Enrolled Act, House Bill 1299

SOURCE: IC 24-4.5-1-201; (06)HE1299.1.2. -->     SECTION 2. IC 24-4.5-1-201 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 201. (1) Except as otherwise provided in this section, this article applies to sales, leases, and loans made in this state and to modifications, including refinancings, consolidations and deferrals, made in this state, of sales, leases, and loans, wherever made. For purposes of this article:
        (a) a sale or modification of a sale agreement is made in this state if the buyer's agreement or offer to purchase or to modify is received by the seller or a person acting on behalf of the seller in this state;
        (b) a lease or modification of a lease agreement is made in this state if the lessee's agreement or offer to lease or to modify is received by the lessor or a person acting on behalf of the lessor in this state; and
        (c) a loan or modification of a loan agreement is made in this state if a writing signed by the debtor and evidencing the debt is received by the lender or a person acting on behalf of the lender in this state.
    (2) With respect to sales made pursuant to a revolving charge account (IC 24-4.5-2-108), this article applies if the buyer's communication or indications of ~~his~~ the buyer's intention to establish the account is received by the seller in this state. If no communication or indication of intention is given by the buyer before the first sale, this article applies if the seller's communication notifying the buyer of the privilege of using the account is mailed or personally delivered in this state.
    (3) With respect to loans made pursuant to a lender credit card or similar arrangement, this article applies if the debtor's communication or indication of ~~his~~ the debtor's intention to establish the arrangement with the lender is received by the lender in this state. If no communication or indication of intention is given by the debtor before the first loan, this article applies if the lender's communication notifying the debtor of the privilege of using the arrangement is mailed or personally delivered in this state.

    (4) IC 24-4.5-5-101 through IC 24-4.5-5-108 apply to actions or other proceedings brought in this state to enforce rights arising from consumer credit sales, consumer leases, or consumer loans, or extortionate extensions of credit, wherever made.
    (5) If a consumer credit sale, consumer lease, or consumer loan, or modification thereof, is made in another state to a person who is a resident of this state when the sale, lease, loan, or modification is made, the following provisions apply as though the transaction occurred in this state:
        (a) a seller, a lessor, a lender, or an assignee of ~~his~~ the seller's, lessor's, or assignee's rights, may not collect charges through actions or other proceedings in excess of those permitted by IC 24-4.5-2, or by IC 24-4.5-3, or IC 24-4.5-7; and
        (b) a seller, a lessor, a lender, or an assignee of ~~his~~ the seller's, lessor's, or assignee's rights, may not enforce rights against the buyer, lessee, or debtor, with respect to the provisions of agreements which violate the provisions on limitations on agreements and practices of IC 24-4.5-2, or of IC 24-4.5-3, or IC 24-4.5-7.
    (6) Except as provided in subsection (4), a sale, lease, loan, or modification thereof, made in another state to a person who was not a resident of this state when the sale, lease, loan, or modification was made is valid and enforceable in this state according to its terms to the extent that it is valid and enforceable under the laws of the state applicable to the transaction.
    (7) For the purposes of this article, the residence of a buyer, lessee, or debtor is the address given by ~~him~~ the buyer, lessee, or debtor as ~~his~~ the buyer's, lessee's, or debtor's residence in any writing signed by ~~him~~ the buyer, lessee, or debtor in connection with a credit transaction. Until he the buyer, lessee, or debtor notifies the creditor of a new or different address, the given address is presumed to be unchanged.
    (7.5) With respect to a consumer credit sale, consumer lease, or consumer loan, or modification thereof, to which this article does not otherwise apply by reason of subsections (1) through (3), if pursuant to a solicitation relating to a consumer credit sale, consumer lease, or consumer loan, a person who is a resident of this state sends a signed writing evidencing the obligation or offer of the person to a creditor in another state and receives the goods or service purchased, the goods leased, or the cash proceeds of the loan in this state:
        (a) a seller, a lessor, a lender or an assignee of ~~his~~ the seller's, lessor's, or lender's rights may not contract for or receive

charges in excess of those permitted by IC 24-4.5-2, or by IC 24-4.5-3, or IC 24-4.5-7;
        (b) the provisions of IC 24-4.5-2-301, ~~and~~ IC 24-4.5-3-301, and IC 24-4.5-7-301 shall apply as though the sale, lease, or loan ~~was~~ were made in this state; and
        (c) the provisions of IC 24-4.5-6-101 through IC 24-4.5-6-117 shall apply as though the sale, lease, or loan ~~was~~ were made in this state.
    (7.6) For the purpose of this section, a solicitation relating to a consumer credit sale, consumer lease, or consumer loan includes:
        (a) with respect to sales and leases, an offer by a catalog, pamphlet, flier, letter, or similar written material to sell or lease goods or to sell services if the terms for the extension of credit are contained therein and regardless of whether or not the instrument of solicitation is sent or delivered at the request of the buyer or lessee;
        (b) with respect to loans, an offer by pamphlet, flier, letter, or similar written material to make loans if the terms for the extension of credit are contained therein and regardless of whether or not the instrument of solicitation is sent or delivered at the request of the debtor; and
        (c) with respect to sales, leases, and loans, an offer by telephone to extend credit if initiated by the seller, lessor, or lender.
    (8) Notwithstanding other provisions of this section:
        (a) except as provided in subsection (4), this article does not apply if the buyer, lessee, or debtor is not a resident of this state at the time of a credit transaction and the parties then agree that the law of ~~his~~ the buyer's, lessee's, or debtor's residence applies; and
        (b) this article applies if the buyer, lessee, or debtor is a resident of this state at the time of a credit transaction and the parties then agree that the law of this state applies.
    (9) Except as provided in subsection (8), the following agreements by a buyer, lessee, or debtor are invalid with respect to consumer credit sales, consumer leases, consumer loans, or modifications thereof, to which this article applies:
        (a) that the law of another state shall apply;
        (b) that the buyer, lessee, or debtor consents to the jurisdiction of another state; and
        (c) that fixes venue.
    (10) The following provisions of this article specify the applicable law governing certain cases:
        (a) applicability (IC 24-4.5-6-102) of the provisions on powers

and functions of the department; and
(b) applicability (IC 24-4.5-6-201) of the provisions on notification and fees.

SOURCE: IC 24-4.5-1-301; (06)HE1299.1.3. -->     SECTION 3. IC 24-4.5-1-301 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 301. General Definitions.In addition to definitions appearing in subsequent chapters in this article:
    (1) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance.
    (2) "Agricultural purpose" means a purpose related to the production, harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, plants, propagates, or nurtures the agricultural products; "Agricultural products" includes agricultural, horticultural, viticultural, and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any and all products raised or produced on farms and any processed or manufactured products thereof.
    (3) "Average daily balance" means the sum of each of the daily balances in a billing cycle divided by the number of days in the billing cycle, and if the billing cycle is a month, the creditor may elect to treat the number of days in each billing cycle as thirty (30).
    (4) "Closing costs" with respect to a debt secured by an interest in land includes:
        (a) fees or premiums for title examination, title insurance, or similar purposes, including surveys;
        (b) fees for preparation of a deed, settlement statement, or other documents;
        (c) escrows for future payments of taxes and insurance;
        (d) fees for notarizing deeds and other documents;
        (e) appraisal fees; and
        (f) credit reports.
    (5) "Conspicuous": A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it.
    (6) "Consumer credit" means credit offered or extended to a consumer primarily for a personal, family, or household purpose.
    (7) "Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.
    (8) "Creditor" means a person:
        (a) who regularly engages in the extension of consumer credit that is subject to a credit service charge or loan finance charge, as

