Question 254. A heavy borrower claims he should pay us "interest rate" and not "discount rate" on time accommodation notes - i.e., he wants to add the month's interest to the face of the note and when discounting expects us to charge him on only the face value of the note; he claims the interest is not due us until maturity of the note. We know that "discount rate "is customary, but what is the bank's authority?

Answer. - The payment discounted is the sum that will be payable at the maturity of the note, namely, its face amount plus interest from its date to its maturity, and interest should be charged upon this sum. But the amount to be charged for discounting a note is, within the limits prescribed by the Act, a matter for arrangement between the bank and its customer; there is no special authority other than this.