§412:5-302  Limitations on loans andextensions of credit to one borrower.  (a)  No bank shall permit a personto become indebted or liable to it, either directly or indirectly on loans andextensions of credit, in a total amount outstanding at any one time in excessof twenty per cent of the capital and surplus of the bank.

(b)  This section applies to all loans andextensions of credit made by a bank and its subsidiaries.  It does not apply toloans and extensions of credit made by a bank or its subsidiaries to itsaffiliates or subsidiaries.

(c)  The limitations set forth in this sectionshall not apply to:

(1)  A bank's eligible acceptances as described insection 412:5-204(b);

(2)  A bank's purchase or discount of another bank'sacceptances of the kinds described in section 13 of the Federal Reserve Act;

(3)  A bank's deposits with a Federal Reserve Bank,Federal Home Loan Bank or another depository institution made in compliancewith this chapter;

(4)  A bank's sale of federal funds to another depositoryinstitution with a maturity of one business day or under a continuing contract;

(5)  Loans and extensions of credit secured by theinterest-bearing obligations of the United States or those for which the faithand credit of the United States are distinctly pledged to provide for thepayment of the principal and interest thereof or of the State or any county ormunicipal or political subdivision of this State, issued in compliance with thelaws of this State, where the market value of the security shall be at any timenot less than one hundred five per cent of the face amount of the loans andextensions of credit;

(6)  Loans and extensions of credit to the extentsecured by a pledge or security interest in a deposit account in the lendingbank; and

(7)  Loans and extensions of credit arising from thediscount of negotiable or nonnegotiable credit sales contracts which carry apartial recourse endorsement or limited guarantee by the person transferringthe credit sales contracts, if the bank's respective file or the knowledge ofits officers of the financial condition of each maker of such credit salescontract is reasonably adequate, and an officer of the bank certifies inwriting that the bank is relying primarily upon the responsibility of eachmaker for payment of such credit sales contract and not upon any partialrecourse endorsement or limited guarantee by the transferor.  Under thesecircumstances, such credit sales contract will be considered a loan andextension of credit to the maker of the credit sales contract rather than theseller of the credit sales contract.

(d)  In computing the total loans andextensions of credit made by a bank to any person, all loans and extensions ofcredit by the bank to the person and to any partnership, joint venture orunincorporated association of which the person is a partner or a member shallbe included unless the person is a limited partner, but not a general partner,in a limited partnership, or unless the person is a partner in a limited orgeneral partnership, or a member of a joint venture or unincorporatedassociation, if such partner or member, by law, by the terms of thepartnership, joint venture or membership agreement, or by the terms of anagreement with the bank, is not to be held liable to the bank for the debts ofthe partnership, joint venture or association.  In computing the total loansand extensions or credit made by a bank to any firm, partnership, joint ventureor unincorporated association, all loans and extensions of credit to itsindividual partners or members shall be included unless such individual partneris a limited partner, but not a general partner, in a limited partnership, orunless such individual partner or member, by law, by the terms of thepartnership, joint venture, or membership agreement, or by the terms of anagreement with the bank, is not to be held liable to the bank for the debts ofthe partnership, joint venture or association.

(e)  Alternatively, a bank may, with the priorapproval of the commissioner, comply with the lending limits applicable tonational banking associations, as and to the same extent it would, at the time,be so required by federal law or regulation if it were a national bankingassociation.  In monitoring a bank's compliance with the national bankingassociation lending limits, the commissioner shall give substantial weight tothe Office of the Comptroller of the Currency's regulations and opinionsinterpreting the national banking association lending limits and will regardthem as strong evidence of safe and sound banking practices. [L 1993, c 350, ptof §1]