§ 7-1-371 - Legal reserve requirements; notice of deficiency; penalty; effect of deficiency - Georgia Statutes

O.C.G.A. 7-1-371 (2010)
7-1-371. Legal reserve requirements; notice of deficiency; penalty; effect of deficiency

(a) For the purposes of the reserve requirement imposed by subsection (b) of this Code section and the composition of the required reserve fund under subsection (d) of this Code section, the term:

(1) "Demand deposits" means the aggregate of deposits which can be required to be paid on demand or within less than 30 days after demand;

(2) "Reserve agent" means a depository of a bank selected as provided in Code Section 7-1-370 and approved by the department for the deposit of funds included in the required reserve fund.

(b) A bank which is not a member of the Federal Reserve System shall maintain at all times a reserve fund in an amount fixed by regulation of the department; but in no case shall such reserve be required in excess of:

(1) In the case of a savings bank, 5 percent of total deposits; and

(2) In the case of a commercial bank, the aggregate of 15 percent of demand deposits and 5 percent of other deposits.

The amount of the required reserve for each day shall be computed on the basis of average daily deposits covering such biweekly or shorter periods as shall be fixed by regulation of the department.

(c) A bank which is a member of the Federal Reserve System shall maintain at all times a reserve fund in accordance with the requirements applicable to a member bank under the laws of the United States.

(d) In the case of a commercial bank, such portion of the reserve fund against deposits as shall be fixed by regulation of the department shall consist of United States coin and currency on hand or on deposit, subject to call without notice, in a reserve agent. The balance of such reserve fund shall be kept in obligations of:

(1) The United States, the Federal National Mortgage Association, a federal land bank, a federal home loan bank, a bank for cooperatives, a federal intermediate credit bank, or the State of Georgia; or

(2) Other issuers whose obligations are marketable and approved by regulation of the department for the purpose of this Code section.

(e) In the case of a savings bank, the reserve fund shall consist of:

(1) United States coin and currency on hand or on deposit, subject to call without notice, in a reserve agent, in a total amount not less than 1 percent of the deposits of the savings bank; and

(2) Securities permitted under subsection (d) of this Code section.

(f) All assets which are part of the reserve fund shall be owned absolutely by the bank and shall not be pledged, assigned, or hypothecated in any manner or subject to setoff. The value of all securities which constitute a part of a bank's reserve fund shall be computed at the current market value thereof.

(g) A bank shall give written notice to the department, in the manner prescribed by the department for such notice, of any deficiency in the amount or form of the reserve fund required by this Code section within three business days after the close of any scheduled averaging period during which such deficiency occurs. A bank shall pay to the department a penalty of $50.00 for each day after the time fixed for the giving of notice in which it fails to give such notice, provided that the department may relieve a bank of this penalty for good cause shown.

(h) Immediately following the closing of any scheduled averaging period during which a deficiency in the required reserve occurs, the bank will take immediate action to restore the deficiency; and, until such deficiency is restored, the bank shall not make any new loans or discounts other than by discounting or purchasing bills of exchange at sight; nor shall any dividend be declared out of the profits of such bank. Any bank failing to restore its reserve to the required amount within 30 days after the closing of the averaging period in which the deficiency occurs may have its business and assets taken over by the department as provided in Part 7 of Article 1 of this chapter.