FR2226_20230227_omb

Supporting Statement for the
Report of Net Debit Cap
(FR 2226; OMB No. 7100-0217)
Improvements to the Federal Reserve Policy on Payment System Risk
To Increase Access to Intraday Credit, Support the FedNow Service, and
Simplify the Federal Reserve Policy on Overnight Overdrafts
(Docket No. OP-1749)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has to extended for three years, with
revision, the Report of Net Debit Cap (FR 2226; OMB No. 7100-0217). Federal Reserve Banks
collect these data annually to provide information that is essential for their administration of the
Board’s Payment System Risk (PSR) policy. The Report of Net Debit Cap comprises three
resolutions, which are filed by an institution’s board of directors depending on its needs. The
reporting panel includes all depository institutions with access to the discount window that are
eligible to request intraday credit.
The Board revised the FR 2226 by amending the requirements associated with the third
resolution so that an eligible institution can request collateralized capacity regardless of whether
the institution has a positive net debit cap. The effective date for the revisions is February 6,
2023.
The current estimated total annual burden for the FR 2226 is 1,042 hours, and would
increase to 1,099 hours. The revisions would result in an increase of 57 hours. There is no formal
reporting form for this information collection.
Background and Justification
The model resolutions associated with the Report of Net Debit Cap address the use of
daylight credit pursuant to the Board’s PSR policy. Under the policy, institutions that maintain a
Federal Reserve account are assigned or may establish a net debit cap that represents a maximum
limit on uncollateralized daylight overdrafts incurred in that account. 1 A daylight overdraft
occurs when the intraday balance in a depository institution’s Reserve Bank account becomes
negative. The net debit cap is calculated by applying a net debit cap multiple to a capital measure
(risk-based capital for a U.S. chartered institution and a U.S. capital equivalency measure for a
U.S. branch or agency of a foreign bank). 2 An institution’s cap category and its reported capital
determine the size of the net debit cap. The six cap categories are (1) zero, (2) exempt-fromfiling, (3) de minimis, and the self-assessed categories, which include (4) average, (5) above
average, and (6) high. All cap categories are granted at the discretion of the Reserve Banks.

1

In December 2008, the Board published its revised Federal Reserve Policy on Payment System Risk. See 73 FR
79109 (December 24, 2008).
2
See 55 FR 22095 (May 31, 1990).

Financially healthy institutions that incur peak daylight overdrafts up to $10 million or 20
percent of their risk-based capital or U.S. capital equivalency measure may be assigned a cap,
called an “exempt-from-filing cap,” by the Reserve Bank. However, if an institution wishes to
increase its daylight overdraft capacity beyond the limits afforded by an exempt-from-filing cap,
it must file a board of directors’ resolution with its Administrative Reserve Bank authorizing a
higher capacity.3
The de minimis cap category allows institutions to incur peak daylight overdrafts up to a
cap of 40 percent of their risk-based capital or U.S. capital equivalency measure. Financially
healthy institutions that expect to incur daylight overdrafts in excess of the exempt-from-filing
limitations, but less than 40 percent of their capital measure, should file a board of directors’
resolution with their Administrative Reserve Bank. This category was designed to reduce the
burden of performing a self-assessment for those institutions incurring relatively small levels of
daylight overdrafts.
Financially healthy institutions that use Federal Reserve intraday credit in amounts that
exceed 40 percent of their capital measure should file a board of directors’ resolution with their
Administrative Reserve Bank and must complete the self-assessment process, which determines
whether the risk profile of the institution allows it to obtain a higher cap and whether it should be
an average, above average, or high cap. Further, institutions with a self-assessed net debit cap
category may pledge collateral to their Reserve Banks under the Maximum Daylight Overdraft
program to secure daylight overdraft capacity in excess of a self-assessed net debit caps by filing
a board of director’s resolution with their Administrative Reserve Bank. The resulting
combination of uncollateralized and collateralized capacity is known as the maximum daylight
overdraft capacity, or max cap.
The Federal Reserve monitors the compliance of depository institutions with their net
debit caps or max cap by using the Federal Reserve Bank’s Account Balances Service ex post
monitoring system. An institution that exceeds its net debit cap or max cap may be counseled by
its Reserve Bank. If an institution continues to exceed its net debit cap or max cap, or if it poses
an excessive credit risk, the institution’s payment activity may be monitored in real time using
the Reserve Banks’ Account Balance Services/Settlement Services application, where Fedwire
funds transfers, net settlement transactions, and ACH credit originations that would cause the
institution’s account balance to exceed its net debit cap would be rejected or delayed.
This information is not available from other sources.
Description of Information Collection
The reporting panel includes all financially healthy depository institutions with access to
the discount window and wish to establish capacity for daylight overdrafts in their Federal
Reserve accounts. Depository institutions that are assigned zero net debit caps or exempt net
debit caps do not have to file board of directors’ resolutions with their Administrative Reserve
Banks. Institutions that apply for and are allowed a de minimis net debit cap, a self-assessed net
3

