Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a)
This section applies to all industrial loan companies which maintain offices in
this state for the acceptance of deposits insured by the Federal Deposit
Insurance Corporation.
(b) For the
purpose of this section, the following definitions apply:
(1) "Account" means investment certification
(thrift obligation) (other than a full paid investment certificate) on which
the account holder is permitted to make withdrawals by negotiable or
transferable instruments, payment orders of withdrawal, telephone transfers, or
other similar means for the purpose of making payments to third person or
others. "Account" includes a negotiable order of withdrawal draft
account.
(2) "Business day" means a
period of twenty four hours following the close of business, as the close of
business is determined by the industrial loan company. Such twenty-four hour
period shall not include Saturdays, Sundays or legal holidays.
(3) "Day of deposit" means the day on which a
holder transfers possession of an item to the depository industrial loan
company for deposit into his or her account. However, after the close of
business of the depository industrial loan company, the "day of deposit" shall
mean the next business day of the depository industrial loan company. For
purposes of determining the day of deposit of an automated teller machine
branch office, the depository industrial loan company shall establish and post
a cut-off time for the automated teller machine branch office and the cut-off
time shall be deemed the close of business for purpose of this rule.
(4) "Deposit" means sale of an investment
certificate (thrift obligation).
(5) "Depository industrial loan company"
means the industrial loan company which maintains the account insured by the
Federal Deposit Insurance Corporation into which an item is first
deposited.
(6) "Item" means a
check, negotiable order of withdrawal, share draft, warrant or money
order.
(c) Except as
provided in Subdivisions (d) and (e), the reasonable time for collection and
return of an item, and the reasonable time by which a depository industrial
loan company must permit a holder to draw on an item deposited in an account as
a master of right shall be not later than the opening of business on the next
business day subsequent to the periods detailed below:
(1) For an item drawn on any depository
institution in this state, five business days following the day of
deposit;
(2) For any item drawn on
the depository institution outside this state, eleven business days following
the day of deposit;
(3) For any
item drawn on the depository industrial loan company, one business day
following the day of deposit.
(d) Notwithstanding Subdivision (c), the
reasonable time for collection and return of any of the following items, and
the reasonable time by which a depository industrial loan company must permit a
holder to draw on any of the following items deposited in an account as a
matter of right shall not be later than the opening of business on the next
business day following the day of deposit:
(1) An item drawn in a face amount of one
hundred dollars or less;
(2) A
first-endorsed item drawn on the U.S. Treasury;
(3) A first-endorsed item drawn on the State
of California or any political subdivision thereof;
(4) A first-endorsed item issued by a
depository institution whose accounts are insured by the Federal Deposit
Insurance Corporation, or the National Credit Union
Administration.
(e) The
time periods specified in Subdivisions (c) and (d) shall not apply in any of
the following cases:
(1) If the depository
industrial loan company has received notice that the item has been or will be
dishonored. Such notice must have been received from an intermediary bank, as
defined in Paragraph (4) of Section
4105 of the California Uniform
Commercial Code, or from the depository institution upon which the item is
drawn.
(2) If the item is deposited
within 60 calendar days of the opening of the account.
(3) If the depository industrial loan company
reasonably believes that the drawer or drawee has become, or is reasonably
believed to become, subject to bankruptcy, receivership or similar proceeding,
or when the depository industrial loan company reasonably believes that a
situation involving fraud or kiting exists.
(4) If the item is drawn on an office located
outside of the states of the United States.
(5) If the item is subject to processing
delay, that is, presentment delay, mutilated item, a counter check, or an
improperly encoded item.
(6) If the
item is in the amount of two thousand five hundred dollars or more, other than
an item drawn on the depository industrial loan company.
(7) If the item is deposited in an account
which on three separate occasions within a six-month period has been the
subject of items drawn in excess of the available funds in the account to cover
the items, whether the industrial loan company has paid such items creating an
overdraft or has returned the items unpaid, for a period of six months
commencing with the last such incident. This exception does not include an
account with overdraft privileges established pursuant to contractual agreement
unless the depositor's credit line has been exceeded.
(f) In the case of exemptions set forth in
subsection (e), there shall be "no such regulations," as the term "no such
regulations" is used in California Uniform Commercial Code Section
4213(4)(a).
(g) Any delay by a depository industrial loan
company beyond the time limits prescribed by this section is excused if the
delay is caused by interruption of communication facilities, suspension of
payments by a bank or savings institution, emergency conditions or other
circumstances beyond the control of the depository industrial loan company, and
the depository industrial loan company exercises such diligence as the
circumstances require.
(h) This
section shall not affect a depository industrial loan company's right:
(1) to accept or reject an item for deposit,
or
(2) to require written notice of
an intended withdrawal.
1. Change
without regulatory effect renumbering and amending former section
1101 to new section
40.101 filed 8-19-97 pursuant to
section 100, title 1, California Code of
Regulations (Register 97, No. 34).
Note: Authority cited: Sections
866.5,
866.6 and
18347,
Financial Code. Reference: Sections
866.5 and
866.6,
Financial Code; and Section
4213,
Commercial Code.
