OCC Adopts Rule on Lending Lids

WASHINGTON - Borrowers from national banks may continue to draw on lines of credit even if their bank's lending limits have declined since the commitments were extended, the Office of the Comptroller of the Currency has ruled.

National banks generally may lend up to the equivalent of 15% of unimpaired capital and surplus to a single borrower. They may lend an additional 10% of capital if the borrower pledges readily marketable collateral, such as cash and securities.

In a final rule scheduled for publication in today's Federal Register, the OCC said that legally binding, written commitments that were within a bank's single-borrower lending limit when made may remain in force. The final rule ratifies a temporary rule that has been on the books since 1988.

In a modification sought by healthy banks, the OCC said banks may make additional loans to borrowers with a credit line that is equivalent to the bank's lending limit, as long as line is not fully drawn down. However, they may not then extend additional credit under the existing commitment if that would push loan balances above the lending limit.

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