) (2), (3), (4) and (5) and paragraph (e) of this section, no insured nonmember mutual savings bank shall pay interest or dividends at a rate in excess of 54 percent per annum on any deposit. Section 329.3(b), relating to modification of deposit contracts to conform to regulations, shall apply to insured nonmember mutual savings banks. (ii) Notwithstanding the provisions of paragraph (b) (1) (i) of this section, no insured nonmember mutual savings bank shall pay interest or dividends at a rate in excess of 5 percent per annum on any deposit that is subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties where such withdrawals are authorized by law. Eligibility for conporations, partnerships, associations, 14 The maximum rates of interest payable by insured nonmember mutual savings banks as prescribed herein are not applicable to any deposit which is payable only at an office of an insured nonmember mutual savings bank located outside of the States of the United States and the District of Columbia. other organizations and public units shall be limited in accordance with the provisions of § 329.1(e) (2) (ii). (2) Time deposits of $100,000 or more. There is no maximum rate of interest or dividends presently prescribed on any time deposit of $100,000 or more. (3) Time deposits of less than $100,000. Except as provided in paragraphs (b) (4) and (5) of this section, no insured nonmember mutual savings bank shall pay interest or dividends on any time deposit of less than $100,000 at a rate in excess of the applicable rate under the following schedule: or dividends permitted to be paid, the effects of compounding may be disregarded. (d) Grace periods in computing interest. An insured nonmember mutual savings bank may pay interest or dividends on a deposit received during the first 10 calendar days of any calendar month at the applicable maximum rate prescribed in paragraph (b) of this section calculated from the first day of such calendar month until such deposit is withdrawn or otherwise ceases to constitute a deposit upon which interest or dividends are payable; and an insured nonmember mutual savings bank may pay interest or dividends on a deposit withdrawn during the last 3 business days of any calendar month ending a regular quarterly or semiannual interest or dividend period at the applicable maximum rate prescribed in paragraph (b) of this section calculated to the end of such calendar month. (e) Systematic savings account deposits in insured nonmember mutual savings banks in Massachusetts. No insured nonmember mutual savings bank located in the Commonwealth of Massachusetts shall pay interest or dividends on any systematic savings account deposit, as defined in section 22B of chapter 168 of the General Laws of the Commonwealth of Massachusetts, at a rate in excess of the applicable rate under the following schedule: (f) Time deposits. The provisions of this Part 329 with respect to time deposits, except the provisions of § 329.6, shall apply to all such deposits in insured nonmember mutual savings banks. [38 FR 20248, July 30, 1973; 38 FR 22120, Aug. 16, 1973, as amended at 38 FR 29315, Oct. 24, 1973; 38 FR 34458, Dec. 14, 1973; 39 FR 42340, Dec. 5, 1974; 39 FR 43295, Dec. 12, 1974; 40 FR 46302, Oct. 7, 1975; 40 FR 57779, Dec. 12, 1975; 41 FR 11477, Mar. 19, 1976; 41 FR 50804, Nov. 18, 1976] § 329.8 Advertising of interest on deposits. Every advertisement, announcement, or solicitation relating to the interest or dividends paid on deposits in insured nonmember banks (including insured nonmember mutual savings banks) shall be governed by the following rules: (a) Annual rate of simple interest. Interest or dividend rates shall be stated in terms of annual rates of simple interest or dividends. In no case shall a rate be advertised which is in excess of the applicable maximum rate for the particular deposit. (b) Percentage yields based on 1 year. Where a percentage yield achieved by compounding interest during 1 year is advertised, the annual rate of simple interest shall be stated with equal prominence, together with a reference to the basis of compounding. No insured nonmember bank shall advertise a percentage yield based on the effect of grace periods permitted in § 329.3 (d) § 329.7(d). or (c) Percentage yields based on periods in excess of 1 year. No advertisement shall include any indication of a total percentage yield, compounded or simple, based on a period in excess of a year, or an average annual percentage yield achieved by compounding during period in excess of a year. (d) Time or amount requirements. If an advertised rate is payable only on deposits that meet time or amount requirements, such requirements shall be clearly and conspicuously stated. Where the time requirement for an advertised rate is in excess of a year, the required number of years for the rate shall be stated with equal prominence, together with an indication of any lower rate or rates that will apply if the deposit is withdrawn at an earlier maturity. (e) Profit. The term "profit" shall not be used in referring to interest or dividends paid on deposits. (f) Accuracy of advertising. No insured nonmember bank shall make any advertisement, announcement or solicitation relating to the interest or dividends paid on deposits which is inaccurate or misleading or which misrepresents its deposit