The Federal Deposit Insurance Corp. (FDIC) has implemented an interim final rule, adopted on August 27 and effective September 1, which increases the capacity for qualifying banks to accept reciprocal deposits. This rule replaces a previous general cap that was limited to the lesser of $5 billion or 20% of an institution's total liabilities.
The new calculation system introduces a tiered approach: 50% of the first $1 billion in liabilities, 40% for liabilities between $1 billion and $10 billion, and 30% for liabilities exceeding $10 billion. This structure establishes a maximum general cap of $30 billion.
Reciprocal deposit arrangements allow banks to distribute a customer's funds across multiple insured institutions to keep balances within the standard FDIC insurance limit of $250,000 per depositor. This enables businesses to maintain a primary relationship with one bank while ensuring their operating cash is insured.
The change is significant for commercial banking, where operating deposits are often linked to other services such as payroll, supplier payments, treasury management, and credit. Banks are increasingly investing in treasury and payment capabilities to meet corporate demand for better cash-flow visibility and working-capital tools.
