CHAPTER 13. LOANS AND INVESTMENTS OF BANKS AND TRUST COMPANIES
IC 28-1-13
Chapter 13. Loans and Investments of Banks and Trust
Companies
IC 28-1-13-1
Repealed
(Repealed by P.L.14-1992, SEC.165.)
IC 28-1-13-1.1
"Capital and surplus" or "unimpaired capital and unimpaired
surplus" defined
Sec. 1.1. As used in this chapter, "capital and surplus" or
"unimpaired capital and unimpaired surplus" has the meaning set
forth in 12 CFR 32.2.
As added by P.L.14-1992, SEC.83. Amended by P.L.176-1996,
SEC.13; P.L.213-2007, SEC.42; P.L.217-2007, SEC.40.
IC 28-1-13-1.2
"Loans and extensions of credit" defined
Sec. 1.2. As used in this chapter, "loans and extensions of credit"
has the meaning set forth in 12 CFR 32.2.
As added by P.L.14-1992, SEC.84. Amended by P.L.90-2008,
SEC.25.
IC 28-1-13-1.3
"Person" defined
Sec. 1.3. As used in this chapter, "person" includes an individual,
a sole proprietorship, a partnership, a joint venture, an association,
a trust, an estate, a business trust, a limited liability company, a
corporation, a sovereign government, or an agency, an
instrumentality, or a political subdivision thereof, or any similar
entity or organization.
As added by P.L.14-1992, SEC.85. Amended by P.L.8-1993,
SEC.439.
IC 28-1-13-1.4
Repealed
(Repealed by P.L.176-1996, SEC.35.)
IC 28-1-13-1.5
Limit on total loans and extensions of credit to one borrower
Sec. 1.5. (a) The total loans and extensions of credit by a 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 bank.
(b) The total loans and extensions of credit by a 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 bank. The
limitation in this subsection is separate from and in addition to the
limitation contained in subsection (a).
As added by P.L.14-1992, SEC.87.
IC 28-1-13-1.6
Loans or extensions of credit not subject to limitations
Sec. 1.6. The limitations contained in section 1.5 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 it 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 such staples.
(4) Loans or extensions of credit secured by bonds, notes,
certificates of indebtedness, or Treasury bills of the United
States or by other such obligation 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 any department, agency,
bureau, board, commission, or establishment of the United
States or any 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 any financial institution or
to any receiver, conservator, superintendent of banks, or other
agent in charge of the business and property of the financial
institution, when such 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.14-1992, SEC.88.
IC 28-1-13-1.7
Limit on total consumer credit obligation of one borrower
Sec. 1.7. (a) Loans and extensions of credit arising from the
discount of negotiable or nonnegotiable installment consumer paper
that carries a full recourse endorsement or unconditional guarantee
by the person transferring the paper is subject under this section to
a maximum limitation equal to twenty-five percent (25%) of the
capital and surplus, notwithstanding the collateral requirements set
forth in section 1.5(b) of this chapter.
(b) If the bank's files or the knowledge of the bank's officers of the
financial condition of each maker of such consumer paper is
reasonably adequate, and an officer of the bank designated for that
purpose by the board of directors of the bank certifies in writing that
the 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 such maker shall be the sole applicable loan limitations.
As added by P.L.14-1992, SEC.89.
IC 28-1-13-1.8
Limit on obligations secured by documents or instruments
covering livestock; dealer discount of paper securing sale of dairy
cattle with payment guaranteed by seller
Sec. 1.8. (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 under this section, notwithstanding the collateral
requirements set forth in section 1.5(b) of this chapter, to a maximum
limitation equal to twenty-five percent (25%) of the capital and
surplus.
(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 under this section, notwithstanding the collateral
requirements set forth in section 1.5(b) of this chapter, to a limitation
of twenty-five percent (25%) of the capital and surplus.
As added by P.L.14-1992, SEC.90. Amended by P.L.141-2005,
SEC.7.
IC 28-1-13-2
Repealed
(Repealed by P.L.14-1992, SEC.165.)
IC 28-1-13-3
Repealed
(Repealed by P.L.14-1992, SEC.165.)
IC 28-1-13-4
Repealed
(Repealed by P.L.14-1992, SEC.165.)
IC 28-1-13-5
Repealed
(Repealed by P.L.14-1992, SEC.165.)
IC 28-1-13-6
Extension of credit to officers, directors, or principal shareholders;
compliance with federal restrictions
Sec. 6. Any bank or trust company may extend credit to an officer,
a director, 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).
(Formerly: Acts 1933, c.40, s.200; Acts 1935, c.5, s.36; Acts 1937,
c.33, s.28; Acts 1943, c.148, s.1; Acts 1955, c.25, s.1; Acts 1969,
c.280, s.5.) As amended by Acts 1977, P.L.291, SEC.1; Acts 1978,
P.L.2, SEC.2808; Acts 1981, P.L.250, SEC.1; P.L.265-1983, SEC.2;
P.L.144-1984, SEC.1; P.L.14-1992, SEC.91.