contracts. (g) Solicitation of deposits for banks. Any person or organization which solicits deposits for an insured nonmember bank shall be bound by the rules contained in this section with respect to any advertisement, announcement or solicitation relating to such deposits. No such person or organization shall advertise a percentage yield on any deposit it solicits for an insured nonmember bank which is not authorized to be paid and advertised by such bank. (h) Time deposits. Every advertisement, announcement, or solicitation relating to the interest paid on time deposits shall include a clear and conspicuous statement that in the event the depositor is allowed to withdraw all or part of his deposit before maturity, a "substantial penalty" will be imposed. (1) Deposits bearing interest or dividends subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties. The dissemination of any advertisement, announcement or solicitation by an insured nonmember bank relating to any interest or dividend-bearing deposit subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties shall be limited, to the extent practicable after considering the media or means chosen, to the States in which Federal law permits banks to accept such withdrawals. [34 F.R. 9703, June 21, 1969, as amended at 37 FR 10341, May 20, 1972; 38 FR 22546, Aug. 22, 1973; 38 FR 34458, Dec. 14, 1973; 41 FR 11477, Mar. 19, 1976] § 329.10 Obligations other than deposits. (a) General. Except as provided in this section, the provisions of this Part 329 shall apply to obligations other than deposits that are issued or undertaken by insured nonmember banks for the purpose of obtaining funds to be used in the banking business." The term "obligations" includes but is not limited to: Promissory notes, acknowledgments of advance, due bills, repurchase agreements, or similar obligations (written or oral).10 (b) Exceptions. The provisions of this Part 329 shall not apply to any obligation other than a deposit obligation of an insured nonmember bank that: (1) Is issued to (or undertaken with respect to), and held for the account of, 18 The term "insured nonmember bank" includes insured nonmember mutual savings banks as defined in § 329.7(a). 16 The provisions of this section shall not apply to any obligation of a bank which is payable only at an office of the bank located outside of the United States, the District of Columbia, Puerto Rico, Guam, American Samoa, and the Virgin Islands. (i) a bank," (ii) any organization the time deposits of which are exempt from § 329.6 pursuant to the provisions of § 329.3(g), (iii) an agency of the United States or the Government Development Bank for Puerto Rico, or (iv) Minbanc Capital Corp. (where such obligation is subordinated to the claims of depositors to the extent of any deposits they may have in the issuing bank); (2) Evidences an indebtedness arising from a transfer of direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States or any agency thereof, that the bank is obligated to repurchase; (3) (i) Bears on its face, in bold-face type, the following: This obligation is not a deposit and is not insured by the Federal Deposit Insurance Corporation; 17a (ii) Has a maturity of (A) at least seven years, or (B) in the case of an obligation or issue that provides for scheduled repayments of principal, has an average maturity of at least seven years and provides that once repayment of principal begins, all scheduled repayments shall be made at least annually and that the amount repaid in each year shall be no less than the amount repaid in the prior year; provided that the Federal Deposit Insurance Corporation may permit the issuance of an obligation or issue with a shorter maturity or average maturity, or an obligation or issue which otherwise fails to comply with the provisions of this subparagraph (ii), if the Federal Deposit Insurance Corporation has determined that exigent circumstances require the issuance of such obligation or issue; 17 The term "bank” includes a member bank, a nonmember commercial bank, a sayings bank (mutual or stock), a building or savings and loan association or cooperative bank, the Export-Import Bank of the United States, or a foreign bank. It also includes bank subsidiaries that engage in business in which their parents are authorized to engage and subsidiaries the stock of which is by statute explicitly eligible for purchase by national banks. 17 The "average maturity" of an obligation or issue repayable in scheduled periodic payments shall be the time-weighted average of all such scheduled payments. In any serial note issue which is exempt from the provisions of subparagraph (ii) by virtue of having an average maturity of 7 years or more, no note in that issue may be offered with a maturity of less than 5 years. (iii) Is in an amount of at least $500, provided that the Federal Deposit Insurance Corporation may, at its option, permit the issuance of an obligation in a lesser amount where such lesser amount is necessary in order to either (A) satisfy the preemptive rights of shareholders in the case of a convertible debt obligation; or (B) maintain a ratable unit offering to holders of preemptive rights in the case of an obligation issued exclusively as part of a unit including shares of stock which are subject to such preemptive rights; or (C) satisfy