Limits on Loans to Other Credit Unions

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

RIN 3133-AF72

Limits on Loans to Other Credit Unions

National Credit Union Administration (NCUA).

Final rule.

The NCUA Board (Board) is issuing this rule to remove the regulations related to approval and policies on making loans to other credit unions. While this provision will no longer be codified in regulation, federal credit unions remain subject to statutory requirements related to making loans to credit unions. Federally insured, state-chartered credit unions remain subject to any other applicable NCUA or state law or regulation. The final rule follows publication of a December 29, 2025, proposed rule, and takes into consideration the public comments recieved on the proposal.

This final rule is effective on September 8, 2026.

Ariel Pereira, Senior Attorney, Office of General Counsel, at (703) 518-6540 or at 1775 Duke Street, Alexandria, VA 22314.

The regulations in Sec. 701.25 govern the ability of a federal credit union (FCU) to make loans, including investments in subordinated debt, to other credit unions. In accordance with section 107(7)(C) of the FCU Act, the regulation establishes an aggregate limit on such loans of 25 percent of the lending FCU's paid-in and unimpaired capital and surplus.\1\ It also sets limits for loans to a single credit union borrower. The regulation sets forth specific eligibility requirements and aggregate limits for FCUs that invest in the subordinated debt of other credit unions. The requirements of Sec. 701.25 are made applicable to federally insured, state-chartered credit unions (FISCUs) through Sec. 741.227.\2\

\1\ 12 U.S.C. 1757(7)(C). This statutory provision provides that an FCU may invest its funds "in accordance with rules and regulations prescribed by the Board, in loans to other credit unions in the total amount not exceeding 25 per centum of its paid-in and unimpaired capital and surplus." In addition, section 107(5)(A)(x) of the FCU Act limits the aggregate amount that a single member may borrow from an FCU to "10 per centum of the credit union's unimpaired capital and surplus" (12 U.S.C. 1757(5)(A)(x)). \2\ FCUs and FISCUs are collectively referred to as federally insured credit unions, or FICUs.

In addition to the limits discussed above, Sec. 701.25 imposes documentation requirements on FCU boards of directors, and through Sec. 741.227 on FISCU boards as well. Specifically, paragraph (b) of Sec. 701.25 requires the board of directors to approve all loans to other credit unions and to establish written policies for managing the associated credit risk. The policies must specify the limits on the aggregate principal amount of loans the FICU can make to all other credit unions and the aggregate principal amount of loans the FICU can make to any single credit union. Such limits specific to the FICU may not exceed the generally applicable limits established in Sec. 701.25. On December 29, 2025, the Board published a proposed rule requesting public comment on the removal of the documentation requirements codified in 12 CFR 701.25(b).\3\ As explained in the preamble to the proposed rule, the Board believes this portion of the regulation is unnecessary and overly prescriptive. The FCU Act already requires an FCU's board of directors to approve all loans to other credit unions.\4\ Accordingly, for FCUs, