Uncollected Funds Law and Legal Definition

A deposit not collected by a financial institution is an uncollected fund. It is a portion of a deposit balance that has not yet been collected by the depository bank. Uncollected funds include checks or drafts not paid by the drawee bank. Financial institutions prohibit customers from writing checks on uncollected funds.

Banks place some restrictions on the withdrawal of uncollected funds for a period of time. Federal Reserve Regulation Cc requires banks to follow a uniform schedule of funds availability. Regulation Cc provides two rules. For local checks, even if funds are not collected from the paying bank, a local check drawn on a bank in the same Federal Reserve check processing district is to be available for withdrawal funds two business days after a check is deposited. For non-local checks, the check are usable funds in five business days and the first $100 of any check deposited, the next business day.