§373 — Title 12 Banks and Banking | U.S. Code

Summary

Member banks may accept drafts or bills of exchange drawn on them that are payable within three months (not counting days of grace). These must follow rules set by the Federal Reserve Board and are allowed when banks in foreign countries or U.S. possessions need dollar exchange for local trade. Federal Reserve banks may buy these drafts under Board rules. A member bank must not accept drafts from any one foreign bank totaling more than 10% of its paid-up and unimpaired capital and surplus unless the drafts have documents that transfer or secure title or other adequate security. At no time may a member bank accept such drafts in total more than one-half of its paid-up and unimpaired capital and surplus.

Title 12, §373

Banks and Banking — Source: USLM XML via OLRC

Any member bank may accept drafts or bills of exchange drawn upon it having not more than three months’ sight to run, exclusive of days of grace, drawn under regulations to be prescribed by the Board of Governors of the Federal Reserve System by banks or bankers in foreign countries or dependencies or insular possessions of the United States for the purpose of furnishing dollar exchange as required by the usages of trade in the respective countries, dependencies, or insular possessions. Such drafts or bills may be acquired by Federal reserve banks in such amounts and subject to such regulations, restrictions, and limitations as may be prescribed by the Board of Governors of the Federal Reserve System: Provided, however, That no member bank shall accept such drafts or bills of exchange referred to 11 So in original. Probably should be followed by “in”. this paragraph for any one bank to an amount exceeding in the aggregate ten per centum of the paid-up and unimpaired capital and surplus of the accepting bank unless the draft or bill of exchange is accompanied by documents conveying or securing title or by some other adequate security: Provided further, That no member bank shall accept such drafts or bills in an amount exceeding at any time the aggregate of one-half of its paid-up and unimpaired capital and surplus.

Notes & Related Subsidiaries

Editorial Notes

Codification Section is based on the twelfth par. of section 13 of act Dec. 23, 1913, as amended. The twelfth par. constituted the tenth par. of section 13 in 1916 (39 Stat. 754), became the eleventh par. in 1923 (42 Stat. 1478), and became the twelfth par. in 1932 (47 Stat. 715). For further details, see Codification notes under sections 342 to 344 of this title.

Statutory Notes and Related Subsidiaries

Change of Name

section 203(a) of act Aug. 23, 1935, changed the name of the Federal Reserve Board to Board of Governors of the Federal Reserve System.

§373 Acceptance of Drafts or Bills Drawn by Banks in Foreign Countries or Dependencies of United States for Purpose of Dollar Exchange