§ 19-3-3. Maximum aggregate liability of one person or company.
(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
transactions and the extent to which the credit exposure shall be taken into account.
The director shall apply the limitation included herein to derivative transactions
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.
(b) To the extent that a deposit-taking institution regulated by the Federal Reserve System
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 Federal Reserve System 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.