applicable, or is payable in installments; and
        (b) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is not a note or contract.
    (9) "Earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments under a pension or retirement program.
    (10) "Lender credit card or similar arrangement" means an arrangement or loan agreement, other than a seller credit card, pursuant to which a lender gives a debtor the privilege of using a credit card, letter of credit, or other credit confirmation or identification in transactions out of which debt arises:
        (a) by the lender's honoring a draft or similar order for the payment of money drawn or accepted by the debtor;
        (b) by the lender's payment or agreement to pay the debtor's obligations; or
        (c) by the lender's purchase from the obligee of the debtor's obligations.
    (11) "Official fees" means:
        (a) fees and charges prescribed by law which actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest related to a consumer credit sale, consumer lease, or consumer loan; or
        (b) premiums payable for insurance in lieu of perfecting a security interest otherwise required by the creditor in connection with the sale, lease, or loan, if the premium does not exceed the fees and charges described in paragraph (a) which would otherwise be payable.
    (12) "Organization" means a corporation, a government or governmental subdivision, or an agency, a trust, an estate, a partnership, a limited liability company, a cooperative, or an association.
    (13) "Payable in installments" means that payment is required or permitted by written agreement to be made in more than four (4) installments not including a down payment.
    (14) "Person" includes a natural person or an individual, and an organization.
    (15) "Person related to" with respect to an individual means:
        (a) the spouse of the individual;
        (b) a brother, brother-in-law, sister, sister-in-law of the individual;
        (c) an ancestor or lineal descendants of the individual or the

individual's spouse; and
        (d) any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual.
    "Person related to" with respect to an organization means:
        (a) a person directly or indirectly controlling, controlled by, or under common control with the organization;
        (b) an officer or director of the organization or a person performing similar functions with respect to the organization or to a person related to the organization;
        (c) the spouse of a person related to the organization; and
        (d) a relative by blood or marriage of a person related to the organization who shares the same home with ~~him.~~ the person.
    (16) "Presumed" or "presumption" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.
    (17) "Mortgage transaction" means a transaction in which a first mortgage or a land contract which constitutes a first lien is created or retained against land.
    (18) "Regularly engaged" means a person who extends consumer credit more than:
        (a) twenty-five (25) times; or
        (b) five (5) times for transactions secured by a dwelling;
in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year.
    (19) "Seller credit card" means an arrangement which gives to a buyer or lessee the privilege of using a credit card, letter of credit, or other credit confirmation or identification for the purpose of purchasing or leasing goods or services from that person, a person related to that person, or from that person and any other person. The term includes a card that is issued by a person, that is in the name of the seller, and that can be used by the buyer or lessee only for purchases or leases at locations of the named seller.
    (20) "Supervised financial organization" means a person, other than an insurance company or other organization primarily engaged in an insurance business:
        (a) organized, chartered, or holding an authorization certificate under the laws of a state or of the United States which authorizes the person to make loans and to receive deposits, including a savings, share, certificate, or deposit account; and
        (b) subject to supervision by an official or agency of a state or of

the United States.
    (21) "Mortgage servicer" means the last person to whom a mortgagor or the mortgagor's successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage.
     (22) "Affiliate", with respect to any person subject to this article, means a person that, directly or indirectly, through one (1) or more intermediaries:
        (a) controls;
        (b) is controlled by; or
        (c) is under common control with;
the person subject to this article.

SOURCE: IC 24-4.5-2-201; (06)HE1299.1.4. -->     SECTION 4. IC 24-4.5-2-201 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 201. Credit Service Charge for Consumer Credit Sales other than Revolving Charge Accounts-(1) With respect to a consumer credit sale, other than a sale pursuant to a revolving charge account, a seller may contract for and receive a credit service charge not exceeding that permitted by this section.
    (2) The credit service charge, calculated according to the actuarial method, may not exceed the equivalent of the greater of either of the following:
        (a) the total of:
            (i) thirty-six percent (36%) per year on that part of the unpaid balances of the amount financed which is three hundred dollars ($300) or less;
            (ii) twenty-one percent (21%) per year on that part of the unpaid balances of the amount financed which is more than three hundred dollars ($300) but does not exceed one thousand dollars ($1,000); and
            (iii) fifteen percent (15%) per year on that part of the unpaid balances of the amount financed which is more than one thousand dollars ($1,000); or
        (b) twenty-one percent (21%) per year on the unpaid balances of the amount financed.
    (3) This section does not limit or restrict the manner of contracting for the credit service charge, whether by way of add-on, discount, or otherwise, so long as the rate of the credit service charge does not exceed that permitted by this section. If the sale is precomputed:
        (a) the credit service charge may be calculated on the assumption that all scheduled payments will be made when due; and
        (b) the effect of prepayment is governed by the provisions on rebate upon prepayment (IC 24-4.5-2-210).

    (4) For the purposes of this section, the term of a sale agreement commences with the date the credit is granted or, if goods are delivered or services performed more than thirty (30) days after that date, with the date of commencement of delivery or performance except as set forth below:
        (a) Delays attributable to the customer. Where the customer requests delivery after the thirty (30) day period or where delivery occurs after the thirty (30) day period for a reason attributable to the customer (including but not limited to failure to close on a residence or failure to obtain lease approval), the term of the sale agreement shall commence with the date credit is granted.
        (b) Partial Deliveries. Where any portion of the order has been delivered within the thirty (30) day period, the term of the sale agreement shall commence with the date credit is granted.
Differences in the lengths of months are disregarded and a day may be counted as one-thirtieth (1/30) of a month. Subject to classifications and differentiations the seller may reasonably establish, a part of a month in excess of fifteen (15) days may be treated as a full month if periods of fifteen (15) days or less are disregarded and that procedure is not consistently used to obtain a greater yield than would otherwise be permitted.
    (5) Subject to classifications and differentiations the seller may reasonably establish, he the seller may make the same credit service charge on all amounts financed within a specified range. A credit service charge so made does not violate subsection (2) if:
        (a) when applied to the median amount within each range, it does not exceed the maximum permitted by subsection (2); and
        (b) when applied to the lowest amount within each range, it does not produce a rate of credit service charge exceeding the rate calculated according to paragraph (a) by more than eight percent (8%) of the rate calculated according to paragraph (a).
    (6) Notwithstanding subsection (2), the seller may contract for and receive a minimum credit service charge of not more than thirty dollars ($30). The minimum credit service charge allowed under this subsection may be imposed only if:
        (a) the borrower prepays in full a consumer credit sale, refinancing, or consolidation, regardless of whether the sale, refinancing, or consolidation is precomputed;
        (b) the sale, refinancing, or consolidation prepaid by the borrower is subject to a credit service charge that:
            (i) is contracted for by the parties; and
            (ii) does not exceed the rate prescribed in subsection (2);

and
        (c) the credit service charge earned at the time of prepayment is less than the minimum credit service charge contracted for under this subsection.
    (7) The amounts of three hundred dollars ($300) and one thousand dollars ($1,000) in subsection (2) are subject to change pursuant to the provisions on adjustment of dollar amounts (IC 24-4.5-1-106).
    (8) The amount of thirty dollars ($30) in subsection (6) is subject to change under the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the Reference Base Index to be used under this subsection is the Index for October 1992.

