Section 40.101 - Delayed Funds Availability(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.Cal. Code Regs. Tit. 10, § 40.101
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.
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).