Chapter 127

2006 -- H 6837

Enacted 06/16/06

A N A C T

RELATING TO FINANCIAL INSTITUTIONS

Introduced By: Representatives Kennedy, and Lewiss

Date Introduced: January 18, 2006

It is enacted by the General Assembly as follows:

     SECTION 1. Section 19-5-6 of the General Laws in Chapter 19-5 entitled "Credit

Unions" is hereby amended to read as follows:

19-5-6. Demand deposits. -- (a) A credit union may offer demand deposits to its

members provided the following conditions are met:

      (1) That the credit union has shares and deposits of one million dollars ($1,000,000) or

more;

      (2) Every credit union shall maintain reserves as required by the provisions with respect

to reserve funds and reserve balances contained in the Federal Reserve Act, 12 U.S.C. section 221

et seq., and in the rules, regulations, orders, and rulings from time to time in force of the board of

governors of the federal reserve system; and

(3) That no overdraft in excess of five hundred dollars ($500) shall be allowed unless

authorized as all or part of a loan for which the credit union holds an executed promissory note;

and

(4) (3) That the credit union obtain the approval of the director or the director's designee

prior to accepting demand deposits, that approval to be conditioned on compliance with the above

requirements and on the soundness of the condition and operation of the credit union.

      (b) If at any time the credit union ceases to comply with subdivisions (1) through (4)

above, the director or the director's designee may, upon thirty (30) days notice and after an

opportunity to be heard, withdraw the authority of the credit union to accept demand deposits.

Upon withdrawal the credit union shall accept no further sums to be credited to any demand

deposit. After two (2) months from the date of withdrawal of authority, the credit union shall

cease to maintain demand deposits.

     SECTION 2. This act shall take effect upon passage.

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LC00606

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