SOURCE: IC 24-4.5-3-201; (06)HE1299.1.5. -->     SECTION 5. IC 24-4.5-3-201 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 201. Loan Finance Charge for Consumer Loans other than Supervised Loans_(1) Except as provided in subsections (6) and (8), with respect to a consumer loan other than a supervised loan (IC 24-4.5-3-501), a lender may contract for a loan finance charge, calculated according to the actuarial method, not exceeding twenty-one percent (21%) per year on the unpaid balances of the principal.
    (2) This section does not limit or restrict the manner of contracting for the loan finance charge, whether by way of add-on, discount, or otherwise, so long as the rate of the loan finance charge does not exceed that permitted by this section. If the loan is precomputed:
        (a) the loan finance charge may be calculated on the assumption that all scheduled payments will be made when due; and
        (b) the effect of prepayment is governed by the provisions on rebate upon prepayment (IC 24-4.5-3-210).
    (3) For the purposes of this section, the term of a loan commences with the date the loan is made. Differences in the lengths of months are disregarded, and a day may be counted as one-thirtieth (1/30) of a month. Subject to classifications and differentiations the lender may reasonably establish, a part of a month in excess of fifteen (15) days may be treated as a full month if periods of fifteen (15) days or less are disregarded and if that procedure is not consistently used to obtain a greater yield than would otherwise be permitted. For purposes of computing average daily balances, the creditor may elect to treat all months as consisting of thirty (30) days.
    (4) With respect to a consumer loan made pursuant to a revolving loan account:
        (a) the loan finance charge shall be deemed not to exceed the maximum annual percentage rate if the loan finance charge

contracted for and received does not exceed a charge in each monthly billing cycle which is one and three-fourths percent (1 3/4%) of an amount no greater than:
            (i) the average daily balance of the debt;
            (ii) the unpaid balance of the debt on the same day of the billing cycle; or
            (iii) subject to subsection (5), the median amount within a specified range within which the average daily balance or the unpaid balance of the debt, on the same day of the billing cycle, is included; for the purposes of this subparagraph and subparagraph (ii), a variation of not more than four (4) days from month to month is "the same day of the billing cycle";
        (b) if the billing cycle is not monthly, the loan finance charge shall be deemed not to exceed the maximum annual percentage rate if the loan finance charge contracted for and received does not exceed a percentage which bears the same relation to one-twelfth (1/12) the maximum annual percentage rate as the number of days in the billing cycle bears to thirty (30); and
        (c) notwithstanding subsection (1), if there is an unpaid balance on the date as of which the loan finance charge is applied, the lender may contract for and receive a charge not exceeding fifty cents ($0.50) if the billing cycle is monthly or longer, or the pro rata part of fifty cents ($0.50) which bears the same relation to fifty cents ($0.50) as the number of days in the billing cycle bears to thirty (30) if the billing cycle is shorter than monthly, but no charge may be made pursuant to this paragraph if the lender has made an annual charge for the same period as permitted by the provisions on additional charges (paragraph (c) of subsection (1) of IC 24-4.5-3-202).
    (5) Subject to classifications and differentiations, the lender may reasonably establish and make the same loan finance charge on all amounts financed within a specified range. A loan finance charge does not violate subsection (1) if:
        (a) when applied to the median amount within each range, it does not exceed the maximum permitted by subsection (1); and
        (b) when applied to the lowest amount within each range, it does not produce a rate of loan finance charge exceeding the rate calculated according to paragraph (a) by more than eight percent (8%) of the rate calculated according to paragraph (a).
    (6) With respect to a consumer loan not made pursuant to a revolving loan account, the lender may contract for and receive a minimum loan finance charge of not more than thirty dollars ($30).

The minimum loan finance charge allowed under this subsection may be imposed only if:
        (a) the borrower prepays in full a consumer loan, refinancing, or consolidation, regardless of whether the loan, refinancing, or consolidation is precomputed;
        (b) the loan, refinancing, or consolidation prepaid by the borrower is subject to a loan finance charge that:
            (i) is contracted for by the parties; and
            (ii) does not exceed the rate prescribed in subsection (1); and
        (c) the loan finance charge earned at the time of prepayment is less than the minimum loan finance charge contracted for under this subsection.
    (7) The amount of thirty dollars ($30) in subsection (6) is subject to change under the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the Reference Base Index to be used under this subsection is the Index for October 1992.
    (8) In addition to the loan finance charge provided for in this section, a lender may contract for the following:
        (a) With respect to a consumer loan that is not made under a revolving loan account, a loan origination fee of not more than two percent (2%) of the loan amount.
        (b) With respect to a consumer loan that is made under a revolving loan account, a loan origination fee of not more than two percent (2%) of the line of credit that was contracted for.
    (9) The charges provided for in subsection (8):
        (a) are not subject to refund or rebate;
        (b) are not permitted if a lender makes a settlement charge under IC 24-4.5-3-202(d)(ii); and
        (c) are limited to two percent (2%) of the part of the loan that does not exceed two thousand dollars ($2,000), if the loan is not primarily secured by an interest in land.
Notwithstanding subdivision (a), if a lender retains any part of a loan origination fee charged on a loan that is paid in full by a new loan from the same lender within three (3) months after the date of the prior loan, the lender may charge a loan origination fee only on that part of the new loan not used to pay the amount due on the prior loan, or in the case of a revolving loan, the lender may charge a loan origination fee only on the difference between the amount of the existing credit line and the increased credit line. This subsection does not prohibit a lender from contracting for and receiving a fee for preparing deeds,

mortgages, reconveyance, and similar documents under IC 24-4.5-3-202(d)(ii), in addition to the charges provided for in subsection (8).

SOURCE: IC 24-4.5-3-503; (06)HE1299.1.7. -->     SECTION 7. IC 24-4.5-3-503 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 503. License to Make Consumer Loans . (1) The department shall receive and act on all applications for licenses to make consumer loans. Applications must be as prescribed by the director of the department of financial institutions.
    (2) A license shall not be issued unless the department finds that the financial responsibility, character, and fitness of the applicant and of the members of the applicant (if the applicant is a copartnership or an association) and of the officers and directors of the applicant (if the applicant is a corporation) are such as to warrant belief that the business will be operated honestly and fairly within the purposes of this article. The director is entitled to request evidence of compliance with this section at:
         (a) the time of application; or ~~after~~ a ~~license~~ is ~~issued.~~ ~~The~~ ~~evidence~~ ~~requested~~
         (b) the time of renewal of a license; or
        (c) any other time considered necessary by the director.
    (3) Evidence of compliance with this section ~~includes:~~ may include: ~~but~~ is ~~not~~ ~~limited~~ ~~to,~~ an ~~official~~ ~~report~~ of ~~criminal~~ ~~activity~~ of ~~the~~ ~~applicant~~ ~~from~~ ~~the~~ ~~state~~ ~~law~~ ~~enforcement~~ ~~agency~~ or ~~criminal~~ ~~history~~ ~~records~~ ~~repository~~ of ~~the~~ ~~state~~ in ~~which~~ ~~the~~ ~~applicant~~ ~~resides.~~
         (a) criminal background checks, including a national criminal history check by the Federal Bureau of Investigation;
        (b) credit histories; and
        (c) other background checks considered necessary by the director.
    (4) The department may deny an application under this section if the director of the department determines that the application was submitted for the benefit of, or on behalf of, a person who does not qualify for a license.
    ~~(3)~~ (5) Upon written request, the applicant is entitled to a hearing on the question of the qualifications of the applicant for a license as provided in IC 4-21.5.
    ~~(4)~~ (6) The applicant shall pay the following fees at the time designated by the department:
        (a) An initial license fee as established by the department under IC 28-11-3-5.
        (b) An initial investigation fee as established by the department under IC 28-11-3-5.
        (c) An annual renewal fee as established by the department under IC 28-11-3-5.
        (d) A fee as established by the department under IC 28-11-3-5 may be charged for each day the annual renewal fee is delinquent.
    ~~(5)~~ (7) The applicant may deduct the fees required under subsection ~~4(a)~~ (6)(a) through ~~4(c)~~ (6)(c) from the filing fees paid under IC 24-4.5-6-203.
    ~~(6)~~ (8) A loan license issued under this section is not assignable or transferable.

