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HomeFinancial CodeDiv. 5Ch. 12Art. 6§ 16603 Foreign Credit Union Exemption

§ 16603 Foreign Credit Union Exemption

Financial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 16603 Foreign Credit Union Exemption

If a credit union from another country has a branch or agency in California, it can ignore the state's limits on how much interest it can charge, but it still has to follow all other laws.

Key Takeaways

  • •Foreign credit unions with a California branch are exempt from the state’s interest‑rate limits.
  • •They must still follow every other California law that applies to their business.
  • •The law creates a special exempt group under the state constitution.

Example

A credit union based in Mexico opens a branch in Los Angeles and wants to charge a 12% interest rate on a loan.

Because the credit union has a branch in California, the state’s interest‑rate caps don’t apply, so it can charge the 12% rate. However, the credit union still has to obey all other California banking rules.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 16603 Foreign Credit Union Exemption

(a) Any foreign (other nation) credit union that is authorized to and does maintain a branch office or agency is exempted from the restrictions of Section 1 of Article XV of the California Constitution relating to rates of interest upon the loan or forbearance of any money, goods, or things in action or on accounts after demand. (b) This section does not exempt a foreign (other nation) credit union or any subsidiary from complying with all other laws and regulations governing the business in which the foreign (other nation) credit union or subsidiary is engaged. (c) This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution. (Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

Last verified: January 11, 2026

Key Terms

foreign (other nation) credit unionbranch office or agencySection 1 of Article XV of the California Constitutionrates of interestexempt class

Related Statutes

  • § 16550 Foreign Credit Union Operations
  • § 16554 Foreign Credit Union Relocation
  • § 16555 Foreign Credit Union Closure
  • § 16600 Foreign Credit Union Activities
  • § 16602 Foreign Credit Union Rules

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Financial Code. Section 16603.
View Official Source