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HomeFinancial CodeDiv. 7Ch. 5Art. 1§ 18343 Loan Reserve Requirements

§ 18343 Loan Reserve Requirements

Financial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 18343 Loan Reserve Requirements

Key Takeaways

  • •Banks must save money to cover bad loans.
  • •The boss (commissioner) can make rules on how to label loans as late or paid.
  • •The boss can say when to cancel a bad loan and when to count it again.
  • •The boss decides how much money banks must keep aside for safety.

Example

A bank gives out a car loan, but the person stops paying.

The bank must save extra money to cover this bad loan. The boss can tell the bank when to call the loan 'late' and when to give up on getting the money back.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 18343 Loan Reserve Requirements

The commissioner may require an industrial loan company to establish and maintain reasonable reserves for loans made, and contracts or other obligations purchased or discounted in accordance with sound business practices. The commissioner may by rule or order: (a) Establish reasonable standards for the classification of loans and contracts or other obligations as to their delinquency or currency. (b) Prescribe the conditions requiring the writing off of delinquent loans and contracts or other obligations and the conditions under which they may be restored as part of corporate assets. (c) Establish the basis upon which reasonable and adequate reserves shall be created and maintained. (Amended by Stats. 1989, Ch. 663, Sec. 12. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

Last verified: January 23, 2026

Key Terms

industrial loan companyreasonable reservessound business practicesdelinquent loanscorporate assets

Related Statutes

  • § 18344 Loan Office Business Restrictions
  • § 18345 Management Personnel Change Reporting
  • § 18349 License Suspension Or Revocation
  • § 18349.5 Industrial Loan Account Definitions
  • § 18350 Industrial Loan Company Fees

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Financial Code. Section 18343.
View Official Source