2013 Indiana Code TITLE 28. FINANCIAL INSTITUTIONS ARTICLE 6.1. SAVINGS BANKS CHAPTER 9. LENDING LIMITATIONS OF SAVINGS BANKS
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IC 28-6.1-9
Chapter 9. Lending Limitations of Savings Banks
IC 28-6.1-9-1
"Capital and surplus" and "unimpaired capital and surplus"
defined
Sec. 1. As used in this chapter, "capital and surplus" and
"unimpaired capital and surplus" have the meaning set forth in 12
CFR 32.2.
As added by P.L.42-1993, SEC.72. Amended by P.L.176-1996,
SEC.19; P.L.213-2007, SEC.64; P.L.217-2007, SEC.62.
IC 28-6.1-9-2
Loans and extensions of credit
Sec. 2. As used in this chapter, "loans and extensions of credit"
includes all direct or indirect advances of funds to a person made on
the basis of an obligation of that person to repay the funds or
repayable from specific property pledged by or on behalf of the
person. To the extent specified by the department, the term includes
a liability of a savings bank to advance funds to or on behalf of a
person under a contractual commitment.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-3
Person
Sec. 3. As used in this chapter, "person" includes an individual,
an association, a business trust, a corporation, an estate, a joint
venture, a sole proprietorship, a partnership, a trust, a government,
or an agency, an instrumentality, or a political subdivision of a
government, or any similar entity.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-4
Repealed
(Repealed by P.L.176-1996, SEC.35.)
IC 28-6.1-9-5
Limits on total loans and extensions of credit to one borrower;
loans and extensions not fully secured; loans and extensions fully
secured; derivative transactions
Sec. 5. (a) The total loans and extensions of credit by a savings
bank to a person outstanding at one (1) time and not fully secured, as
determined in a manner consistent with subsection (b), by collateral
having a market value at least equal to the amount of the loan or
extension of credit may not exceed fifteen percent (15%) of the
unimpaired capital and unimpaired surplus of the savings bank.
(b) The total loans and extensions of credit by a savings bank to
a person outstanding at one (1) time and fully secured by readily
marketable collateral having a market value, as determined by
reliable and continuously available price quotations, at least equal to
the amount of the funds outstanding may not exceed ten percent
(10%) of the unimpaired capital and unimpaired surplus of the
savings bank. The limitation in this subsection is separate from and
in addition to the limitation contained in subsection (a).
(c) The total loans and extensions of credit by a savings bank
includes any credit exposure to a person arising from a derivative
transaction (as defined in 12 U.S.C. 84(b)(3)) between the savings
bank and the person.
As added by P.L.42-1993, SEC.72. Amended by P.L.27-2012,
SEC.86.
IC 28-6.1-9-6
Exceptions to lending limitations
Sec. 6. The limitations contained in section 5 of this chapter are
subject to the following exceptions:
(1) Loans or extensions of credit arising from the discount of
commercial or business paper evidencing an obligation to the
person negotiating the loan or extension of credit with recourse
are not subject to any limitation based on capital and surplus.
(2) The purchase of bankers' acceptances of the kind described
in 12 U.S.C. 372 and issued by other banks are not subject to
any limitation based on capital and surplus.
(3) Loans and extensions of credit secured by bills of lading,
warehouse receipts, or similar documents transferring or
securing title to readily marketable staples are subject to a
limitation of thirty-five percent (35%) of capital and surplus in
addition to the general limitations if the market value of the
staples securing each additional loan or extension of credit at all
times equals or exceeds one hundred fifteen percent (115%) of
the outstanding amount of the loan or extension of credit. The
staples shall be fully covered by insurance whenever it is
customary to insure them.
(4) Loans or extensions of credit secured by bonds, notes,
certificates of indebtedness, or treasury bills of the United
States or by other similar obligations fully guaranteed as to
principal and interest by the United States are not subject to any
limitation based on capital and surplus.
(5) Loans or extensions of credit to or secured by unconditional
takeout commitment or guarantees of an agency, a board, a
bureau, a commission, a department, or other establishment of
the United States or corporation wholly owned directly or
indirectly by the United States are not subject to any limitation
based on capital and surplus.
(6) Loans or extensions of credit secured by a segregated
deposit account in the lending bank are not subject to any
limitation based on capital and surplus.
