Sec. 229.30 Paying bank's responsibility for
return of checks.
(a) Return of checks. If a paying bank determines
not to pay a check, it shall return the check in an expeditious manner
as provided in either paragraph (a)(1) or (a)(2) of this section.
(1) Two-day/four-day test. A paying bank returns
a check in an expeditious manner if it sends the returned check in a manner
such that the check would normally be received by the depositary bank not
later than 4:00 p.m. (local time of the depositary bank) of--
(i) The second business day following the
banking day on which the check was presented to the paying bank, if the
paying bank is located in the same check processing region as the depositary
bank; or
(ii) The fourth business day following the
banking day on which the check was presented to the paying bank, if the
paying bank is not located in the same check processing region as the depositary
bank.
If the last business day on which the paying bank may deliver a returned
check to the depositary bank is not a banking day for the depositary bank,
the paying bank meets the two-day/four-day test if the returned check is
received by the depositary bank on or before the depositary bank's next
banking day.
(2) Forward collection test. A paying bank
also returns a check in an expeditious manner if it sends the returned
check in a manner that a similarly situated bank would normally handle
a check--
(i) Of similar amount as the returned check;
(ii) Drawn on the depositary bank; and
(iii) Deposited for forward collection in
the similarly situated bank by noon on the banking day following the banking
day on which the check was presented to the paying bank. Subject to the
requirement for expeditious return, a paying bank may send a returned check
to the depositary bank, or to any other bank agreeing to handle the returned
check expeditiously under Sec. 229.31(a). A paying bank may convert a check
to a qualified returned check. A qualified returned check shall be encoded in magnetic ink with the routing number of the depositary bank, the amount of the returned check, and a “2” in the case of an original check (or a “5” in the case of a substitute check) in position 44 of the qualified return MICR line as a return identifier. A qualified returned original check shall be encoded in accordance with ANS X9.13, and a qualified returned substitute check shall be encoded in accordance with ANS X9.100-140. This paragraph does not affect a paying bank's responsibility to return a check within
the deadlines required by the U.C.C., Regulation J (12 CFR part 210), or
Sec. 229.30(c).
(b) Unidentifiable depositary bank. A paying
bank that is unable to identify the depositary bank with respect to a check
may send the returned check to any bank that handled the check for forward
collection even if that bank does not agree to handle the check expeditiously
under Sec. 229.31(a). A paying bank sending a returned check under this
paragraph to a bank that handled the check for forward collection must
advise the bank to which the check is sent that the paying bank is unable
to identify the depositary bank. The expeditious return requirements in
Sec. 229.30(a) do not apply to the paying bank's return of a check under
this paragraph.
(c) Extension of deadline. The deadline for
return or notice of nonpayment under the U.C.C. or Regulation J (12 CFR
part 210), or Sec. 229.36(f)(2) is extended to the time of dispatch of
such return or notice of nonpayment where a paying bank uses a means of
delivery that would ordinarily result in receipt by the bank to which it
is sent--
(1) On or before the receiving bank's next banking day following the otherwise applicable deadline by the earlier of the close of that banking day or a cutoff hour of 2 p.m. or later set by the receiving bank under U.C.C. 4-108, for all deadlines other than those described in paragraph (c)(2) of this section; this deadline is extended further if a paying bank uses a highly expeditious means of transportation, even if this means of transportation would ordinarily result in delivery after the receiving bank's next cutoff hour or banking day referred to above; or
(2) Prior to the cut-off hour for the next
processing cycle (if sent to a returning bank), or on the next banking
day (if sent to the depositary bank), for a deadline falling on a Saturday
that is a banking day (as defined in the applicable U.C.C.) for the paying
bank.
(d) Identification of returned check. A paying bank returning a check shall clearly indicate on the front of the check that it is a returned check and the reason for return. If the check is a substitute check, the paying bank shall place this information within the image of the original check that appears on the front of the substitute check.
(e) Depositary bank without accounts. The
expeditious return requirements of paragraph (a) of this section do not
apply to checks deposited in a depositary bank that does not maintain accounts.
(f) Notice in lieu of return. If a check is
unavailable for return, the paying bank may send in its place a copy of
the front and back of the returned check, or, if no such copy is available,
a written notice of nonpayment containing the information specified in
Sec. 229.33(b). The copy or notice shall clearly state that it constitutes
a notice in lieu of return. A notice in lieu of return is considered a
returned check subject to the expeditious return requirements of this section
and to the other requirements of this subpart.
(g) Reliance on routing number. A paying bank
may return a returned check based on any routing number designating the
depositary bank appearing on the returned check in the depositary bank's
indorsement.
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