Upon the indorsement of any of its member banks, with a waiver of demand, notice and protest by such bank, a Federal Reserve Bank may discount notes, drafts and bills of exchange arising out of commercial transactions. The Federal Reserve Board to have the right to determine or define the character of the paper thus eligible for discount. Notes, drafts, and bills admitted to discount under the terms above must have a maturity at the time of discount of not more than ninety days, provided that notes, drafts, and bills drawn or issued for agricultural purposes or based on live stock, and having a maturity not exceeding six months, may be discounted in an amount to be limited to a percentage of the capital of the Federal Reserve Bank to be ascertained and fixed by the Federal Reserve Board.

Any Federal Reserve Bank may discount acceptances which are based on the importation or exportation of goods and which have a maturity at time of discount of not more than three months and indorsed by at least one member bank. The amount of acceptances so discounted shall at no time exceed one-half of the paid up capital stock and surplus of the bank for which the rediscounts are made.