(7) Loans or extensions of credit to a financial institution or to
a receiver, conservator, superintendent of banks, or other agent
in charge of the business and property of the financial
institution, when the loans or extensions of credit are approved
by the director, are not subject to any limitation based on capital
and surplus.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-7
Loan limitations for commercial paper carrying full recourse
endorsements or unconditional guarantees
Sec. 7. (a) Loans and extensions of credit arising from the
discount of negotiable or nonnegotiable installment consumer paper
that carries a full recourse endorsement or an unconditional
guarantee by the person transferring the paper is subject to a
maximum limitation equal to twenty-five percent (25%) of the
capital and surplus, notwithstanding the collateral requirements in
section 5(b) of this chapter.
(b) If the savings bank's files or the knowledge of the savings
bank's officers of the financial condition of each maker of the
consumer paper is reasonably adequate, and an officer of the savings
bank designated for that purpose by the board of the savings bank
certifies in writing that the savings bank is relying primarily upon the
responsibility of each maker for payment of the loans or extensions
of credit and not upon any full or partial recourse endorsement or
guarantee by the transferor, the limitations of this section as to the
loans or extensions of credit of each maker are the only applicable
loan limitations.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-8
Special limits for obligations secured by livestock or dairy cattle
Sec. 8. (a) Loans and extensions of credit secured by shipping
documents or instruments transferring or securing title covering
livestock or giving a lien on livestock when the market value of the
livestock securing the obligation is not at any time less than one
hundred fifteen percent (115%) of the face amount of the note
covered are subject to a maximum limitation equal to twenty-five
percent (25%) of the capital and surplus, notwithstanding the
collateral requirements of section 5(b) of this chapter.
(b) Loans and extensions of credit that arise from the discount by
dealers in dairy cattle of paper given in payment for dairy cattle,
which paper carries a full recourse endorsement or unconditional
guarantee of the seller and that are secured by the cattle being sold,
are subject to a limitation of twenty-five percent (25%) of the capital
and surplus, notwithstanding the collateral requirements of section
5(b) of this chapter.
As added by P.L.42-1993, SEC.72. Amended by P.L.141-2005,
SEC.10.
IC 28-6.1-9-9
Extensions of credit to officers, directors, trustees, and principal
shareholders
Sec. 9. A savings bank may extend credit to an officer, a director,
a trustee, or a principal shareholder in accordance with the
restrictions and provisions of Regulation O of the Board of
Governors of the Federal Reserve System (12 CFR 215).
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-10
Loans or discounts on security and purchase or holding of bank's
own capital stock
Sec. 10. (a) A stock savings bank may not:
(1) make a loan or discount on the security of the shares of its
own capital stock; or
(2) be the purchaser or holder of shares of its own capital stock;
unless the security or purchase is necessary to prevent loss under a
debt previously contracted in good faith.
(b) Stock that may be purchased or acquired under subsection (a)
shall be sold or disposed of within six (6) months from the time of its
purchase at public or private sale, unless otherwise ordered by the
department.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-11
Conformity with lending limitations; sanctions
Sec. 11. (a) Except as otherwise provided in this article, a savings
bank that holds obligations of indebtedness in violation of the
limitations prescribed in this article shall take action to conform the
amount of the obligations to the limitations prescribed by this article.
(b) If a savings bank fails to comply with the limitations of this
article or an order of the department in relation to the limitations of
this article, the department may find that the savings bank is
conducting its business in an unauthorized or unsafe manner and
proceed under IC 28-1-3.1-2.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-12
Exception to limitations for Student Loan Marketing Association
loans and extensions of credit
Sec. 12. Loans or extensions of credit to the Student Loan
Marketing Association are not subject to any limitation based on
capital and surplus.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-13
Repealed
(Repealed by P.L.27-2012, SEC.87.)
IC 28-6.1-9-14
Application of federal regulations
Sec. 14. The department may apply the provisions of 12 CFR 32
in the application and administration of this chapter.
As added by P.L.42-1993, SEC.72.
IC 28-6.1-9-15
Receiving fees, commissions, gifts, or things of value; violation
Sec. 15. Except as otherwise provided, an officer, a director, an
owner, a partner, an employee, or an attorney of a savings bank who
stipulates for, receives, or agrees to receive, a fee, commission, gift,
or thing of value, from any person, for the purpose of procuring or
attempting to procure for a person a loan from or the purchase or
discount of a paper, note, draft, check, or bill of exchange by the
savings bank commits a Class A misdemeanor.
As added by P.L.42-1993, SEC.72.
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