Public Finance

CHAPTER 35-10.1
Collateralization of Public Deposits

SECTION 35-10.1-2

§ 35-10.1-2 Definitions.

The following definitions shall apply for the purposes of this chapter:

(1) "Commission" shall mean the state investment commission established pursuant to chapter 10 of this title.

(2) "Depository institution" shall mean any state chartered bank or trust company, state chartered loan and investment company or building loan company, national banking association, state chartered savings bank, or federally chartered savings bank insured by the federal deposit insurance corporation or a federally or state chartered credit union insured by the national credit union administration.

(3) "Eligible collateral" shall mean assets owned by a depository institution free and clear of any right, title, or interest of any other party (other than a public depositor that acquires a security interest in the collateral) pursuant to this chapter and consisting of:

(i) Obligations of the United States government or any of its agencies or instrumentalities;

(ii) Obligations of the state or any of its political subdivisions, or of any of the agencies, boards, or commissions of the state or political subdivision;

(iii) Obligations of any state other than Rhode Island or any of that other state's political subdivisions, or any of the agencies, boards, or commissions of that state or political subdivision, provided that these obligations are rated not less than "A" by standard & poor's corporation or moody's investors service;

(iv) One to four (4) family residential mortgage loans; provided, that the value of the collateral is not less than one hundred fifty percent (150%) of the public deposit secured thereby; and provided, further, that the original loan to value ratio on the individual mortgage loans pledged as collateral shall not have exceeded eighty percent (80%) unless private mortgage insurance was obtained with respect to any excess; however, collateral of this type shall not exceed twenty-five percent (25%) of total collateral pledged by a depository institution; or

(v) Other marketable securities and debt instruments determined by the commission to be satisfactory for purposes of providing liquid assets in the event of the default or insolvency of a qualified depository institution; provided, that the commission gives prompt public notice of any determination it makes under this paragraph; and provided, further, that all depository institutions are permitted to use any category of eligible collateral approved under this section; however, collateral of this type shall not exceed ten percent (10%) of total collateral pledged by a depository institution.

(4) "Public deposit" shall mean funds deposited in a demand account or time deposit account at any depository institution by the state or any of its agencies, boards, or commissions, or by any governmental subdivision of the state or any of the subdivision's agencies, boards, commissions, or districts.

(5) "Public depositor" shall mean the entity in the name of which a public deposit is maintained.

(6) "Qualified depository institution" shall mean a depository institution that has satisfied all of the requirements of this chapter with respect to insuring or securing public deposits held by that institution.

(7) "State" shall mean the state of Rhode Island.

History of Section.
(P.L. 1991, ch. 44, art. 74, § 1.)