Rhode Island Senate Bill S0386

Rhode Island 2025 Regular Session

• Introduced: 2/26/25
• Refer: 2/26/25

Caption

Allows RI to opt out of the provisions of DIDMCA exempting out of state lenders from interest rate limits which apply to RI lenders. Prevents evasion of statutory interest rate limits and lending rules for loans made in RI.

Impact

The bill's implementation is anticipated to have significant implications for lending practices within Rhode Island by reinforcing state authority over interest rate regulations. It aims to close loopholes that allow lenders to circumvent local lending rules, ensuring that all lenders, irrespective of where they are chartered, follow the same interest rate laws. This uniformity is designed to enhance consumer protection and create a fairer lending environment, particularly for those seeking small loans.

Summary

Bill S0386, introduced in 2025, seeks to amend existing laws regarding interest and usury in Rhode Island, specifically allowing the state to opt out of certain provisions of the Federal Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). This act permits out-of-state lenders to evade interest rate limits that are applicable to local financial institutions. The bill provides that financial institutions operating within Rhode Island must adhere to the state's established interest rate limits, thus protecting consumers from potentially high-interest rates charged by out-of-state lenders exploiting the exemptions in DIDMCA.

Contention

While the bill presents several benefits in terms of consumer protection, it may also spark contention among financial institutions that rely on out-of-state lending practices. Critics argue that tighter regulations may restrict access to credit for consumers who might otherwise benefit from loans offered by non-local lenders. The overall regulatory environment surrounding consumer lending is likely to become a focal point of debate, particularly concerning how these changes might impact loan availability and cost for residents of Rhode Island.