The Administrative Reserve Bank is responsible for the administration of Federal Reserve credit, reserves, and
risk-management policies for a given institution or other legal entity.

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debit cap, or max cap, must file a board of directors’ resolution. Institutions are required to
submit the resolutions at least annually.
A de minimis cap can be adopted by an institution if it limits its daylight overdrafts to 40
percent of its capital measure. In this case, the institution files a de minimis cap resolution, the
first model resolution.
Depository institutions seeking capacity for daylight overdrafts greater than that afforded
by the exempt or de minimis caps must complete a self -assessment. The self-assessment takes
into consideration a depository institution’s creditworthiness, intraday funds management and
controls, customer credit policies, operating controls, and contingency procedures. (A selfassessment is required for average, above average, or high cap categories.) The results of the
self-assessment must be reviewed and approved by the institution’s board of directors. The
directors’ approval must be communicated to the Reserve Bank by submission of a board of
directors’ resolution, the second model resolution. The Reserve Bank will ensure that the cap
resolution is complete and the cap requested is appropriate. The work papers supporting the self assessment and resolution should be retained by the institution for review by its primary
supervisor.
Depository institutions with self -assessed net debit caps that seek additional daylight
overdraft capacity must submit to their Administrative Reserve Banks a written business
justification to support the request for collateralized capacity in addition to the uncollateralized
self-assessed net debit cap. In evaluating a depository institution’s request, the Administrative
Reserve Bank will review the institution’s daylight overdraft levels, financial condition, and
written business justification. In addition to ensuring that the institution has explored other
alternatives for addressing intraday liquidity problems, the Administrative Reserve Bank will
consult the institution’s primary regulator as well as Reserve Bank staff from the discount
window and legal areas. If the Administrative Reserve Bank approves the request, the depository
institution will need to file the maximum daylight overdraft capacity resolution, which is the
third resolution. This resolution combines the board of directors’ approval of the self -assessment
and the maximum daylight overdraft capacity amount in order to ease the reporting burden of
these institutions.
Respondent Panel
The FR 2226 panel comprises all depository institutions with access to the discount
window that are eligible to request intraday credit.
Frequency
The FR 2226 is submitted annually.
Revisions to the FR 2226
The Board adopted changes to the PSR policy that expand access to collateralized
capacity under the max cap program to include all domestic institutions with a Prompt Corrective

