Section 1902.4 - Establishing MFH reserve accounts in a supervised bank account(a)General requirements. All MFH borrowers required to maintain reserve accounts must place the reserve accounts in a supervised bank account(s) which meets the following requirements:(1)Countersignature requirements. The reserve account must require that any funds withdrawn be countersigned by an authorized government official.(2)Restrictions on collateral. The financial institution holding the reserve account must ensure that the funds are not pledged or taken as security without the Agency's prior consent.(3)Interest bearing. The reserve account funds are encouraged to be maintained in an interest-bearing account. The "Interest-Bearing Deposit Agreement" set out in Exhibit B of this subpart is not required to be used for reserve accounts.(4)Restricted investments. Reserve funds must be placed in investments authorized in 7 CFR part 3560 , subpart G. The authorized investments are deemed to be of acceptable risk such that the potential for any loss is minimal.(5)Financial institutions. The reserve account must be maintained in authorized financial institutions set out in 7 CFR part 3560 , subpart G; e.g., banks, savings associations, credit unions, brokerage firms, mutual funds. Generally, any financial institution may be used provided invested or deposited funds are insured to protect against theft and dishonesty. The reserve account funds need not be Federally insured, but must be otherwise covered by non-Federal insurance against theft and dishonesty.(6)Rules where multiple projects are involved. A reserve account(s) must be maintained for each borrower. When a borrower owns multiple projects, reserve accounts may be established for each project. A single reserve account may also be established by a borrower owning multiple projects, provided the conditions set out in 7 CFR part 3560 . subpart G are met.(7)Term. Reserve accounts are expected to be kept for the full term of the loan.(b)Deposits and account activity statements -(1)Deposits. Generally, Rural Development will not require the review or approval of deposits or the use of Form RD 402-1 or 402-2.(2)Account activity statements. Generally, Rural Development will not monitor or reconcile the reserve account activity statements issued periodically by the financial institutions holding the funds. Rural Development will monitor reserve account levels through budget reports, audits, and Agency reserve tracking systems. If disputes arise or the borrower is in violation of Agency regulations, the Agency may require account activity statements. When account activity statements are sought, it will normally be sufficient to obtain the statement which reflects balances as of the last activity statement ending period. Form RD 402-2 is not required to be used.59 FR 3778, Jan. 27, 1994, as amended at 69 FR 69104, Nov. 26, 2004; 70 FR 59226, Oct. 12, 2005; 70 FR 73347, Dec. 12, 2005; 80 FR 9869, Feb. 24, 2015