SOURCE: IC 24-4.5-3-508; (06)HE1299.1.8. -->     SECTION 8. IC 24-4.5-3-508 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 508. Loan Finance Charge for Supervised Loans.(1) With respect to a supervised loan, including a loan pursuant to a revolving loan account, a supervised lender may contract for and receive a loan finance charge not exceeding that permitted by this section.
    (2) The loan finance charge, calculated according to the actuarial method, may not exceed the equivalent of the greater of either of the following:
        (a) the total of:
            (i) thirty-six percent (36%) per year on that part of the unpaid balances of the principal which is three hundred dollars ($300) or less;
            (ii) twenty-one percent (21%) per year on that part of the unpaid balances of the principal which is more than three hundred dollars ($300) but does not exceed one thousand dollars ($1,000); and
            (iii) fifteen percent (15%) per year on that part of the unpaid

balances of the principal which is more than one thousand dollars ($1000); or
        (b) twenty-one percent (21%) per year on the unpaid balances of the principal.
    (3) This section does not limit or restrict the manner of contracting for the loan finance charge, whether by way of add-on, discount, or otherwise, so long as the rate of the loan finance charge does not exceed that permitted by this section. If the loan is precomputed:
        (a) the loan finance charge may be calculated on the assumption that all scheduled payments will be made when due; and
        (b) the effect of prepayment is governed by the provisions on rebate upon prepayment (IC 24-4.5-3-210).
    (4) The term of a loan for the purposes of this section commences on the date the loan is made. Differences in the lengths of months are disregarded, and a day may be counted as one-thirtieth (1/30) of a month. Subject to classifications and differentiations the lender may reasonably establish, a part of a month in excess of fifteen (15) days may be treated as a full month if periods of fifteen (15) days or less are disregarded and that procedure is not consistently used to obtain a greater yield than would otherwise be permitted.
    (5) Subject to classifications and differentiations, the lender may reasonably establish and make the same loan finance charge on all principal amounts within a specified range. A loan finance charge does not violate subsection (2) if:
        (a) when applied to the median amount within each range, it does not exceed the maximum permitted in subsection (2); and
        (b) when applied to the lowest amount within each range, it does not produce a rate of loan finance charge exceeding the rate calculated according to paragraph (a) by more than eight percent (8%) of the rate calculated according to paragraph (a).
    (6) The amounts of three hundred dollars ($300) and one thousand dollars ($1,000) in subsection (2) and thirty dollars ($30) in subsection (7) are subject to change pursuant to the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). For the adjustment of the amount of thirty dollars ($30), the Reference Base Index to be used is the Index for October 1992.
    (7) With respect to a supervised loan not made pursuant to a revolving loan account, the lender may contract for and receive a minimum loan finance charge of not more than thirty dollars ($30). The minimum loan finance charge allowed under this subsection may be imposed only if:
        (a) the borrower prepays in full a consumer loan, refinancing,

or consolidation, regardless of whether the loan, refinancing, or consolidation is precomputed;
        (b) the loan, refinancing, or consolidation prepaid by the borrower is subject to a loan finance charge that:
            (i) is contracted for by the parties; and
            (ii) does not exceed the rate prescribed in subsection (2); and
        (c) the loan finance charge earned at the time of prepayment is less than the minimum loan finance charge contracted for under this subsection.

SOURCE: IC 24-4.5-6-106; (06)HE1299.1.9. -->     SECTION 9. IC 24-4.5-6-106 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 106. Examinations . (1) In administering this article and in order to determine whether the provisions of this article are being complied with by persons engaging in acts subject to this article, the department may examine the books and records of persons and may make investigations of persons as may be necessary to determine compliance. The department may administer oaths or affirmations, subpoena witnesses, compel their attendance, adduce evidence, and require the production of any matter which is relevant to the investigation. The department shall determine the sufficiency of the records and whether the person has made the required information reasonably available. The records pertaining to any transaction subject to this article shall be retained for two (2) years after making the final entry relating to the consumer credit transaction, but in the case of a revolving loan account or revolving charge account, the two (2) years is measured from the date of each entry.
    (2) ~~The~~ If the department: ~~may~~ ~~assess~~ to
        (a) investigates; or
        (b) examines the books and records of;
a person that is subject to IC 24-4.5-6-201, IC 24-4.5-6-202, and IC 24-4.5-6-203, an ~~examination~~ the person shall pay all reasonably incurred costs of the investigation or examination in accordance with the fee as ~~established~~ schedule adopted by the department under IC 28-11-3-5. ~~for~~ ~~each~~ ~~day~~ or ~~partial~~ ~~day~~ by ~~which~~ ~~the~~ ~~examination~~ ~~exceeds~~ ~~three~~ ~~(3)~~ ~~days~~ ~~per~~ ~~location~~ to be ~~examined.~~ However, the ~~examination~~ ~~fee~~ ~~provided~~ ~~for~~ in person is liable for the costs of an investigation or examination under this subsection is ~~payable~~ only to the extent that the ~~fee~~ ~~exceeds~~ costs exceed the amount of the filing fees paid most recently under IC 24-4.5-6-203.
    (3) The department shall be given free access to the records wherever located. If the person's records are located outside Indiana, the records shall be made available to the department at a convenient

location within Indiana, or the person shall pay the reasonable and necessary expenses for the department or its representative to examine them where they are maintained. The department may designate comparable officials of the state in which the records are located to inspect them on behalf of the department.
(4) Upon failure without lawful excuse to obey a subpoena or to give testimony and upon reasonable notice to all persons affected thereby, the department may apply to (any civil) court for an order compelling compliance.
(5) The department shall not make public the name or identity of a person whose acts or conduct he the department investigates pursuant to this section or the facts disclosed in the investigation, but this subsection does not apply to disclosures in actions or enforcement proceedings pursuant to this article.

