(a)  No financial institution shall permit any person or entity to borrow or guaranty an amount(s), directly or indirectly, in the aggregate, that exceeds fifteen percent (15%) of its unimpaired capital. In calculating this limitation, a financial institution shall take into account the credit exposure to any such person or entity arising from derivative transactions. The director shall have the authority to establish the method for determining the credit exposure and the extent to which the credit exposure shall be taken into account. As used in this subsection, “derivative transaction” includes any transaction that is a contract, agreement, swap, warrant, note or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event leading to, one or more commodities, securities, currencies, interest or other rates, indices or other assets. The director may adopt regulations establishing the method for determining credit exposure to derivative transaction and the extent to which the credit exposure shall be taken into account. The director shall apply the limitation included herein to derivative transaction entered into on or after January 1, 2013.

This limitation shall not include:

(1)  Obligations issued by the United States;

(2)  General obligations of the state of Rhode Island;

(3)  Loans or any portion thereof that are insured or guaranteed by the United States or any agency thereof;

(4)  Inter-bank transactions involving the transfer of immediately available funds resulting from credits to deposit balances at Federal Reserve banks or from credit to new or existing deposit balances due from a correspondent depository institution (commonly known as the sale of federal funds) with a maturity of one business day or less; or

(5)  Loans secured by deposits within the financial institution where a perfected interest in the deposits is on record.

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Terms Used In Rhode Island General Laws 19-3-3

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • person: may be construed to extend to and include co-partnerships and bodies corporate and politic. See Rhode Island General Laws 43-3-6
  • United States: include the several states and the territories of the United States. See Rhode Island General Laws 43-3-8

(b)  To the extent that a deposit-taking institution regulated by the Federal Office of Thrift Supervision and insured by the Federal Deposit Insurance Corporation is expressly permitted to make loans that would exceed the limitations set forth in this section, the lending limitations of the Office of Thrift Supervision shall apply. Nothing herein shall limit the department of business regulation from taking any action it deems appropriate to maintain appropriate safety and soundness standards relative to any loan or loans made by any financial institutions.

History of Section.
P.L. 1995, ch. 82, § 40; P.L. 1997, ch. 29, § 1; P.L. 2013, ch. 26, § 1; P.L. 2013, ch. 37, § 1.