shareholders' ratable claims in the case of an obligation issued wholly or partially in exchange for shares of voting stock or assets pursuant to a plan of merger, consolidation, reorganization, or other transaction where the issuer will acquire either a majority of such shares of voting stock or all or substantially all of the assets of the entity whose assets are being acquired. (iv) States expressly that it is subordinated to the claims of depositors and is ineligible as collateral for a loan by the issuing bank; (v) Is unsecured; and (vi) Has been approved by the Federal Deposit Insurance Corporation as an addition to the bank's capital structure; or 18 (4) Arises from a borrowing by an insured nonmember bank from a dealer in securities, for one business day, of proceeds of a transfer of deposit credit in a Federal Reserve Bank (or other immediately available funds), commonly referred to as "Federal funds", received by such dealer on the date of the loan in connection with the clearance of securities transactions. [35 FR 18314, Dec. 2, 1970, as amended at 36 FR 3112, Feb. 18, 1971; 38 FR 16347, June 22, 1973; 41 FR 24978, June 22, 1976; 41 FR 30008, July 21, 1976] § 329.101 Computation and payment of interest on time and savings deposits. The Board of Directors of the Federal Deposit Insurance Corporation has adopted the following position concern 18 Capital notes or debentures issued by insured nonmember banks are subject to the retirement provisions of section 18(1) (1) of the Federal Deposit Insurance Act whether or not such capital notes or debentures are exempt from the provisions of Part 329. ing the methods of computing interest on time and savings deposits. (a) The maximum rate of simple interest that an insured nonmember bank may pay on a deposit is established by §§ 329.6 and 329.7 of the rules and regulations of the Federal Deposit Insurance Corporation. In January 1970, the Federal Deposit Insurance Corporation established certain rates on deposits with a maturity of "1 year or more." To qualify for the maximum rate that may be paid on such a deposit, the deposit must not mature before 1 full year, 365 or 366 days as the case may be, from the date of deposit.1 (b) Section 329.3(e) of the Corporation's regulations has been amended to authorize the use of 360 or 365 days (or 366 in a leap year) as the basis for computing interest on time or savings deposits, regardless of the actual number of days the funds earn interest." For example, in computing interest on a 295-day deposit, the bank could use the fraction 295/360 or 295/365 or 295/366 if a leap year. On a 360-day deposit the fraction could be 360360 or 360365 or 36366 if a leap year. On a 365-day deposit the fraction may exceed a value of 1, i.e. 365360. Additionally, § 329.3 (e) authorizes 1 month, or multi Part 329 of the Corporation's regulations prescribes certain maximum interest rates for consumer-type time deposits (1.e., deposits of less than $100,000) with maturity intervals of 30 days or more and 90 days or more. Deposits that mature 1 month from the date of deposit or at 1-month intervals normally cover a period of at least 30 days. Deposits that mature 3 months from the date of deposit or at 8-month intervals normally cover a period of at least 90 days. However, if the date of deposit is in February such deposits will mature 28 days or 89 days, respectively, from the date of deposit in years other than leap years. The Board of Directors regards this de minimis departure from the 30- or 90-day interval required for payment of interest at the applicable maximum rate as justified on grounds of fairness and mathematical simplicity. 20 Interest may not be computed or paid on time deposits after maturity or the expiration of the period of notice given with respect to the repayment thereof, except in the case of deposits which are renewed within 10 days therafter (§ 329.3 (f)). This is true even where the funds remain on deposit for a longer period of time. Consequently, interest must be computed on the number of days the funds are actually eligible to earn interest and not necessarily on the number of days the funds remain on deposit. ples thereof, to be figured as 30 days, or multiples thereof, for interest computation purposes. For example, for a deposit made February 1 for 1 month, the fraction could be 30360 or 30365 or 28360 or 28/365, etc. [37 F.R. 10341, May 20, 1972] APPENDIX A FOREIGN, INTERNATIONAL AND SUPRANATIONAL ENTITIES DESIGNATED AS EXEMPT FROM 329.6 EUROPE Bank for International Settlements. European Investment Bank. LATIN AMERICA Andean Development Corporation. The Central American Institute for Industrial Central American Monetary Stabilization Fund. East Caribbean Common Market. Latin American Free Trade Association. Organization for Central American States. Permanent Secretariat of the Central American General Treaty of Economic Integration. River Plate Basin Commission. AFRICA African Development Bank. Banque Centrale des Etats de l'Afrique de l'Ouest. Banque Centrale des Etats de l'Afrique Equa- Organisation Commune Africaine et Malagache. Organization of African Unity. Union des Etats de l'Afrique Centrale. Union Douaniere des Etats de l'Afrique de l'Ouest. ASIA Asia and Pacific Council. Association of Southeast Asian Nations. Bank of Taiwan. Korea Exchange Bank. |