the applicable maximum rate prescribed pursuant to the provisions of paragraph (a) of this section, calculated from the first day of such calendar month until such deposit is withdrawn or ceases to constitute a savings deposit under the provisions of this part, whichever shall first occur.

(d) Continuance of time deposit status. A deposit which was a time deposit at the date of deposit continues to be such until maturity, although it has become payable within 30 days, and interest at a rate not exceeding that prescribed pursuant to the provisions of paragraph (a) of this section may be paid until maturity upon such deposit. A time deposit or a savings deposit, with respect to which notice of withdrawal has been given, continues to be such until the expiration of the period of such notice, and interest may be paid upon such deposit until the expiration of the period of such notice at a rate not exceeding that prescribed pursuant to the provisions of paragraph (a) of this section. Interest at a rate not exceeding that prescribed pursuant to the provisions of paragraph (a) of this section may be paid upon savings deposits with respect to which notice of intended withdrawal has not actually been required or given. No interest shall be paid by an insured nonmember bank on any amount which by the terms of any certificate or other contract, or agreement, or otherwise, the bank may be required to pay within 30 days from the date on which such amount is deposited in such bank,10 except as to savings deposits with respect to which the bank consistently continues to adhere to a practice existing prior to January 23, 1936, of requiring notice of at least 15 days before permitting withdrawal.

(e) No interest after maturity or expiration of notice; exception. No interest shall be paid on any time or savings deposit for any period subsequent to maturity, whether such deposit matures by its terms on a specific date or at the expiration of a notice period pursuant to written notice actually given, except if a time certificate is renewed within 10 days after maturity, the renewal certificate 11 may draw interest from the maturity date of the matured certificate.*+

304.4 Payment of time deposits before maturity-(a) Time deposits payable on a specified date. No insured nonmember bank shall pay any time deposit, which is payable on a specified date, before such specified date, except as provided in paragraph (d) of this section.

(b) Time deposits payable after a specified period. No insured nonmember bank shall pay any time deposit, which is payable at the expiration of a specified period, before such period has expired, except as provided in paragraph (d) of this section.

(c) Time deposits payable after a specified notice. No insured nonmember bank shall pay any time deposit, with respect to which

10 Deposits, such as Christmas club accounts and vacation club accounts, which are made under written contracts providing that no withdrawal shall be made until a certain number of periodic deposits have been made during a period of not less than 3 months, constitute "time deposits, open account" even though some of the deposits are made within 30 days from the end of such period.

11

Where a time certificate is renewed within 10 days after maturity, the renewal certificate may be dated back to the maturity date of the matured certificate.

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**For statutory and source citations, see note to § 304.1.

notice is required to be given a specified period before any withdrawal is made, until such required notice has been given and the specified period thereafter has expired, except as provided in paragraph (d) of this section.

(d) Loans upon security of time deposits. An insured nonmember bank may make a loan to the depositor upon the security of his time deposit, provided that the rate of interest in such loan shall be not less than 2 percent per annum in excess of the rate of interest on the time deposit.

Where a loan to the depositor upon the security of his time deposit upon terms satisfactory to the insured nonmember bank and the depositor cannot be arranged, and where the depositor signs a written statement, to be kept in the files of the bank that he is in need of money represented by the time deposit before the maturity thereof, stating the definite amount needed, the time deposit may be paid before maturity to the extent required to meet such need, but the depositor shall forfeit accrued and unpaid interest for a period of not less than three months on the amount withdrawn. When a portion of a time certificate of deposit is paid before maturity, the certificate shall be canceled and a new certificate shall be issued for the unpaid portion of the deposit, with the same terms, rate, date and maturity as the original deposit.*†

304.5 Notice of withdrawal of savings deposits (a) Requirements regarding notice. An insured nonmember bank shall observe the requirements set forth as follows in requiring notice of intended withdrawal of any savings deposit or part thereof or in permitting withdrawal without requiring such notice:

(1) If an insured nonmember bank pay any amount or percentage of the savings deposits of any depositor without requiring such notice, it shall, upon request, and without requiring such notice, pay the same amount or percentage, of the savings deposits of every other depositor, subject to the same notice requirement, except if the bank changes its practice in accordance with paragraph (b) of this section.

(2) If an insured nonmember bank requires such notice before the payment of any amount or percentage of the savings deposits of any depositor, it shall require such notice before the payment of the same amount or percentage of the savings deposits of any other depositor, subject to the same notice requirement, except if the bank changes its practice in accordance with paragraph (b) of this section.

Even though the bank's practice is to require notice, an insured nonmember bank is not prevented by this part from paying during the next succeeding interest period without requiring notice of withdrawal interest on a savings deposit which has accrued during the preceding interest period.

(b) Requirements regarding change of practice. No insured nonmember bank shall change its practice with respect to the requiring or not requiring of notice of intended withdrawal of savings deposits, except after duly recorded action of its board of directors or of its executive committee properly authorized, and no practice in this respect shall be adopted which does not conform to the requirements of paragraphs (a) (1), (2) of this section.

**For statutory and source citations, see note to § 304.1

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(c) Change of practice for purpose of discrimination. No change in the practice of an insured nonmember bank with respect to the requiring or not requiring of notice of intended withdrawal of savings deposits shall be made for the purpose of discriminating in favor of or against any particular depositor or depositors.

(d) Requirements applicable although no interest paid. An insured nonmember bank shall observe the requirements of this section with respect to savings deposits even though no interest be paid on such deposits.

