CHAPTER 163 - BANKS, SAVINGS SOCIETIES AND TRUST COMPANIES - RESERVES

AN ACT TO AMEND CHAPTER 66 OF THE REVISED CODE OF DELAWARE, 1935, RELATING TO "BANKS, SAVINGS SOCIETIES AND TRUST COMPANIES", IN REFERENCE TO RESERVES.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Chapter 66 of the Revised Code of Delaware, 1935, as amended by Chapter 130, Vol. 44 Laws of Delaware, be and the same is hereby further amended by striking out and repealing all of 2298. Sec. 41, as amended by Chapter 130, Vol. 44 Laws of Delaware, and by inserting in lieu thereof a new section to be styled 2298. Sec. 41 as follows:

2298. Sec. 41. Reserves Must Be Maintained; of What to Consist:--Demand deposits as used in this section shall mean all deposits payable within thirty days; and time deposits shall comprise all deposits payable after thirty days, all savings accounts, certificates of deposit, and postal savings which are subject to not less than thirty days' notice before payment.

Every bank, banking association, trust company, savings bank or savings society shall maintain liquid reserves as follows:

(d) Seven per centum of the aggregate of its demand deposits. Such reserve shall consist only of cash in the possession of the bank and of net balances, payable on demand, with banking institutions chartered by this State, any other State, or the Federal Government, including Federal Reserve Banks, which have been approved in writing as reserve depositories by the State Bank Commissioner.

(e) Three per centum of the aggregate of its time deposits. Such reserve shall consist of cash in the possession of the bank and of net balances with reserve depositories as hereinbefore specified with regard to demand deposit reserves.

Whenever the State Bank Commissioner shall determine that the maintenance of sound banking practices or the prevention of injurious credit expansions or contraction makes such action advisable, he may, by general regulation, change, from time to time, the requirements as to reserves against demand or time deposits, or both, in banking institutions doing business in this State which are not members of the Federal Reserve System. The reserves so specified shall be not less than the statutory requirement, nor greater than those requirements of the Federal Reserve Bank in this district applicable to member banks in this State, and until six months after the cessation of hostilities in the present war, as determined by proclamation of the President or concurrent resolution of the Congress, no deposit payable to the United States by any banking institutions in this State which are not members of the Federal Reserve System, arising solely as the result of subscriptions made by or through said banking institutions for United States Government securities issued under authority of the Second Liberty Bond Act, as amended, shall be included in demand deposits or in time deposits which are subject to reserve requirements. The power conferred upon the State Bank Commissioner by this paragraph shall not be construed as applicable to mutual savings societies and mutual savings banks chartered under the laws of this State and having no capital stock it being expressly provided hereby that liquid reserves in excess of three per centum of their time deposits shall not be required of mutual savings societies and mutual savings banks.

No money held in a fiduciary capacity, whether as executor, administrator, guardian, trustee, or otherwise, shall be carried or counted as a part of the required reserves in any bank or trust company, exclusive of Federal Reserve Member Banks, unless it shall first set aside, earmarked for the trust department, United States Government securities having a maturity of not more than one year from the date of earmarking for the trust department and having a current market value of at least 110% of the amount on deposit.

If the reserve of any corporation comprehended by this section shall be less than prescribed by general regulations issued by the State Bank Commissioner, such corporation shall not make any new loans or discounts, other than discounting bills of exchange payable on sight, nor shall such corporation declare or pay any dividends until the full amount of its reserve shall have been restored.

Upon failure of any such corporation to make good its reserve within thirty days after notice from the State Bank Commissioner, the said Commissioner may treat such corporation as in an unsound condition and may proceed against it accordingly.

If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provisions or applications, and to this end the provisions of this Act are declared to be severable.

Approved April 10, 1945.