WASHINGTON - The Federal Reserve Board proposed Wednesday making it easier for banks to finance certain securities purchases.

The Fed said it plans to let banks lend money to consumers who buy securities from brokers on a cash-on-delivery basis. Banks have questioned whether the Fed would allow them to process such transactions.

Banks also would gain greater freedom to substitute collateral on loans used to buy stocks under the Fed's proposal. Banks could let customers substitute securities that differ from the ones the bank currently holds as collateral. This practice is now prohibited.

Comments are due at the Fed by Feb. 15.

The Fed also approved its 1996 budget, which includes a 5.3% increase in operating expenses, to $161 million. That includes a 4% increase in salaries, higher office rent, and increased foreign travel.

The Fed also will spend $10 million on capital projects and $1.5 million for extra examiner training as well as a survey on consumer finances. Several initiatives to automate internal Fed functions were excluded from the budget.

"Not every project could be funded," Fed Governor Susan M. Phillips said. "Several projects had to be delayed or deferred."

Ms. Philips said the Fed may have to spend more on personnel if Congress completes a plan to give the Fed control over the Real Estate Settlement Procedures Act.

The Fed also approved the inspector general's $3 million budget, which was $100,000 less than requested last year. "I'm delivering what I promised," Fed Inspector General Brent Bowen said. "I'm going in at below what I spent."

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