Section 365.10  Purpose and Scope

 

This Part applies to all banks chartered under provisions of the Illinois Banking Act [205 ILCS 5].

 

Section 365.20  Definitions

 

"Bank" means a state-chartered bank chartered under the provisions of the Illinois Banking Act [205 ILCS 5].

 

"Department" means the Illinois Department of Financial and Professional Regulation.

 

"Division" means the Illinois Department of Financial and Professional Regulation-Division of Banking.

 

"Payday Loan" or "loan" means a loan with a finance charge exceeding an annual percentage rate of 36% and with a term that does not exceed 120 days, including any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet, or telephone, in which:

 

A lender accepts one or more checks dated on the date written and agrees to hold them for a period of days before deposit or presentment, or accepts one or more checks dated subsequent to the date written and agrees to hold them for deposit; or

 

A lender accepts one or more authorizations to debit a consumer's account; or

 

A lender accepts an interest in a consumer's wages, including, but not limited to, a wage assignment.

 

"PLRA" means the Payday Loan Reform Act [815 ILCS 122].  Banks are expressly exempt from the provisions of the PLRA.

 

Section 365.30  Applicability of Rule

 

This Part shall apply only to payday loans made by a bank.  Products and services offered by a bank that are not offered by lenders governed by the PLRA shall not be subject to this Part.

 

Section 365.40  Issuance of Payday Loans by Banks

 

a)         A bank making a payday loan shall satisfactorily address all safety and soundness considerations identified by the Division in its examination and supervision of the bank.  Safety and soundness considerations include, without limitation:

 

1)         Risk-management practices for payday loan activities, particularly with regard to concentrations of payday loans;

 

2)         Capital adequacy, depending on the level and volatility of risk;

 

3)         Allowance for loan losses to ensure the allowance is adequate to absorb estimated credit losses within the payday loan portfolio;

 

4)         Classification of payday loans, given the unsecured nature of the credit and weakness of repayment capacity inherent in payday loans; and

 

5)         The establishment and maintenance of extension, deferral, renewal and rewrite standards consistent with the PLRA.

 

b)         In the event the Division determines the bank's management of safety and soundness risks relating to its payday loan portfolio is deficient, the Division

may initiate corrective enforcement action, as authorized under Section 48 of the Illinois Banking Act.