In accordance with Section 337.7(d), an insured depository institution that seeks to pay a rate of interest up to its local market rate cap shall provide notice and evidence of the highest rate paid on a particular deposit product in the institution’s local market areas to the appropriate FDIC regional director. The Final Rule redefined the “local rate cap” for a particular deposit product as 90 percent of the highest rate offered on the deposit product by an institution or credit union accepting deposits at a physical location within the institution’s local market area. The national rate cap for non-maturity deposits is the higher of the national rate plus 75 basis points or the federal funds rate plus 75 basis points.Ī less than well capitalized institution may use the “local rate cap” in place of the national rate cap for deposits gathered from within the institution’s local market area. Treasury) obligations plus 75 basis points. The “national rate cap” is calculated as the higher of: (1) the national rate plus 75 basis points or (2) 120 percent of the current yield on similar maturity U.S. The Final Rule redefined the “national rate” as the average of rates paid by all insured depository institutions and credit unions for which data is available, with rates weighted by each institution’s share of domestic deposits.

The interest rate restrictions generally limit a less than well capitalized institution from soliciting deposits by offering rates that significantly exceed rates in its prevailing market. On December 15, 2020, the FDIC Board of Directors approved a Final Rule - PDF making certain revisions to the interest rate restrictions applicable to less than well capitalized institutions (as defined in Section 38 of the Federal Deposit Insurance Act), which are effective on April 1, 2021.

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