Delaware Administrative Code Title 5 - Banking
Delaware Administrative Code — Title 5: Banking
Scope
Title 5 governs the regulation, licensing, and supervision of banks, trust companies, and other financial institutions in Delaware.
It provides rules for compliance with state banking laws, corporate governance, consumer protections, and operational standards.
These regulations are enforced by the Delaware Office of the State Bank Commissioner (OSBC).
Section 1. General Provisions
Establishes the legal authority of the Office of the State Bank Commissioner (OSBC) to regulate financial institutions.
Defines key terms used throughout Title 5:
Bank / Financial Institution – Any entity authorized to engage in banking, trust, or financial services.
Commissioner – The Delaware State Bank Commissioner.
Charter / License – Legal authorization to operate as a bank or trust company in Delaware.
Board of Directors / Officers – Individuals responsible for governance and management of institutions.
Deposit / Fiduciary Assets – Funds held or managed by institutions for customers.
Section 2. Licensing and Chartering
Banks and trust companies must obtain a charter or license from the Commissioner to operate legally.
Application requirements include:
Organizational documents (articles of incorporation, bylaws).
Business plan and financial projections.
Background checks on directors, officers, and major shareholders.
The Commissioner may deny, conditionally approve, or revoke a license if legal or financial standards are not met.
Section 3. Governance and Management
Institutions must maintain sound governance practices:
Boards of directors must meet minimum fiduciary and oversight standards.
Management must demonstrate competence, experience, and integrity.
Policies must exist for risk management, internal controls, and operational audits.
The Commissioner may require changes in management or governance to protect depositors and ensure compliance.
Section 4. Capital and Financial Requirements
Banks must maintain minimum capital ratios as required by Delaware law.
Requirements cover:
Tier 1 capital and total capital adequacy.
Liquidity standards.
Contingency and reserve planning.
The Commissioner may impose restrictions on lending, dividends, or new investments to maintain financial stability.
Section 5. Reporting and Recordkeeping
Institutions must file regular reports with the OSBC, including:
Financial statements (balance sheets, income statements).
Regulatory compliance reports.
Reports on major transactions, mergers, or acquisitions.
Banks must maintain records for a prescribed period for inspection and audit purposes.
Section 6. Consumer Protection
Banks must comply with Delaware laws on:
Truth in lending.
Fair banking and fiduciary practices.
Handling of deposits, withdrawals, and escrow accounts.
Complaints from customers may be investigated by the OSBC, with corrective action required as necessary.
Section 7. Examinations and Enforcement
The Commissioner conducts periodic examinations of institutions to ensure compliance.
Violations of regulations may result in:
Cease and desist orders.
Fines or penalties.
Revocation or suspension of license.
Requirements to correct operational deficiencies.
Enforcement aims to protect depositors, investors, and the financial system.
Section 8. Mergers, Acquisitions, and Branching
Institutions must obtain Commissioner approval for:
Mergers with or acquisitions of other banks.
Opening new branches or expanding operations.
Applications require disclosure of financial condition, management, and risk considerations.
Summary
Title 5 – Banking establishes the regulatory framework for Delaware’s banks and trust companies.
It covers licensing, governance, capital standards, reporting, consumer protections, examinations, enforcement, and corporate changes.
The regulations ensure financial stability, legal compliance, and protection of depositors and investors in the state.
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