We spoke with an attorney at the IDFPR Division of Banking about this question and were informed that this issue is unsettled under Illinois law. The attorney told us that the Illinois Banking Act does not clearly exempt overnight exposures from its lending limits, even for uncollected electronic ACH transactions that are in the normal process of collection. (Notably, the Act exempts liabilities stemming from a bank’s potential obligations for breach of a warranty or representation relating to transfers of negotiable or non-negotiable paper, except in cases of an actual unremedied breach, but it is not clear whether the language of this longstanding exception, which pre-dates electronic ACH transfers, would apply to an electronic ACH transfer.)

The IDFPR attorney’s guidance was that banks should have strong internal policies to control for ACH exposures. Provided the ACH exposures are reasonable and within your bank’s internal policies, they should not be a problem for lending limit purposes. The attorney also pointed out that the IDFPR has never issued any disciplinary actions against a bank in Illinois for lending limit violations related to ACH exposures.

However, an overdraft or intentional extension of credit via ACH most likely would be subject to the Act’s lending limits.

For resources related to our guidance, please see below:

• Illinois Banking Act — 205 ILCS 5/32 (general lending limit provisions)