§ 4-A-506 — Rate of Interest

Section 4-A-506. Rate of Interest.\n (1) If, under this Article, a receiving bank is obliged to pay\ninterest with respect to a payment order issued to the bank, the amount\npayable may be determined (i) by agreement of the sender and receiving\nbank, or (ii) by a funds-transfer system rule if the payment order is\ntransmitted through a funds-transfer system.\n (2) If the amount of interest is not determined by an agreement or\nrule as stated in subsection (l), the amount is calculated by\nmultiplying the applicable Federal Funds rate by the amount on which\ninterest is payable, and then multiplying the product by the number of\ndays for which interest is payable. The applicable Federal Funds rate is\nthe average of the Federal Funds rates published by the Federal Reserve\nBank of New York for each of the days for which interest is payable\ndivided by 360. The Federal Funds rate for any day on which a published\nrate is not available is the same as the published rate for the next\npreceding day for which there is a published rate. If a receiving bank\nthat accepted a payment order is required to refund payment to the\nsender of the order because the funds transfer was not completed, but\nthe failure to complete was not due to any fault by the bank, the\ninterest payable is reduced by a percentage equal to the reserve\nrequirement on deposits of the receiving bank.\n