12 U.S.C. § 372 — Bankers’ acceptances

submitted 113 years ago by ch. 6 to r/title-12-BANKS-AND-BANKING · 673 words · no verdicts yet

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Member banks and certain foreign bank branches can accept drafts tied to trade or warehouse receipts, up to six months long. The total they can accept is capped as a percentage of their capital, with higher caps allowed by regulators and a lower share allowed for purely domestic deals.

(a) Institutions; drafts and bills of exchange; types. A member bank, and a federal or state branch or agency of a foreign bank that must hold reserves under section 3105, (both called "institutions" here) may accept drafts or bills of exchange drawn on it that run no more than six months, not counting grace days, if the draft (i) comes from importing or exporting goods, (ii) comes from shipping goods within the U.S., or (iii) is backed, at the time of acceptance, by a warehouse receipt or similar document covering easily marketable staple goods. (b) Ratio limit of bills to unimpaired capital stock and surplus. Except as allowed under (c), an institution can't have outstanding acceptances (including its share of participations in acceptances) totaling more than 150% of its paid-up, unimpaired capital stock and surplus — or, for a U.S. branch or agency of a foreign bank, 150% of the dollar equivalent the Board sets under (h). (c) Authorization for special ratio limit; foreign banks. Under conditions it sets, the Board may allow, by regulation or order, an institution to accept up to 200% of its paid-up, unimpaired capital stock and surplus (or the dollar equivalent for a foreign bank branch or agency). (d) Ratio limit for domestic transactions. No matter what (b) and (c) allow, an institution's acceptances from purely domestic transactions can't be more than 50% of all the acceptances that section allows it to have in total. (e) Ratio limit for single entity; foreign banks; security. An institution can't accept bills for any one person, partnership, corporation, association, or other entity totaling more than 10% of its paid-up, unimpaired capital stock and surplus (or the dollar equivalent for a foreign bank branch), unless the institution is secured either by attached documents or by other real security tied to that same transaction. (f) Exception for participation agreements. The limits in this section don't apply to the part of an acceptance that the issuing institution has sold off to another institution under a participation agreement. (g) Definitions by Board. The Board may define any term used in this section, and, for institutions that have no capital or capital stock, must define an equivalent measure to apply these limits to them. (h) Dollar equivalent of foreign bank paid-up capital stock and surplus. Wherever this section's limits depend on an institution's paid-up, unimpaired capital stock and surplus, a U.S. branch or agency of a foreign bank instead uses the dollar equivalent of the foreign bank's own paid-up capital stock and surplus, as the Board determines. If the foreign bank has more than one U.S. branch or agency, all their business is added together to check compliance with these limits.

the actual law source: uscode.house.gov ↗public domain

(a) Institutions; drafts and bills of exchange; types

Any member bank and any Federal or State branch or agency of a foreign bank subject to reserve requirements under section 3105 of this title (hereinafter in this section referred to as “institutions”), may accept drafts or bills of exchange drawn upon it having not more than six months’ sight to run, exclusive of days of grace—

(i)

which grow out of transactions involving the importation or exportation of goods;

(ii)

which grow out of transactions involving the domestic shipment of goods; or

(iii)

which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering readily marketable staples.

(b) Ratio limit of bills to unimpaired capital stock and surplus

Except as provided in subsection (c), no institution shall accept such bills, or be obligated for a participation share in such bills, in an amount equal at any time in the aggregate to more than 150 per centum of its paid up and unimpaired capital stock and surplus or, in the case of a United States branch or agency of a foreign bank, its dollar equivalent as determined by the Board under subsection (h).

The Board, under such conditions as it may prescribe, may authorize, by regulation or order, any institution to accept such bills, or be obligated for a participation share in such bills, in an amount not exceeding at any time in the aggregate 200 per centum of its paid up and unimpaired capital stock and surplus or, in the case of a United States branch or agency of a foreign bank, its dollar equivalent as determined by the Board under subsection (h).

(d) Ratio limit for domestic transactions

Notwithstanding subsections (b) and (c), with respect to any institution, the aggregate acceptances, including obligations for a participation share in such acceptances, growing out of domestic transactions shall not exceed 50 per centum of the aggregate of all acceptances, including obligations for a participation share in such acceptances, authorized for such institution under this section.

(e) Ratio limit for single entity; foreign banks; security

No institution shall accept bills, or be obligated for a participation share in such bills, whether in a foreign or domestic transaction, for any one person, partnership, corporation, association or other entity in an amount equal at any time in the aggregate to more than 10 per centum of its paid up and unimpaired capital stock and surplus, or, in the case of a United States branch or agency of a foreign bank, its dollar equivalent as determined by the Board under subsection (h), unless the institution is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance.

(f) Exception for participation agreements

With respect to an institution which issues an acceptance, the limitations contained in this section shall not apply to that portion of an acceptance which is issued by such institution and which is covered by a participation agreement sold to another institution.

(g) Definitions by Board

In order to carry out the purposes of this section, the Board may define any of the terms used in this section, and, with respect to institutions which do not have capital or capital stock, the Board shall define an equivalent measure to which the limitations contained in this section shall apply.

(h) Dollar equivalent of foreign bank paid-up capital stock and surplus

Any limitation or restriction in this section based on paid-up and unimpaired capital stock and surplus of an institution shall be deemed to refer, with respect to a United States branch or agency of a foreign bank, to the dollar equivalent of the paid-up capital stock and surplus of the foreign bank, as determined by the Board, and if the foreign bank has more than one United States branch or agency, the business transacted by all such branches and agencies shall be aggregated in determining compliance with the limitation or restriction.

Source credit: (Dec. 23, 1913, ch. 6, § 13 (par.), 38 Stat. 264; Mar. 3, 1915, ch. 93, 38 Stat. 958; Sept. 7, 1916, ch. 461, 39 Stat. 752; June 21, 1917, ch. 32, § 5, 40 Stat. 235; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 97–290, title II, § 207, Oct. 8, 1982, 96 Stat. 1239.)

history & why it existsrecord from the source credit

1913Enacted · Act of Dec. 23, 1913, ch. 6 · 38 Stat. 264
1915Amended · Act of Mar. 3, 1915, ch. 93 · 38 Stat. 958
1916Amended · Act of Sept. 7, 1916, ch. 461 · 39 Stat. 752
1917Amended · Act of June 21, 1917, ch. 32 · 40 Stat. 235
1935Amended · Act of Aug. 23, 1935, ch. 614 · 49 Stat. 704
1982Amended · Pub. L. 97-290 · 96 Stat. 1239

A history note hasn’t been published yet. The record shows enactment by ch. 6 on 1913-12-23.

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