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This entry was published on 2014-09-22
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SECTION 173
Rate of interest; effect of usury
Banking (BNK) CHAPTER 2, ARTICLE 4
§ 173. Rate of interest; effect of usury. 1. No private banker shall
take, receive, reserve or charge on any loan or discount made, or upon
any note, bill of exchange or other evidence of debt, interest as
computed pursuant to this section, at a rate greater than the rate
prescribed by the superintendent of financial services pursuant to
section fourteen-a of this chapter, or, if no rate has been so
prescribed, six per centum per annum, or two dollars if the interest so
computed is less than that amount. Such interest may be taken in
advance, reckoning the days for which the note, bill or evidence of debt
has to run. The knowingly taking, receiving, reserving or charging a
greater rate of interest shall be held and adjudged a forfeiture of the
entire interest which the note, bill of exchange or other evidence of
debt carries with it, or which has been agreed to be paid thereon. If a
greater rate of interest has been paid, the person paying the same or
his legal representatives may recover twice the entire amount of the
interest thus paid from the private banker. The purchase, discount or
sale of a bona fide bill of exchange, note or other evidence of debt
payable at another place than the place of such purchase, discount or
sale at not more than the current rate of exchange for sight draft, or a
reasonable charge for the collection of the same, in addition to the
interest, shall not be considered interest for the purpose of any law
regulating the maximum rate of interest which may be charged, taken or
received.

Anything contained in this subdivision to the contrary
notwithstanding, the charging of interest or discount on a loan or
discount at an office of a private banker located outside of the states
of the United States of America and the District of Columbia at a rate
allowed by the laws of the country, territory, dependency, province,
dominion, insular possession or other political subdivision where such
office is located, or the acquisition by a private banker of a part
interest or the entire interest in any loan or discount heretofore or
hereafter made by a bank or trust company or any other banking
institution at an office located outside of the states of the United
States of America and the District of Columbia, shall not be a violation
of this section.

1-a. Anything contained in this section to the contrary
notwithstanding, any private banker, in purchasing or otherwise
acquiring, any note or other evidence of debt, which has arisen out of
the sale of personal property or the performance of services on credit
and which is repayable in instalments from the payee or holder thereof,
may take, receive, reserve or charge an amount not exceeding twelve per
centum per annum, computed pursuant to this section on unpaid principal
balances, or the sum of ten dollars, whichever is the greater; provided,
however, that nothing contained in this subdivision shall authorize a
private banker to take, receive, reserve or charge upon the purchase or
other acquisition of any two or more notes or other evidences of debt,
arising out of the same transaction, an amount greater than such private
banker would be entitled to take, receive, reserve or charge if all of
such obligations constituted a single obligation. In the event that the
private banker insures, under a group insurance policy, the life of the
person primarily liable on any such obligation, or in the event that the
private banker requires insurance on personal property securing any such
obligation, the actual cost of such insurance may be added to the amount
which such private banker may take, receive, reserve or charge upon the
purchase or other acquisition of such obligation. This subdivision shall
not be in derogation of any powers, rights or privileges possessed by
any private banker prior to the effective date this subdivision.

2. Upon advances of money repayable on demand to an amount not less
than five thousand dollars made upon warehouse receipts, bills of
lading, certificates of stock, certificates of deposit, bills of
exchange, bonds or other negotiable instruments, pledged as collateral
security for such repayment, a private banker may receive or contract to
receive and collect as compensation for making such advances any sum
which may be agreed upon by the parties to such transaction.

3. Upon an advance of money, whether or not repayable on demand, to an
amount not less than five thousand dollars, made upon documents of title
within article seven of the uniform commercial code or negotiable
instruments within article three or article eight of the uniform
commercial code pledged as collateral security for such repayment, any
private banker may receive or contract to receive and collect as
compensation for making such advance any sum which may be agreed upon by
the parties to such transaction; provided that such advance is (a) to or
for any partner of a firm which is a member firm of a national
securities exchange registered with the securities and exchange
commission as a national securities exchange under the federal
securities exchange act of 1934, as amended, to enable such partner to
make a contribution of capital to such firm or to purchase stock of an
affiliated corporation of such firm, provided that such partner is
actively engaged in the business of such firm and devotes the major
portion of his time thereto, or (b) to or for any person who is or will
become a holder of stock of a corporation which is a member corporation
of such a national securities exchange to enable such person to purchase
stock of such corporation or to purchase stock of an affiliated
corporation of such corporation, provided that such person is actively
engaged in the business of such corporation and devotes the major
portion of his time thereto.