SOURCE: IC 24-4.5-7-404; (06)HE1299.1.17. -->     SECTION 17. IC 24-4.5-7-404 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 404. (1) As used in this section, "commercially reasonable method of verification" means one (1) or more private consumer credit reporting services that the department determines to be capable of providing a lender with adequate verification information necessary to ensure compliance with subsection (4).
    (2) With respect to a small loan, no lender may permit a person to become obligated under more than one (1) loan agreement with the lender at any time.
    (3) A lender shall not make a small loan that, when combined with another outstanding small loan owed to another lender, exceeds a total of five hundred dollars ($500) when the face amounts of the checks written or debits authorized in connection with each loan are combined into a single sum. A lender shall not make a small loan to a borrower who has two (2) or more small loans outstanding, regardless of the total value of the small loans.
    (4) A lender complies with subsection (3) if the borrower represents in writing that the borrower does not have any outstanding small loans with the lender, another lender, an affiliate of the lender or another lender, or a separate entity involved in a business association with the lender or another lender in making small loans, and the lender independently verifies the accuracy of the borrower's written representation through a commercially reasonable method of verification. A lender's method of verifying whether a borrower has any outstanding small loans will be considered commercially reasonable if

the method includes a manual investigation or an electronic query of:
        (a) the lender's own records, including both records maintained at the location where the borrower is applying for the transaction and records maintained at other locations within the state that are owned and operated by the lender; and
        (b) available third party databases.
    (5) The department shall monitor the effectiveness of private consumer credit reporting services in providing the verification information required under subsection (4). If the department determines that one (1) or more commercially reasonable methods of verification are available, the department shall:
        (a) provide reasonable notice to all lenders identifying the commercially reasonable methods of verification that are available; and
        (b) require each lender to use, consistent with the policies of the department, one (1) of the identified commercially reasonable methods of verification as a means of complying with subsection (4).
    (6) The excess amount of loan finance charge provided for in agreements in violation of this section is an excess charge for purposes of the provisions concerning effect of violations on rights of parties (IC 24-4.5-5-202) and the provisions concerning civil actions by the department (IC 24-4.5-6-113).

SOURCE: IC 24-4.5-7-409; (06)HE1299.1.19. -->     SECTION 19. IC 24-4.5-7-409 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 409. (1) This section applies to licensees and unlicensed persons.
    ~~(2)~~ ~~The~~ ~~following~~ ~~apply~~ to ~~small~~ ~~loans~~ ~~only~~ ~~when~~ a ~~check~~ or an ~~authorization~~ to ~~debit~~ a ~~borrower's~~ ~~account~~ is ~~used~~ to ~~defraud~~ ~~another~~ ~~person:~~
        ~~(a)~~ IC ~~26-1-3.1-502.5~~ ~~(surcharge~~ ~~after~~ ~~dishonor).~~
        ~~(b)~~ IC ~~26-2-7~~ ~~(penalties~~ ~~for~~ ~~stopping~~ ~~payments~~ or ~~permitting~~ ~~dishonor~~ of ~~checks~~ ~~and~~ ~~drafts).~~
        ~~(c)~~ IC ~~34-4-30~~ ~~(before~~ ~~its~~ ~~repeal).~~
        ~~(d)~~ IC ~~34-24-3~~ ~~(treble~~ ~~damages~~ ~~allowed~~ in ~~certain~~ ~~civil~~ ~~actions~~ by ~~crime~~ ~~victims).~~
        ~~(e)~~ IC ~~35-43-5~~ ~~(forgery,~~ ~~fraud,~~ ~~and~~ ~~other~~ ~~deceptions).~~
        ~~(f)~~ IC ~~24-4.5-3-404~~ ~~(attorney's~~ ~~fees)~~ ~~does~~ ~~not~~ ~~apply~~ to a ~~small~~ ~~loan.~~
    ~~(3)~~ A ~~contractual~~ ~~agreement~~ in a ~~small~~ ~~loan~~ ~~transaction~~ ~~must~~ ~~include~~ ~~the~~ ~~language~~ of ~~subsection~~ ~~(2)~~ in 14 ~~point~~ ~~bold~~ ~~type.~~
    ~~(4)~~ (2) A person who violates this chapter:
        (a) is subject to a civil penalty up to two thousand dollars ($2,000) imposed by the department;
        (b) is subject to the remedies provided in IC 24-4.5-5-202;
        (c) commits a deceptive act under IC 24-5-0.5 and is subject to the penalties listed in IC 24-5-0.5;
        (d) has no right to collect, receive, or retain any principal, interest, or other charges from a small loan; however, this subdivision does not apply if the violation is the result of an accident or bona fide error of computation; and
        (e) is liable to the borrower for actual damages, statutory damages of two thousand dollars ($2,000) per violation, costs, and

attorney's fees; however, this subdivision does not apply if the violation is the result of an accident or bona fide error of computation.
    ~~(5)~~ (3) The department may sue:
        (a) to enjoin any conduct that constitutes or will constitute a violation of this chapter; and
        (b) for other equitable relief.
    ~~(6)~~ (4) The remedies provided in this section are cumulative but are not intended to be the exclusive remedies available to a borrower. A borrower is not required to exhaust any administrative remedies under this section or any other applicable law.

SOURCE: IC 24-4.5-7-410; (06)HE1299.1.20. -->     SECTION 20. IC 24-4.5-7-410 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 410. A lender making small loans shall not commit nor cause to be committed any of the following acts:
        (a) Threatening to use or using the criminal process in any state to collect on a small loan.
        (b) Threatening to take action against a borrower that is prohibited by this chapter.
        (c) Making a misleading or deceptive statement regarding a small loan or a consequence of taking a small loan.
        (d) Contracting for ~~and~~ or collecting attorney's fees on small loans made under this chapter.
        (e) Altering the date or any other information on a check or an authorization to debit the borrower's account held as security.
        (f) Using a device or agreement that the department determines would have the effect of charging or collecting more fees, charges, or interest than allowed by this chapter, including, but not limited to:
            (i) entering a different type of transaction with the borrower;
            (ii) entering into a sales/leaseback arrangement;
            (iii) catalog sales;
            (iv) entering into transactions in which a customer receives a purported cash rebate that is advanced by someone offering Internet content services, or some other product or service, when the cash rebate does not represent a discount or an adjustment of the purchase price for the product or service; or
            (v) entering any other transaction with the borrower that is designed to evade the applicability of this chapter.
        (g) Engaging in unfair, deceptive, or fraudulent practices in the making or collecting of a small loan.
        (h) Charging to cash a check representing the proceeds of a small

loan.
        (i) Except as otherwise provided in this chapter:
            (i) accepting the proceeds of a new small loan as payment of an existing small loan provided by the same lender; or
            (ii) renewing, refinancing, or consolidating a small loan with the proceeds of another small loan made by the same lender.
        (j) Including any of the following provisions in a loan document:
            (i) A hold harmless clause.
            (ii) A confession of judgment clause.
            (iii) A mandatory arbitration clause, unless the terms and conditions of the arbitration have been approved by the director of the department.
            (iv) An assignment of or order for payment of wages or other compensation for services.
            (v) A provision in which the borrower agrees not to assert a claim or defense arising out of contract.
            (vi) A waiver of any provision of this chapter.
        (k) Selling insurance of any kind in connection with the making or collecting of a small loan.
        (l) Entering into a renewal with a borrower.

