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Can you summarize MDCM Fin. Inst. Section 5-512?
Short Summary
This section of the Code of Maryland, Financial Institutions, Title 5, SubTitle 5 governs the borrowing restrictions for directors, officers, and employees of banking institutions. It prohibits these individuals from borrowing money directly or indirectly from a banking institution, unless the loan is approved or exempted as provided in this section. The section defines ‘commercial loan’ as a loan made for business or commercial purposes, and ‘consumer loan’ as a loan made for personal, family, or household purposes. It also provides definitions for ’executive officer’ and specifies that loans to directors, officers, or employees of a banking institution can only be made if approved by the board of directors or the authorized executive committee. The section further requires periodic review and approval for loan renewals or extensions. All loans to directors, officers, or employees of a banking institution are subject to the limitations imposed by 3-601 of this article.
Whom does it apply to?
Directors, officers, and employees of banking institutions
What does it govern?
Borrowing restrictions for directors, officers, and employees of banking institutions
What are exemptions?
1. Commercial loans made to directors, partnerships, or corporations in which the director has an interest, unless an officer or employee of the banking institution is involved. 2. Consumer loans made to banking institution employees who are not executive officers or directors.
What are the Penalties?
No specific penalties mentioned.
Jurisdiction
Maryland