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Reg O Demand Clause In Note for OD?

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Question: 
For Reg. O compliance, is a Demand Clause required to be included in the Note for overdraft loans to executive officers?
Answer: 

In the Reg O definition of extensions of credit, there is an exclusion for overdraft protection lines of credit of $5,000 or less from the definition - § 215.3(b)(6). So if your executive officer has such a line, it is not an extension of credit, and only extensions of credit to executive officers require a demand clause. If, on the other hand, we are to read your question as technically written, you asked about loans, not lines of credit. Any loan made to an executive officer would be an extension of credit unless covered by one of the other exclusions at § 215.3(b) and would require a demand clause.

First published on 04/28/2014

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