SOURCE: IC 24-5-23; (06)HE1299.1.22. -->     SECTION 22. IC 24-5-23 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]:
     Chapter 23. Marketing by Mortgage Lenders
    Sec. 1. As used in this chapter, "mortgage lender" means the original lender under a mortgage and the original lender's successors and assigns, including insurance companies, trust companies, banks, investment companies, savings banks, savings associations, credit unions, executors, trustees, and other fiduciaries, or any other mortgagee authorized to do business in this state.
    Sec. 2. (a) Except as provided in subsection (b), a person, firm, limited liability company, or corporation may not use the name of an existing mortgage lender or a name confusingly similar to that of an existing mortgage lender when marketing to or soliciting business from a customer or prospective customer if the reference to the existing mortgage lender is:
        (1) without the consent of the existing mortgage lender; and
        (2) made in a manner that could cause a reasonable person to believe that the marketing material or solicitation:
            (A) originated from;
            (B) is endorsed by; or
            (C) is in any other way the responsibility of;
the existing mortgage lender.
    (b) This section does not prohibit the use of or reference to the name of an existing mortgage lender in marketing materials or solicitations if the use or reference does not deceive or confuse a reasonable person regarding whether the marketing material or solicitation:
        (1) originated from;
        (2) is endorsed by; or
        (3) is in any other way the responsibility of;
the existing mortgage lender.
    (c) A mortgage lender whose name is used in violation of this section may bring an action to recover the greater of:
        (1) two (2) times the amount of actual damages incurred by the mortgage lender as a result of the violation; or
        (2) one thousand dollars ($1,000) plus attorney's fees.
    (d) A mortgage lender that is a bank or a bank holding company is entitled to any relief available under both:
        (1) subsection (c); and
        (2) IC 28-1-20-4(m);
with respect to the same violation.

SOURCE: IC 28-1-5-2; (06)HE1299.1.29. -->     SECTION 29. IC 28-1-5-2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 2. (a) Every corporation has the capacity to act that is possessed by a natural person, but has the authority to perform only those acts that are necessary, convenient, or expedient to accomplish the purposes for which it is formed and that are not repugnant to law.
    (b) Subject to any limitations or restrictions imposed by law or by the articles of incorporation, each corporation has the following general rights, powers, and privileges:
        (1) To continue as a corporation, under its corporate name, for the period limited in its articles of incorporation, or, if the period is not so limited, then perpetually.
        (2) To sue and be sued in its corporate name.
        (3) To have a corporate seal and to alter such seal at its pleasure.
        (4) To acquire, own, hold, use, lease, mortgage, pledge, sell, convey, or otherwise dispose of property, real and personal,

tangible and intangible, in the manner and to the extent hereinafter provided.
        (5) To borrow money and to mortgage or pledge its property to secure the payment thereof, in the manner and to the extent hereinafter provided; but no financial institution having power to accept deposits of money shall pledge any of the assets of such financial institution as security for the safekeeping and prompt payment of any money so deposited, except that any such financial institution may, for the safekeeping and prompt payment of any money so deposited, give security of the kind authorized by any statute of this state or by the Congress of the United States.
        (6) To conduct business in this state and elsewhere.
        (7) To appoint such officers and agents as the business of the corporation may require and to do the following with respect to any officers or agents appointed:
            to (A) Define their duties.
            to (B) Fix their compensation, which may include compensation paid pursuant to any plan of deferred compensation approved by ~~its~~ the corporation's board of directors.
            to (C) Enter into employment contracts with ~~its~~ the corporation's officers and agents which set forth terms and conditions of employment.
            to (D) Provide ~~it's~~ the corporation's officers, agents, and employees with individual or group life insurance.
            ~~and~~ to (E) Procure and maintain in effect for the benefit of the bank, insurance on the life or lives of designated officers or directors.
        (8) To make bylaws for the government and regulation of its affairs.
        (9) To cease doing business and to dissolve and surrender its corporate franchise.
        (10) To do all acts and things necessary, convenient, or expedient to carry out the purposes for which it is formed.
     (c) Subject to any limitations or restrictions that the department may impose by rule or policy, each corporation may purchase and hold life insurance as follows:
        (1) Life insurance purchased or held in connection with employee compensation or benefit plans approved by the corporation's board of directors.
        (2) Life insurance purchased or held to recover the cost of providing preretirement or postretirement employee benefits

approved by the corporation's board of directors.
        (3) Life insurance on the lives of borrowers.
        (4) Life insurance held as security for a loan.
        (5) Life insurance that a national bank may purchase or hold under 12 U.S.C. 24 (Seventh).

SOURCE: IC 28-1-11-3.1; (06)HE1299.1.30. -->     SECTION 30. IC 28-1-11-3.1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 3.1. (a) Any bank or trust company shall have the power to discount, negotiate, sell and guarantee promissory notes, bonds, drafts, acceptances, bills of exchange, and other evidences of debt; to buy and sell, exchange, coin and bullion; to loan money; to borrow money and to issue its notes, bonds, or debentures to evidence any such borrowing and to mortgage, pledge, or hypothecate any of its assets to secure the repayment thereof; to receive savings deposits and deposits of money subject to check, and deposits of securities or other personal property from any person or corporation, upon such terms as may be agreed upon by the parties; to contract for and receive on loans and discounts the highest rate of interest allowed by the laws of this state to be contracted for and received by individuals; to accept, for payment at a future date, drafts drawn upon it by its customers and to issue letters of credit authorizing the holders thereof to draw drafts upon it or its correspondents at sight or on time, however, the letter of credit must state a specific expiration date; and to exercise all the powers incidental and proper or which may be necessary and usual in carrying on a general banking business, but it shall have no right to issue bills to circulate as money.
    (b) Subject to such regulations as the department finds to be necessary and proper, any bank or trust company shall have the following powers:
        (1) To make such loans and advances of credit and purchases of obligations representing loans and advances of credit as are eligible for insurance by the federal housing administrator, and to obtain such insurance.
        (2) To make such loans secured by mortgages on real property or leasehold, as the federal housing administrator insures or makes a commitment to insure, and to obtain such insurance.
        (3) To purchase, invest in, and dispose of notes or bonds secured by mortgage or trust deed insured by the federal housing administrator or debentures issued by the federal housing administrator, or bonds or other securities issued by national mortgage associations.
        (4) To extend credit to any state agency, with the approval of the department, notwithstanding any other provisions or limitations

of IC 28-1. No law of this state prescribing the nature, amount, or form of security or requiring security upon which loans or advances of credit may be made, or prescribing or limiting interest rates upon loans or advances of credit, or prescribing or limiting the period for which loans or advances of credit may be made, shall be deemed to apply to loans, advances of credit, or purchases made pursuant to subdivisions (1), (2), and (3) and this subdivision.
(5) To purchase, take, hold, and dispose of notes, and mortgages securing such notes, made to any joint stock land bank heretofore incorporated, in any case in which not less than ninety-nine percent (99%) of the stock of said joint stock land bank is owned by the bank or trust company at the time such notes or mortgages be acquired by the bank or trust company; and upon dissolution of any such joint stock land bank, or at any stage in the process of such dissolution, any bank or trust company then owning not less than ninety-nine percent (99%) of the stock of such joint stock land bank may take, hold, and dispose of any notes, mortgages, or other assets of such joint stock land bank of whatsoever nature, including real estate, wheresoever situated, which such joint stock land bank shall assign, transfer, convey, or otherwise make over to such bank or trust company by way of final or partial distribution of its assets to its stockholders upon such dissolution or in connection with the process of such dissolution. No law of this state prescribing the nature, amount, location, or form of security, or requiring security upon which loans or advances of credit may be made, or prescribing or limiting interest rates upon loans or advances of credit, or prescribing or limiting the period for which loan or advances of credit may be made, or prescribing any ratio between the amount of any loan and the appraised value of the security for such loan, or requiring periodical reductions of the principal of any loan, shall be deemed to apply to loans, notes, mortgages, real estate, or other assets mentioned in this subdivision.
(6) To adopt stock purchase programs for employees and to grant options to purchase, and to issue and sell, shares of its capital stock to its employees, or to a trustee on their behalf (which may be the bank or trust company issuing such capital stock), without first offering the same to its shareholders, for such consideration, not less than par value, and upon such terms and conditions as shall be approved by its board of directors and by the holders of a majority of its shares entitled to vote with respect thereto, and

