On May 23, 2018, the OCC issued a bulletin encouraging banks to offer responsible short-term small-dollar loans to help meet the credit needs of their customers. The OCC reminded banks, however, that any short- term small-dollar lending should be done in accordance with three core lending principles, including: (i) that all bank products should be consistent with safe and sound banking, treat customers fairly and comply with applicable laws and regulations, (ii) that banks should effectively manage the risks associated with the products they offer, including credit, operational, compliance and reputational risk, and (iii) that all credit products should be underwritten based upon reasonable policies and practices, including guidelines governing the amounts borrowed, frequency of borrowing and repayment requirements. The OCC bulletin also lists a number of policies and procedures topics specific to short-term small dollar lending, including with respect to loan pricing and repayment terms, effective management of credit risk, loan servicing and timely reporting of repayment activities to credit bureaus. In addition, the OCC bulletin encourages banks to discuss their plans to offer short-term small-dollar lending products with their OCC portfolio manager or other OCC supervisory authority, especially if the offering of these products represents a substantial deviation from a bank's existing business plan.
The full text of the OCC bulletin is available at: https://www.occ.treas.gov/news-issuances/bulletins/2018/bulletin-2018-14.html.
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