by Regulation PP, also known as “Availability of Funds and Collection of Checks,” is a regulation issued by the Federal Reserve Board in the United States. It establishes rules for the availability of funds and the collection of checks by depository institutions.
Regulation PP applies to all depository institutions, including banks, savings associations, and credit unions. It applies to all types of deposit accounts, including checking accounts, savings accounts, and money market accounts, and to all types of checks, including paper checks and electronic checks.
The regulation applies to all aspects of check processing, including deposit, clearance, and return of checks. It covers both checks that are deposited directly with the institution, as well as those that are deposited through third-party check deposit services.
The regulation applies to the availability of funds and the collection of checks by depository institutions, it establishes rules for the availability of funds and the collection of checks by depository institutions, including the time frame for making funds available to customers and the conditions under which funds may be delayed. It also requires depository institutions to provide written notice to customers when they place a hold on funds from a check deposit and to make funds from electronic and remotely created checks available to customers no later than the next business day after deposit.
It’s important to note that the regulation applies to all depository institutions regardless of their size, type or location, and it applies to all types of checks, including those that are drawn on other depository institutions, the U.S. government, and foreign banks.
The main provisions of Regulation PP include:
- Availability of funds: Depository institutions must make funds from deposits available to customers in a timely manner, as specified in the regulation.
- Delay of check deposit availability: Depository institutions may delay the availability of funds from check deposits under certain conditions, such as if the check is not properly payable or if the check is drawn on an out-of-state bank.
- Check hold notices: Depository institutions must provide written notice to customers when they place a hold on funds from a check deposit.
- Next-day availability: Depository institutions must make funds from electronic and remotely created checks available to customers no later than the next business day after deposit.
- Funds availability schedules: Depository institutions must disclose to customers their funds availability schedules, which specify when funds from deposits will be available for withdrawal.
- Recordkeeping and reporting requirements: Depository institutions must keep records and make reports to the Federal Reserve regarding their compliance with the regulation.
The regulation is important because it helps ensure that customers have access to their funds in a timely manner and helps to reduce the risk of financial loss to customers due to delayed check clearing. It also improves the transparency by requiring depository institutions to disclose their funds availability schedules to their customers and it helps to ensure that depository institutions are in compliance with the rules and regulations established by the Federal Reserve.