by the department. In the absence of actual fraud in the transaction, the judgment of the directors as to the consideration for the issuances of such options and the sufficiency thereof shall be conclusive. Any bank or trust company exercising the powers granted in this subsection may, to the extent approved by the department, have authorized and unissued stock required to fulfill any stock option or other arrangement authorized herein.
        (7) Subject to such restrictions as the department may impose, to become the owner or lessor of personal or real property acquired upon the request and for the use of a customer and to incur such additional obligations as may be incident to becoming an owner or lessor of such property.
        (8) To purchase or construct buildings and hold legal title thereto to be leased to municipal corporations or other public authorities, for public purposes, having resources sufficient to make payment of all rentals as they become due. Each lease agreement shall provide that upon expiration, the lessee will become the owner of the building.
        (8.1) Subject to the prior written approval of the department, and notwithstanding section 5 of this chapter, to purchase, hold, and convey real estate which is:
            (A) improved or to be improved by a single, freestanding building; and
            (B) to be used, in part, as a branch or the principal office of that bank or trust company and, in part, as rental property for one (1) ~~lessee.~~ or more lessees.
        Unless a written extension of time is given by the department, the bank or trust company shall open ~~its~~ the branch or principal office within two (2) years from the acquisition date of the real estate. If the bank or trust company does not open a branch or its principal office on the real estate in that time period or if the bank or trust company removes its branch or principal office from the real estate, the bank or trust company shall divest itself of all interest in the real estate within five (5) years from the acquisition date of the real estate, if a branch was not opened, or five (5) years from the removal date of the branch office, whichever applies. Except with the written approval of the department, the sum invested in real estate and buildings used for the convenient transaction of its business as provided in this subdivision shall not exceed fifty percent (50%) of the sound capital of ~~that~~ the bank or trust company as provided in section 5 of this chapter.

        (9) To invest in community development corporations and projects of a predominantly civic, community, or public nature, including equity investments in corporations or limited liability companies organized for such purposes. Investments by a bank or trust company under this subdivision may not exceed:
            (A) in any one (1) project, two percent (2%); and
            (B) in the aggregate, five percent (5%);
        of the capital and surplus of the bank or trust company, unless the director makes the determination set forth in subsection (c). As used in this subdivision and in subsection (c), "capital and surplus" has the meaning set forth in IC 28-1-13-1.1.
        (10) Subject to section 3.2 of this chapter, to exercise the rights and privileges (as defined in section 3.2(a) of this chapter) that are or may be granted to national banks domiciled in Indiana.
    (c) Investments by a bank or trust company under subsection ~~(b)(10)~~ (b)(9) may exceed the limit set forth in subsection ~~(b)(10)(B)~~ (b)(9)(B) if the director determines that:
        (1) the aggregate investments by the bank or trust company under subsection ~~(b)(10)~~ (b)(9) in excess of five percent (5%) of the capital and surplus of the bank or trust company will not pose a significant risk to the affected deposit insurance fund; and
        (2) the bank or trust company is adequately capitalized.
However, in no case shall the aggregate investments by a bank or trust company under subsection ~~(b)(10)~~ (b)(9) exceed ten percent (10%) of the capital and surplus of the bank or trust company.
    (d) A bank or trust company shall not make any investment under subsection ~~(b)(10)~~ (b)(9) if the investment would expose the bank or trust company to unlimited liability.
    (e) Any rule made and promulgated under and pursuant to this section may apply to one (1) or more banks or trust companies or to one (1) or more localities in the state as the department, in its discretion, may determine.

SOURCE: IC 28-1-20-4; (06)HE1299.1.31. --> SECTION 31. IC 28-1-20-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 4. (a) Except as provided in subsections (c), (d), (g), and (k), it is unlawful for any person, firm, limited liability company, or corporation (other than a bank or trust company, a bank holding company, a subsidiary of a bank or trust company, a subsidiary of a bank holding company, a subsidiary of a savings bank, a subsidiary of a savings association, or a corporate fiduciary organized or reorganized under IC 28 or statutes in effect at the time of organization or reorganization or under the laws of the United States):

        (1) to use the word "bank", "banc", or "banco" as a part of the name or title of the person, firm, or corporation; or
        (2) to advertise or represent the person, firm, limited liability company, or corporation to the public:
            (A) as a bank or trust company or a corporate fiduciary; or
            (B) as affording the services or performing the duties which by law only a bank or trust company or a corporate fiduciary is entitled to afford and perform.
    (b) A financial institution organized under the laws of any state or the United States ~~that~~ ~~establishes~~ a ~~branch~~ ~~office~~ ~~under~~ ~~this~~ ~~title~~ is authorized to do business in Indiana:
         (1) at ~~that~~ its principal office;
        (2) at any branch office; or
        (3) otherwise;
using a name other than ~~the~~ its official entity name of ~~its~~ ~~home~~ ~~office.~~ if the financial institution notifies the department at least ten (10) days before using the other name.
    (c) Notwithstanding the prohibitions of this section, an out-of-state financial institution with the word "bank" in its legal name may use the word "bank" if the financial institution is insured by the Federal Deposit Insurance Corporation or its successor.
    (d) Notwithstanding subsection (a), a building and loan association organized under IC 28-4 (before its repeal) may include in its name or title:
        (1) the words "savings bank"; or
        (2) the word "bank" if the name or title also includes either the words "savings bank" or letters "SB".
A building and loan association that includes "savings bank" in its title under this section does not by that action become a savings bank for purposes of IC 28-6.1.
    (e) The name or title of a savings bank governed by IC 28-6.1 must include the words "savings bank" or the letters "SB".
    (f) A savings association may include in its name the words "building and loan association".
    (g) Notwithstanding subsection (a), a bank holding company (as defined in 12 U.S.C. 1841) may use the word "bank" or "banks" as a part of its name. However, this subsection does not permit a bank holding company to advertise or represent itself to the public as affording the services or performing the duties that by law a bank or trust company only is entitled to afford and perform.
    (h) The department is authorized to investigate the business affairs of any person, firm, limited liability company, or corporation that uses

