Non-Member Banks

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Definition: Non-Member Banks

A bank which is not a part of the U.S.Federal Reserve System is called a non-member bank. They are usually state chartered banks which have opted not to join the Federal Reserve System.

They are not required to purchase stocks of the Federal Reserve unlike the mandatory rule for member banks. But they are still subject to the reserve requirements of the Federal Reserve. The non-member banks can still make use of all the facilities available to member banks.

They are subject to the laws of the state to which they are chartered. The non-member banks are less regulated as compared to those banks who are a member.

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