§ 5–512
Statutes in effect as of October 1, 2026.
Md. Code Ann., Fin. Inst. § 5-512 (2026)
Title 5. Banking Institutions -- General Provisions
Subtitle 5. Miscellaneous Regulations
§ 5–512LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Commercial loan” means a loan that is made:
(i)
Solely to acquire or carry on a business or commercial enterprise; or
(ii)
To any business or commercial organization.
(3)
“Consumer loan” means a loan that is made primarily for personal, family, or household purposes.
(4)
“Executive officer” has the meaning stated in Title 12 of the Code of Federal Regulations, § 215.2.
(b)
Unless the loan is approved or exempted from approval as provided in this section, the following persons may not borrow, directly or indirectly, any money from a banking institution:
(1)
Any director, officer, or employee of the banking institution;
(2)
Any partnership of which the director, officer, or employee is a member; or
(3)
Any corporation in which the director, officer, or employee is an officer or owns the majority interest.
(c)
This section does not require approval of:
(1)
A commercial loan that is made to:
(i)
A director of the banking institution, unless the director also is an officer or employee of the banking institution;
(ii)
A partnership of which the director is a member, unless an officer or employee of the banking institution also is a member of that partnership; or
(iii)
A corporation in which the director holds any interest, unless an officer or employee of the banking institution is an officer or owns the majority interest in that corporation; or
(2)
A loan that is:
(i)
A consumer loan; and
(ii)
Is made to an employee of a banking institution who is not an executive officer or director of the banking institution.
(d)
(1)
A loan to a director, officer, or employee of a banking institution may be made only if the loan has been approved by a resolution adopted at and recorded in the minutes of a meeting of:
(i)
The board of directors of the banking institution; or
(ii)
The executive committee of the banking institution, if that committee is authorized to make loans.
(2)
If a loan is approved by an executive committee, the loan approval shall be reported to the board of directors at its next meeting.
(e)
(1)
A loan made under this section shall be reviewed every 6 months by the board of directors.
(2)
The loan may not be renewed or extended unless the renewal or extension has been approved by a resolution adopted at a meeting of the board of directors and recorded in the minutes of the meeting.
(f)
All loans to a director, officer, or employee of a banking institution are subject to the limitations imposed by § 3-601 of this article.