(e) Loans upon security of savings deposits. An insured nonmember bank may make a loan to any of its depositors upon the security of his savings deposits, provided that if the bank's practice is to require notice before permitting withdrawal of any amount or percentage of the savings deposits of any depositor, it shall require like notice before permitting a loan on the security of the same amount or percentage of such deposits.*†

304.6 Maximum rates 12 of interest payable on time and savings deposits by insured nonmember banks-(a) Maximum rate of 22 percent. No insured nonmember bank shall pay interest accruing after February 1, 1936, at a rate in excess of 22 percent per annum, compounded quarterly,13 regardless of the basis upon which such interest may be computed,

(2) On any time deposit having a maturity date six months or more after the date of deposit or payable upon written notice of six months or more,

(3) On any Postal Savings deposit which constitutes a time deposit, except that an insured nonmember bank may pay interest on any such deposits in accordance with the terms of any certificate of deposit or other contract which was entered into before February 1, 1936, (or, if the bank becomes an insured nonmember bank thereafter, before the date upon which it becomes an insured nonmember bank) which was in force on such date and which may not legally be terminated or modified by such bank at its option and without liability.

(b) Maximum rate of 2 percent. No insured nonmember bank shall pay interest accruing after February 1, 1936, at a rate in excess of 2 percent per annum, compounded quarterly, regardless of the basis upon which such interest may be computed,

On any time deposit (except Postal Savings deposits which constitute time deposits) having a maturity date less than 6 months

"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 insured nonmember bank or at an office of an insured nonmember bank located outside of the States of the United States and the District of Columbia.

13 This limitation is not to be interpreted as preventing the compounding of interest at other than quarterly intervals, Provided, That the aggregate amount of such interest so compounded does not exceed the aggregate amount of interest at the rate above prescribed when compounded quarterly.

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**For statutory and source citations, see note to § 304.1

and not less than 90 days after the date of deposit or which is originally or becomes payable upon written notice of less than 6 months and not less than 90 days,

except that an insured nonmember bank may pay interest on such deposits in accordance with the terms of any certificate of deposit or other contract which was entered into before February 1, 1936, (or, if the bank becomes an insured nonmember bank thereafter, before the date upon which it becomes an insured nonmember bank) which was in force on such date and which may not legally be terminated or modified by such bank at its option and without liability.

(c) Maximum rate of 1 percent. No insured nonmember bank shall pay interest accruing after February 1, 1936, at a rate in excess of 1 percent per annum, compounded quarterly, regardless of the basis upon which such interest may be computed,

On any time deposit (except Postal Savings deposits which constitute time deposits) having a maturity date less than ninety days after the date of deposit or which is originally or becomes payable upon written notice of less than 90 days,

except that an insured nonmember bank may pay interest on such deposits in accordance with the terms of any certificate of deposit or other contract which was entered into before February 1, 1936, (or, if the bank becomes an insured nonmember bank thereafter, before the date upon which it becomes an insured nonmember bank) which was in force on such date and which may not legally be terminated or modified by such bank at its option and without liability.

(d) Discontinuance of payments on outstanding certificates of indefinite maturities. Banks which on January 23, 1936, have outstanding certificates of indefinite maturities representing deposit liabilities drawing interest as savings deposits must within one year from February 1, 1936 discontinue to pay thereon the rate applicable hereunder to savings deposits unless meanwhile the same be converted into savings deposits as defined in this part.* [Supp. to Reg. IV, Dec. 21, 1935]

PART 305-RECOGNITION OF DEPOSIT OWNERSHIP NOT ON BANK RECORDS

305.1 Deposits evidenced by negotiable 305.2 Deposit obligations for payment instruments. of items forwarded for collection by bank acting as agent.

Section 305.1 Deposits evidenced by negotiable instruments. If any insured deposit obligation of a bank be evidenced by a negotiable certificate of deposit, negotiable draft, negotiable cashier's or officer's check, negotiable certified check or negotiable traveler's check or letter of credit, the owner of such deposit obligation will be recognized for all purposes of claim for insured deposits to the same extent as if his name and interest were disclosed on the records of the bank provided the instrument was in fact negotiated to such owner prior to the date of the closing of the bank. Affirmative proof of such negotiation must be offered in all cases to substantiate the claim.

*For statutory citation, see note to § 304.1.

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(Sec. 101 (m) (3), 49 Stat. 697; 12 U.S.C., Sup., 264 (m) (3)) [Rule in re deposits evidenced by negotiable instruments, Oct. 1, 1935]

305.2 Deposit obligations for payment of items forwarded for collection by bank acting as agent. Where a closed bank has become obligated for the payment of items forwarded for collection by a bank acting solely as agent the owner of such items will be recognized for all purposes of claim for insured deposits to the same extent as if his name and interest were disclosed on the records of the bank when such claims for insured deposits, if otherwise payable, have been established by the execution and delivery of prescribed forms. Such bank forwarding such items for the owner thereof will be recognized as agent for such owners for the purpose of making an assignment of the rights of such owners against the closed insured bank to the Federal Deposit Insurance Corporation and for the purpose of receiving payment on behalf of such owners. (Sec. 101 (m) (3), 49 Stat. 697; 12 U.S.C., Sup., 264 (m) (3)) [Res., May 20, 1937, as amended May 3, 1939]

PART 306-AGENTS FOR SERVICE OF PROCESS

Section 306.1 Agents for service of process. Service of process may be made on the following agents of the Federal Deposit Insurance Corporation:

**Indicates Supervising Examiner or Examiner of the Federal Deposit Insurance Corporation.

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