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Action designation of undercapitalized, adequately capitalized, or well capitalized. The changes
also expand access to collateralized capacity under the max cap program to include all foreign
banking organizations (FBOs) with an FBO PSR category of undercapitalized, sufficiently
capitalized, or highly capitalized. As part of the changes, institutions are no longer required to
obtain one of the self-assessed net debit caps in order to obtain collateralized capacity through
the max cap program.
Finally, the changes eliminate, in most cases, the requirements that an institution provide
(1) a business case outlining its need for collateralized capacity4 and (2) an annual board of
directors resolution approving its collateralized capacity 5.
In order to the facilitate these changes to the PSR policy, the Board amended the
requirements associated with the third resolution so that an eligible institution can request
collateralized capacity regardless of whether the institution has a positive net debit cap. The
changes did not increase the estimated average hours per response to the FR 2226, but expanded
the estimated number of respondents requesting collateralized capacity under the max cap
program. The changes to the PRS policy related to this information collection become effective
February 6, 2023, and thus, the revised FR 2226 effective date is February 6, 2023.
Time Schedule for Information Collection
The PSR policy requires depository institutions to submit their resolutions annually, as of
the date on which the board of directors approved the resolution(s). Institutions file the
resolutions directly with their Administrative Reserve Banks and keep current copies of the
resolutions on file for examiner review. The Reserve Banks enter the net debit cap information
into an ex post monitoring system and forward the information to the institutions’ primary
supervisors for examination purposes.
Public Availability of Data
There are no data related to this information collection available to the public.
Legal Status
The FR 2226 is authorized pursuant to sections 11, 16, and 19 of the Federal Reserve Act
(12 U.S.C. §§ 248(i), 248-1, 464). The obligation to respond is required for the institution to
obtain the benefit of an increase in daylight overdraft capacity beyond the limit afforded by the
exempt-from-filing cap.
The Board has confirmed that the disclosure of information collected on the FR 2226
4

An institution must provide a business-case justification if the institution requests a max cap in excess of its capital
measure multiplied by 2.25; or the administrative Reserve Bank exercises discretion to require that the institution
submit a business-case justification due to recent developments in the institution’s condition.
5
If an institution is requesting collateralized capacity for the first time, it must submit a resolution from its board of
directors indicating its board’s approval of the requested max cap. Increases to collateralized capacity previously
approved by Reserve Banks will also require a board of directors resolution.

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would likely cause substantial harm to the competitive position of the respondent institution.
Therefore, the FR 2226 is exempt from disclosure under exemption (b)(4) of the Freedom of
Information Act (FOIA), which exempts from disclosure “trade secrets and commercial or
financial information obtained from a person and privileged or confidential” (5 U.S.C. §
552(b)(4)). In addition, information reported in connection with the second and third resolutions
may be protected under section (b)(8) of FOIA, to the extent that such information is based on
the institution’s CAMELS rating, and thus is related to examination reports prepared by, on
behalf of, or for the use of an agency responsible for the regulation or supervision of financial
institutions (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On June 3, 2021, the Board published an initial notice in the Federal Register (86 FR
29776) requesting public comment for 60 days on the extension, with revision, of the FR 2226.
The comment period for this notice expired on August 2, 2021. The Board did not receive any
comments on the Paperwork Reduction Act analysis. The Board adopted the extension, with
revision, of the FR 2226 as originally proposed. On December 8, 2022, the Board published a
final notice in the Federal Register (87 FR 75254).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 2226 is 1,042
hours, and would increase to 1,099 hours with the revisions. These reporting requirements
represent less than 1 percent of the Board’s total paperwork burden.

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FR 2226
Current
De minimis cap Non FBOs
De minimis cap FBOs
Self-assessed cap Non FBOs
Self-assessed cap FBOs
Maximum daylight overdraft
capacity
Current Total
Proposed
De minimis cap Non FBOs
De minimis cap FBOs
Self-assessed cap Non FBOs
Self-assessed cap FBOs
Maximum daylight overdraft
capacity
Proposed Total

Estimated
number of
respondents6

Estimated
annual
frequency

893
18
106
9

1
1
1
1

1
1.5
1
1.5

2

1

1

893
18
106
9

1
1
1
1

1
1.5
1
1.5

59

1

1

Change

Estimated
Estimated
average hours annual burden
per response
hours
893
27
106
14
2
1,042

893
27
106
14
59
1,099
57

The estimated total annual cost to the public for the FR 2226 is $62,989, and would
increase to $66,435 with the revisions. 7
Sensitive Questions
These collections of information contain no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

6

Of these respondents, 410 for the De minimis cap Non FBOs row are considered small entities as defined by the
Small Business Administration (i.e., entities with less than $850 million in total a ssets),
https://www.sba.gov/document/support-table-size-standards. There are no special accommodations given to mitigate
the burden on small institutions.
7
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $21, 45% Financial Managers at
$74, 15% Lawyers at $71, and 10% Chief Executives at $102). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment and Wages,
May 2021, published March 31, 2022, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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