IC 28-1-13-7
Repealed
(Repealed by P.L.33-1991, SEC.57.)
IC 28-1-13-7.1
State chartered banks; real estate loans
Sec. 7.1. (a) As used in this section, "federally chartered bank"
means a bank that was incorporated under 12 U.S.C. 21 et seq. and
is doing business in Indiana.
(b) As used in this section, "rollover mortgage" means a loan that:
(1) is secured by a first mortgage on real estate improved by:
(A) a dwelling for one (1) to four (4) families; or
(B) a combination home and business building; and
(2) may be subject to rate adjustments at regularly scheduled
times.
(c) As used in this section, "state chartered bank" means a bank
that was incorporated under the laws of Indiana and is doing business
in Indiana. The term includes a savings bank organized under the
laws of Indiana.
(d) A state chartered bank may make, arrange, purchase, or sell
loans or extensions of credit secured by liens or interests in real
estate as:
(1) may be so made, arranged, purchased, or sold by a federally
chartered bank under a federal law or regulation; or
(2) prescribed by order of the department or by a rule adopted
by the department under IC 4-22-2.
(e) In addition to loans authorized by subsection (d), a state
chartered bank may make rollover mortgage loans. A rollover
mortgage loan made by a state chartered bank is subject to the
following requirements and restrictions:
(1) At each scheduled adjustment time, if the loan is not then in
default, the lender shall make rate adjustments available for the
amount of the outstanding loan for the remaining term of the
loan.
(2) Any adjustment in the loan must be made without
administrative charges to the borrower.
(3) Scheduled adjustments of the loan must be at least one (1)
year apart.
(4) The lender may not charge any penalty or other assessment
for the prepayment of the loan by the borrower at the time of
any adjustment.
(5) At each scheduled adjustment time, the lender and the
borrower may agree to increase or decrease the interest rate
applicable to the outstanding balance of the loan.
(6) At the option of the lender, the borrower may be granted the
option to extend the amortization period for purposes of
calculating monthly payments on the loan in accordance with
the following rules:
(A) The extension of the amortization period may equal up
to one-third (1/3) of the original amortization period,
irrespective of whether this extends the amortization period
beyond thirty (30) years.
(B) To the extent of any extension of the amortization
period, the amortization period will be reduced upon a
subsequent downward adjustment in the interest rate.
(f) The department may adopt an emergency rule under
IC 4-22-2-37.1 to implement this section.
As added by P.L.33-1991, SEC.16. Amended by P.L.42-1993,
SEC.30; P.L.45-1995, SEC.20.
IC 28-1-13-8
Loans on security of own shares; acquisition of shares; disposition
Sec. 8. No bank or trust company shall make any loan or discount
on the security of the shares of its own capital stock, nor be the
purchaser or holder of any such shares, unless such security or
purchase shall be necessary to prevent loss under a debt previously
contracted in good faith; and stock so purchased or acquired shall,
within six (6) months from the time of its purchase, be sold or
disposed of at public or private sale, unless otherwise ordered by the
department.
(Formerly: Acts 1933, c.40, s.202.)
IC 28-1-13-9
Repealed
(Repealed by P.L.42-1993, SEC.103.)
IC 28-1-13-10
Officer and others accepting compensation for procuring loan,
purchase, or discount; violations
Sec. 10. Except as otherwise provided, an officer, director, owner,
partner, employee, or attorney of any bank or trust company who
stipulates for, receives, or consents or agrees to receive, any fee,
commission, gift, or thing of value, from any person, for the purpose
of procuring or endeavoring to procure for any person any loan from
or the purchase or discount of any paper, note, draft, check, or bill of
exchange by the bank or trust company, commits a Class A
misdemeanor.
(Formerly: Acts 1933, c.40, s.204.) As amended by Acts 1978, P.L.2,
SEC.2809.
IC 28-1-13-11
Reduction of existing obligations held in excess of limitations
Sec. 11. Except as otherwise provided in this chapter, any bank or
trust company which holds obligations of indebtedness in violation
of the limitations prescribed in this chapter shall, not later than July
1, 1936, cause the amount of such obligations to conform to the
limitations prescribed by this article and by the provisions of this
chapter. The department may, in its discretion, extend the time for
effecting such conformity, in individual instances, if the interests of
the depositors will be protected and served by such extension. Upon
the failure of any bank or trust company to comply with such
limitations, in accordance with the terms of this section or in
accordance with any order of the department with relation to such
limitations, the department may declare that such bank or trust
company is conducting its business in an unauthorized or unsafe
manner and proceed in accordance with IC 28-1-3.1-2.
(Formerly: Acts 1933, c.40, s.205.) As amended by P.L.263-1985,
SEC.68.
IC 28-1-13-12
Loans or credit to student loan marketing association; applicability
of capital and surplus limitation
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.14-1992, SEC.92.
IC 28-1-13-13
Applicability of federal regulations
Sec. 13. The department may apply the provisions of 12 CFR 32
in the application and administration of this chapter.
As added by P.L.14-1992, SEC.93.