Second Regular Session of the 123rd General Assembly (2024)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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a new provision to the Indiana Code or the Indiana Constitution.
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between statutes enacted by the 2023 Regular Session of the General Assembly.
SENATE ENROLLED ACT No. 220
AN ACT to amend the Indiana Code concerning financial
institutions.
Be it enacted by the General Assembly of the State of Indiana:
SECTION 1. IC 24-4.4-1-102, AS AMENDED BY P.L.197-2023,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2024]: Sec. 102. (1) This article shall be liberally construed
and applied to promote its underlying purposes and policies.
(2) The underlying purposes and policies of this article are:
(a) to permit and encourage the development of fair and
economically sound first lien mortgage lending practices; and
(b) to conform the regulation of first lien mortgage lending
practices to applicable state and federal laws, rules, regulations,
policies, and guidance.
(3) A reference to a requirement imposed by this article includes
reference to a related rule of the department adopted under this article.
(4) A reference to a federal law in this article is a reference to the
law as in effect December 31, 2022. 2023.
SECTION 2. IC 24-4.5-1-102, AS AMENDED BY P.L.197-2023,
SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2024]: Sec. 102. (1) This article shall be liberally construed
and applied to promote its underlying purposes and policies.
(2) The underlying purposes and policies of this article are:
(a) to simplify, clarify, and modernize the law governing retail
installment sales, consumer credit, small loans, and usury;
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(b) to provide rate ceilings to assure an adequate supply of credit
to consumers;
(c) to further consumer understanding of the terms of credit
transactions and to foster competition among suppliers of
consumer credit so that consumers may obtain credit at
reasonable cost;
(d) to protect consumer buyers, lessees, and borrowers against
unfair practices by some suppliers of consumer credit, having due
regard for the interests of legitimate and scrupulous creditors;
(e) to permit and encourage the development of fair and
economically sound consumer credit practices;
(f) to conform the regulation of consumer credit transactions to
the policies of the Consumer Credit Protection Act (15 U.S.C.
1601 et seq.) and to applicable state and federal laws, rules,
regulations, policies, and guidance; and
(g) to make uniform the law, including administrative rules
among the various jurisdictions.
(3) A reference to a requirement imposed by this article includes
reference to a related rule or guidance of the department adopted
pursuant to this article.
(4) A reference to a federal law in this article is a reference to the
law as in effect December 31, 2022. 2023.
(5) This article applies to a transaction if the director determines
that the transaction:
(a) is in substance a disguised consumer credit transaction; or
(b) involves the application of subterfuge for the purpose of
avoiding this article.
A determination by the director under this subsection must be in
writing and shall be delivered to all parties to the transaction.
IC 4-21.5-3 applies to a determination made under this subsection.
(6) The authority of this article remains in effect, whether a licensee,
an individual, or a person subject to this article acts or claims to act
under any licensing or registration law of this state, or claims to act
without such authority.
(7) A violation of a state or federal law, regulation, or rule
applicable to consumer credit transactions is a violation of this article.
(8) The department may enforce penalty provisions set forth in 15
U.S.C. 1640 for violations of disclosure requirements applicable to
mortgage transactions.
SECTION 3. IC 28-7-1-0.5, AS AMENDED BY P.L.129-2020,
SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2024]: Sec. 0.5. The following definitions apply throughout
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this chapter:
(1) "Automated teller machine" (ATM) means a piece of
unmanned electronic or mechanical equipment that performs
routine financial transactions for authorized individuals.
(2) "Branch" office" means an office, agency, or other place of
business at which deposits are received, share drafts are paid, or
money is lent to members of a credit union. The term does not
include:
(A) the principal office of a credit union;
(B) the principal office of a credit union affiliate;
(C) a branch office of a credit union affiliate;
(D) an automated teller machine; or
(E) a night depository.
(3) "Credit union" is a cooperative, nonprofit association,
incorporated under this chapter, for the purposes of educating its
members in the concepts of thrift and to encourage savings among
its members. A credit union should provide a source of credit at
a fair and reasonable rate of interest and provide an opportunity
for its members to use and control their own money in order to
improve their economic and social condition.
(4) "Department" refers to the department of financial institutions.
(5) "Surplus" means the credit balance of undivided earnings after
losses. The term does not include statutory reserves.
(6) "Unimpaired shares" means paid in shares less any losses for
which no reserve exists and for which there is no charge against
undivided earnings.
(7) "Related credit union service organization" means, in
reference to a credit union, a credit union service organization (as
defined and formed under Part 712 of the regulations of the
National Credit Union Administration, 12 CFR 712) in which the
credit union has invested under section 9(a)(4) of this chapter.
(8) "Premises" means any office, branch, suboffice, service
center, parking lot, real estate, or other facility where the credit
union transacts or will transact business.
(9) "Furniture, fixtures, and equipment" means office furnishings,
office machines, computer hardware, computer software,
automated terminals, and heating and cooling equipment.
(10) "Fixed assets" means:
(A) premises; and
(B) furniture, fixtures, and equipment.
(11) "Audit period" means a twelve (12) month period designated
by the board of directors of a credit union.
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(12) "Community" means:
(A) a second class city;
(B) a third class city;
(C) a town;
(D) a county other than a county containing a consolidated
city;
(E) a census tract;
(F) a township; or
(G) any other municipal corporation (as defined in
IC 36-1-2-10).
(13) "Control of a related interest" refers to a situation in which
an individual directly or indirectly, or through or in concert with
one (1) or more other individuals, possesses any of the following:
(A) The ownership of, control of, or power to vote at least
twenty-five percent (25%) of any class of voting securities of
the related interest.
