§ 371a. — Payment of interest on demand deposits.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC371a]
TITLE 12--BANKS AND BANKING
CHAPTER 3--FEDERAL RESERVE SYSTEM
SUBCHAPTER X--POWERS AND DUTIES OF MEMBER BANKS
Sec. 371a. Payment of interest on demand deposits
No member bank shall, directly or indirectly, by any device
whatsoever, pay any interest on any deposit which is payable on demand:
Provided, That nothing herein contained shall be construed as
prohibiting the payment of interest in accordance with the terms of any
certificate of deposit or other contract entered into in good faith
which is in force on the date on which the bank becomes subject to the
provisions of this section; but no such certificate of deposit or other
contract shall be renewed or extended unless it shall be modified to
conform to this section, and every member bank shall take such action as
may be necessary to conform to this section as soon as possible
consistently with its contractual obligations: Provided further, That
this section shall not apply to any deposit of such bank which is
payable only at an office thereof located outside of the States of the
United States and the District of Columbia: Provided further, That until
the expiration of two years after August 23, 1935, this section shall
not apply (1) to any deposit made by a savings bank as defined in
section 12B of this Act, as amended, or by a mutual savings bank, or (2)
to any deposit of public funds made by or on behalf of any State,
county, school district, or other subdivision or municipality, or to any
deposit of trust funds if the payment of interest with respect to such
deposit of public funds or of trust funds is required by State law. So
much of existing law as requires the payment of interest with respect to
any funds deposited by the United States, by any Territory, District, or
possession thereof, or by any public instrumentality, agency, or officer
of the foregoing, as is inconsistent with the provisions of this section
is repealed. Notwithstanding any other provision of this section, a
member bank may permit withdrawals to be made automatically from a
savings deposit that consists only of funds in which the entire
beneficial interest is held by one or more individuals through payment
to the bank itself or through transfer of credit to a demand deposit or
other account pursuant to written authorization from the depositor to
make such payments or transfers in connection with checks or drafts
drawn upon the bank, pursuant to terms and conditions prescribed by the
Board.
(Dec. 23, 1913, ch. 6, Sec. 19(i), formerly Sec. 19 par. (12), as added
June 16, 1933, ch. 89, Sec. 11(b), 48 Stat. 181; amended Aug. 23, 1935,
ch. 614, title III, Sec. 324(c), 49 Stat. 714; Proc. No. 2695, eff. July
4, 1946, 11 F.R. 7517, 60 Stat. 1352; renumbered Sec. 19(i), Pub. L. 89-
597, Sec. 2(b), Sept. 21, 1966, 80 Stat. 824; Pub. L. 96-161, title I,
Sec. 101(a), Dec. 28, 1979, 93 Stat. 1233; Pub. L. 96-221, title III,
Secs. 302(a), 307, Mar. 31, 1980, 94 Stat. 145, 147.)
References in Text
Section 12B of this Act [Federal Reserve Act], as amended, referred
to in text, formerly classified to section 264 of this title, has been
withdrawn from the Federal Reserve Act and incorporated in the Federal
Deposit Insurance Act which is classified to chapter 16 (Sec. 1811 et
seq.) of this title.
This section, referred to in the last sentence, means section 19 of
act Dec. 23, 1913, as amended, which is classified to sections 142,
371a, 371b, 371b-1, 374, 374a, 461, 463 to 466, 505, and 506 of this
title.
Codification
Words ``(including the Philippine Islands)'' following ``or any
possession thereof'' were omitted from text on authority of Proc. No.
2695, which granted independence to the Philippine Islands pursuant to
section 1394 of Title 22. Proc. No. 2695 is set out as a note under
section 1394 of Title 22, Foreign Relations and Intercourse.
Amendments
1980--Pub. L. 96-221, Secs. 302(a), 307, inserted provision
identical to provision added by Pub. L. 96-161 respecting authorization
of member banks to permit withdrawals to be made automatically from
savings deposits consisting only of funds in which the entire beneficial
interest is held by one or more individuals through payment to the bank
itself or through transfer of credit to a demand deposit or other
account pursuant to written authorization from the depositor to make
such transfer or payments in connection with checks or drafts drawn upon
the bank, and repealed the amendment made by Pub. L. 96-161. See Repeals
and Effective Date of 1980 Amendment notes below.
1979--Pub. L. 96-161 inserted provision allowing member banks to
permit withdrawals to be made automatically from a savings deposit that
consists only of funds in which the entire beneficial interest is held
by one or more individuals through payment to the bank itself or through
transfer of credit to a demand deposit or other account pursuant to
written authorization from the depositor to make such payments or
transfers in connection with checks or drafts drawn upon the bank,
pursuant to terms and conditions prescribed by the Board.
1935--Act Aug. 23, 1935, affected three provisos and added last
sentence.
Effective Date of 1980 Amendment
Section 306 of title III of Pub. L. 96-221 provided that: ``The
amendments made by sections 302, 304, and 305 of this title [amending
this section and sections 1464, 1752, 1757, 1763, 1785, and 1828 of this
title] shall take effect at the close of March 31, 1980, and the
amendments made by section 303 of this title [amending section 1832 of
this title] shall take effect on December 31, 1980.''
Effective and Termination Dates of 1979 Amendment
Section 104 of Pub. L. 96-161 which provided that the amendments
made by sections 101-103 [amending this section and sections 1464, 1752,
1757, and 1828 of this title] shall take effect on Dec. 31, 1979, and
shall remain in effect until the close of Mar. 31, 1980, was omitted
from the Code in view of the repeal of the amendments made by sections
101-103 of Pub. L. 96-161 by Pub. L. 96-221, title III, Sec. 307, Mar.
31, 1980, 94 Stat. 147.
Repeals
Amendment by section 101 of Pub. L. 96-161, cited as a credit to
this section, was repealed at the close of Mar. 31, 1980, by section 307
of Pub. L. 96-221, and substantially identical provisions were enacted
by section 302 of Pub. L. 96-221, such amendments to take effect at the
close of Mar. 31, 1980.
Section Referred to in Other Sections
This section is referred to in sections 248, 1424, 1828, 3105 of
this title.