"bank", "banc", or "banco" in its title or holds itself out as a bank, corporate fiduciary, or trust company for the purpose of determining whether the person, firm, limited liability company, or corporation is violating any of the provisions of this article, and, for that purpose, the department and its agents shall have access to any and all of the books, records, papers, and effects of the person, firm, limited liability company, or corporation. In making its examination, the department may examine any person and the partners, officers, members, or agents of the firm, limited liability company, or corporation under oath, subpoena witnesses, and require the production of the books, records, papers, and effects considered necessary. On application of the department, the circuit or superior court of the county in which the person, firm, limited liability company, or corporation maintains a place of business shall, by proper proceedings, enforce the attendance and testimony of witnesses and the production and examination of books, papers, records, and effects.
    (i) The department is authorized to exercise the powers under IC 28-11-4 against a person, firm, limited liability company, or corporation that improperly holds itself out as a financial institution.
    (j) A person, firm, limited liability company, or corporation who violates this section is subject to a penalty of five hundred dollars ($500) per day for each and every day during which the violation continues. The penalty imposed shall be recovered in the name of the state on relation of the department and, when recovered, shall be paid into the financial institutions fund established by IC 28-11-2-9.
    (k) The word "bank", "banc", or "banco" may not be included in the name of a corporate fiduciary.
    (l) A person, firm, limited liability company, or corporation may not use the name of an existing bank or bank holding company or a name confusingly similar to that of an existing bank or bank holding company when marketing to or soliciting business from a customer or prospective customer if the reference to the existing bank or bank holding company is:
        (1) without the consent of the existing bank or bank holding company; and
        (2) in a manner that could cause a reasonable person to believe that the marketing material or solicitation:
            (A) originated from;
            (B) is endorsed by; or
            (C) is in any other way the responsibility of;
the existing bank or bank holding company.
    (m) An existing bank or bank holding company may, in addition to

any other remedies available under the law, report an alleged violation of subsection (l) to the department. If the department finds that the marketing material or solicitation in question is in violation of subsection (l), the department may direct the person, firm, limited liability company, or corporation to cease and desist from using that marketing material or solicitation in Indiana. If that person, firm, limited liability company, or corporation persists in using the marketing material or solicitation, the department may impose a civil penalty of up to fifteen thousand dollars ($15,000) for each violation. Each instance in which the marketing material or solicitation is sent to a customer or prospective customer constitutes a separate violation of subsection (l).
    (n) Nothing in subsection (l) or (m) prohibits the use of or reference to the name of an existing bank or bank holding company in marketing materials or solicitations, if the use or reference does not deceive or confuse a reasonable person regarding whether the marketing material or solicitation:
        (1) originated from;
        (2) is endorsed by; or
        (3) is in any other way the responsibility of;
the existing bank or bank holding company.
    (o) The department may adopt rules under IC 4-22-2 to implement this section.

SOURCE: IC 28-1-23.5; (06)HE1299.1.32. -->     SECTION 32. IC 28-1-23.5 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]:
     Chapter 23.5. Electronic Activity by Financial Institutions
    Sec. 1. This chapter applies to the following financial institutions:
        (1) A bank operating under IC 28-1-11.
        (2) A credit union operating under IC 28-7-1.
        (3) A savings bank operating under IC 28-6.1.
        (4) A savings association operating under IC 28-15.
     Sec. 2. As used in this chapter, "electronic activity" refers to:
        (1) any activity or function that a financial institution performs through electronic means or facilities; or
        (2) the provision or delivery of any product or service by a financial institution through the use of electronic technology.
     Sec. 3. An electronic activity performed by a financial institution must be consistent with the following:
        (1) Standards used by the department to determine whether a financial institution is operating or will operate in a safe and
sound condition.
        (2) State and federal consumer protection laws and regulations.
        (3) State or federal supervisory guidance considered necessary or appropriate by the director.
    Sec. 4. (a) The director may determine whether an electronic activity by a financial institution is permitted under:
        (1) IC 28-1-11, with respect to a bank;
        (2) IC 28-7-1, with respect to a credit union;
        (3) IC 28-6.1, with respect to a savings bank;
        (4) IC 28-15, with respect to a savings association; or
        (5) any other state statute that applies to a financial institution described in subdivisions (1) through (4).
    (b) The director may establish standards or conditions designed to ensure that the electronic activities of financial institutions are:
        (1) transacted as intended; and
        (2) conducted safely and soundly, in accordance with other applicable statutes, regulations, or supervisory policies.
    Sec. 5. (a) An electronic activity is authorized for a financial institution as part of the financial institution's business if the activity is described in:
        (1) IC 28-1-11, with respect to a bank;
        (2) IC 28-7-1, with respect to a credit union;
        (3) IC 28-6.1, with respect to a savings bank;
        (4) IC 28-15, with respect to a savings association; or
        (5) any other state statute that applies to a financial institution described in subdivisions (1) through (4).
    (b) In determining whether an electronic activity is authorized as part of a financial institution's business, the director shall consider the following:
        (1) Whether the activity is functionally equivalent to, or a logical outgrowth of, a recognized activity of the type of financial institution under consideration.
        (2) Whether the activity strengthens the financial institution by benefiting its customers or its business.
        (3) Whether the activity involves risks similar in nature to those already assumed by the type of financial institution under consideration.
        (4) Whether the activity may be conducted by:
            (A) the same, or functionally equivalent type, of federally chartered financial institution; or
            (B) the same, or functionally equivalent type, of financial
institution that:
                (i) is organized or reorganized under the laws of another state; and
                (ii) does business in Indiana;
        under the authority of applicable federal or state statutes, regulations, or supervisory policies.
    Sec. 6. (a) An electronic activity is authorized for a financial institution as incidental to the financial institution's business if the activity is convenient or useful to an activity that is:
        (1) specifically authorized for the type of financial institution under consideration; or
        (2) otherwise part of the business of the type of financial institution under consideration.
    (b) In determining whether an electronic activity is authorized as incidental to a financial institution's business, the director may consider whether the activity:
        (1) facilitates the production or delivery of the financial institution's products or services;
        (2) enhances the financial institution's ability to sell or market its products or services;
        (3) improves the effectiveness or efficiency of the financial institution's operations; or
        (4) enables the financial institution to:
            (A) use capacity acquired for its operations as a financial institution; or
            (B) otherwise avoid economic loss or waste.
    Sec. 7. (a) As used in this section, "potential risks", with respect to a proposed electronic activity by a financial institution, include the following:
        (1) Legal risks.
        (2) Transactional risks.
        (3) Risk of the financial institution's noncompliance with applicable statutes, regulations, or supervisory policies.
        (4) Risk of harm to the financial institution's reputation.
    (b) A financial institution's board of directors and executive officers are responsible for ensuring that all potential risks are evaluated and taken into account before the financial institution undertakes any electronic activity. The board of directors and the executive officers may not delegate their responsibility under this subsection to other persons within the financial institution or to outside parties.
    (c) After a financial institution's board of directors and

executive officers have acted under subsection (b) to conduct an evaluation of the potential risks associated with an electronic activity, the financial institution may perform, provide, or deliver through electronic means or facilities any activity, function, product, or service that it is otherwise authorized to perform, provide, or deliver, subject to this chapter and any other applicable statutes, regulations, or supervisory policies.
    Sec. 8. (a) A financial institution described in section 1(1), 1(3), or 1(4) of this chapter may perform, provide, or deliver through electronic means or facilities any activity, function, product, or service that a national bank is specifically authorized to perform, provide, or deliver under 12 CFR 7.5000 et seq.
    (b) A financial institution described in section 1(2) of this chapter may perform, provide, or deliver through electronic means or facilities any activity, function, product, or service that a federal credit union is specifically authorized to perform, provide, or deliver under Part 721 of the National Credit Union Administration's regulations (12 CFR 721.1 et seq.).
    Sec. 9. A financial institution may perform, provide, or deliver through electronic means or facilities any activity, function, product, or service that it is otherwise authorized or required to perform, provide, or deliver by nonelectronic means or facilities, subject to the following:
        (1) The approval of the customer or member to or for whom the activity, function, product, or service is performed, provided, or delivered.
        (2) The:
            (A) safety and soundness requirements; and
            (B) state or federal supervisory guidance;
        that the director would apply if the activity were conducted by nonelectronic means or facilities.