(B) The control in any manner of the election of a majority of
the directors of the related interest.
(C) The power to exercise a controlling influence over the
management or policies of the related interest. For purposes of
this clause, an individual is presumed to have control,
including the power to exercise a controlling influence over
the management or policies of a related interest, if the
individual:
(i) is an executive officer or a director of the related interest
and directly or indirectly owns, controls, or has the power to
vote more than ten percent (10%) of any class of voting
securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the power to
vote more than ten percent (10%) of any class of voting
securities of the related interest and no other person owns,
controls, or has the power to vote a greater percentage of
that class of voting securities.
(14) "Executive officer" includes any of the following officers of
a credit union:
(A) The chairman of the board of directors.
(B) The president.
(C) A vice president.
(D) The cashier.
(E) The secretary.
(F) The treasurer.
(15) "Immediate family", for purposes of section 17.2 of this
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chapter, means the spouse of an individual, the individual's minor
children, and any of the individual's children, including adults,
residing in the individual's home.
(16) "Officer" means any individual who is not solely a director
or committee member and participates or has the authority to
participate in major policymaking functions of a credit union,
regardless of whether:
(A) the individual has an official title;
(B) the individual's title designates the individual as an
assistant; or
(C) the individual is serving without salary or other
compensation.
(17) "Related interest", with respect to an individual, means:
(A) a partnership, a corporation, or another business
organization that is controlled by the individual; or
(B) a political campaign committee:
(i) controlled by the individual; or
(ii) the funds or services of which benefit the individual.
(18) Except as provided in section 9(a)(4) of this chapter, "capital
and surplus" means the sum of:
(A) undivided profits;
(B) reserve for contingencies;
(C) regular reserve; and
(D) allowance for loan and lease credit losses, minus any
adjustment for credit loss allowance for available for sale
(AFS) securities.
SECTION 4. IC 28-7-1-24, AS AMENDED BY P.L.69-2018,
SECTION 56, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2024]: Sec. 24. (a) All entrance charges shall, after payment
of the organization expenses, be known as reserve income, and shall be
added to the regular reserve of the credit union. At the close of the
dividend period, there shall be set apart to the regular reserve ten
percent (10%) of gross income until the regular reserve shall equal
seven and one-half percent (7 1/2%) of the total of outstanding loans,
then five percent (5%) of gross income until the regular reserve shall
equal ten percent (10%) of the total of outstanding loans. Whenever the
regular reserve falls below ten percent (10%) or seven and one-half
percent (7 1/2%) of the total of outstanding loans, it shall be
replenished by regular contributions to maintain the reserve goals of
seven and one-half percent (7 1/2%) or ten percent (10%). The regular
reserve shall be held to meet contingencies and shall not be distributed
to the members except upon dissolution of the credit union.
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(b) A credit union may have an undivided profits account. The
undivided profits account may be transferred to the regular reserve.
(c) The department may, by rule, revise the formula prescribed by
this section. A revised formula must be prudent and must reasonably
be expected to protect the credit unions.
(d) Financial statements of credit unions must provide for full and
fair disclosure of all assets, liabilities, and members' equity, including
such allowance for loan credit loss accounts necessary to present fairly
the financial position, and all income and expenses necessary to present
fairly the results of operation for the period concerned.
(e) The maintenance of an the allowance for loan credit losses and
investment or other losses does not exempt a credit union from the
requirement set forth in subsection (a). The totals of the regular reserve
and the allowance for loan credit losses account and the allowance for
investment losses shall be combined for determining the percentage of
gross income to be transferred to the regular reserve.
(f) Loan and investment losses of a credit union must be charged
against the corresponding loan or investment category of the
allowance for loan loss. credit losses. Adjustments to the allowance for
loan credit losses shall be made before the distribution of any dividend
so that the allowance for loan credit loss represents the value of loans
and investments and anticipated losses resulting from:
(1) uncollectible loans, investments, notes, and contracts
receivable, including any uncollectible accrued interest receivable
thereon;
(2) assets acquired in liquidation of loans; and
(3) loans purchased from other credit unions.
(g) Adjustments to the allowance for loan credit losses must be
recorded in the expense account "provision for loan losses".
appropriate allowance for credit loss subcategory corresponding
to the asset type being reserved against.
SECTION 5. IC 28-10-1-1, AS AMENDED BY P.L.197-2023,
SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2024]: Sec. 1. A reference to a federal law or federal
regulation in this title is a reference to the law or regulation as in effect
December 31, 2022. 2023.
SECTION 6. IC 28-10-3 IS ADDED TO THE INDIANA CODE AS
A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2024]:
Chapter 3. Reporting of Reportable Cyber Incidents
Sec. 1. As used in this chapter, "corporation" means any:
(1) bank;
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(2) trust company;
(3) corporate fiduciary;
(4) savings bank;
(5) savings association;
(6) industrial loan and investment company that maintains
federal deposit insurance;
(7) credit union; or
(8) bank of discount and deposit;
organized or reorganized under the laws of this state.
Sec. 2. Notwithstanding IC 24-4.9 or any other law, a
corporation shall notify the director of the department of a
reportable cyber incident or notification incident in accordance
with the same procedures required by the corporation's federal
supervisory authority or federal insurer. A corporation without a
federal supervisory authority or federal insurer shall notify the
director of the department of the reportable cyber incident in
accordance with the same procedures set forth in 12 CFR 748.1(c)
for federally insured credit unions, regardless of whether the
corporation is a federally insured credit union.
SEA 220 President of the Senate
President Pro Tempore
Speaker of the House of Representatives
Governor of the State of Indiana
Date: Time:
SEA 220