Reg. D – Under Reg. D, a “Demand Deposit” account is a type of transaction account. What is a “Demand Deposit?”

Compliance > Regulation D - Reserve Requirements
Q:  Under Reg. D, a “Demand Deposit” account is a type of transaction account.  What is a “Demand Deposit?”  
 
A:  Demand deposit accounts are payable on demand, or a deposit issued with an original maturity or required notice period of less than seven days, or a deposit representing funds for which the depository institution does not reserve the right to require at least seven days’ written notice of an intended withdrawal. There are no eligibility restrictions on this type of account.
 
Demand deposits may also include deposits that were incorrectly classified as another type of deposit—for example, savings deposits for which the transfer or withdrawal limitations have been exceeded—and matured time deposits.
Demand deposit accounts have the following characteristics:
 
• no maturity period (or an original maturity of less than seven days)
• payable on demand (or on less than seven days’ notice)
• may be interest-bearing
• no limit on the number of withdrawals or transfers an account holder may make
• no eligibility requirements
 
As Reg. D highlights, demand deposit does not include:
 
(i) Any account that is a time deposit or a savings deposit under this part;
(ii) Any deposit or account on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and either—
(A) Is subject to check, draft, negotiable order of withdrawal, share draft, or similar item, such as an account authorized by 12 U.S.C. 1832(a) (NOW account) and a savings deposit described in §204.2(d)(2), provided that the depositor is eligible to hold a NOW account; or
(B) From which the depositor is authorized to make transfers by preauthorized transfer or telephonic (including data transmission) agreement, order or instruction to another account or to a third party, provided that the depositor is eligible to hold a NOW account;
(iii) Any deposit or account on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and from which withdrawals may be made automatically through payment to the depository institution itself or through transfer of credit to a demand deposit or other account in order to cover checks or drafts drawn upon the institution or to maintain a specified balance in, or to make periodic transfers to such other account, such as accounts authorized by 12 U.S.C. 371a (automatic transfer account or ATS account), provided that the depositor is eligible to hold an ATS account; or
(iv) IBF time deposits meeting the requirements of §204.8(a)(2).
 
This can be found in the FRB’s Consumer Compliance Handbook here:   https://www.federalreserve.gov/boarddocs/supmanual/cch/int_depos.pdf and Regulation D, 12 CFR 204, which you may find here: https://www.ecfr.gov/cgi-bin/text-idx?SID=9fe1569d2f900094418aab62bb9a4680&mc=true&node=pt12.2.204&rgn=div5#se12.2.204_12
 

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