355.4A-506 Rate of interest.
(1)
(2)
If, under this article, a receiving bank is obliged to pay interest with respect to a
payment order issued to the bank, the amount payable may be determined:
(a) By agreement of the sender and receiving bank; or
(b) By a funds-transfer system rule if the payment order is transmitted through a
funds-transfer system.
If the amount of interest is not determined by an agreement or rule as stated in
subsection (1), the amount is calculated by multiplying the applicable Federal Funds
rate by the amount on which interest is payable, and then multiplying the product by
the number of days for which interest is payable. The applicable Federal Funds rate
is the average of the Federal Funds rates published by the Federal Reserve Bank of
New York for each of the days for which interest is payable divided by three
hundred sixty (360). The Federal Funds rate for any day on which a published rate
is not available is the same as the published rate for the next preceding day for
which there is a published rate. If a receiving bank that accepted a payment order is
required to refund payment to the sender of the order because the funds transfer was
not completed, but the failure to complete was not due to any fault by the bank, the
interest payable is reduced by a percentage equal to the reserve requirement on
deposits of the receiving bank.
Effective: July 14, 1992
History: Created 1992 Ky. Acts ch. 116, sec. 60, effective July 14, 1992.
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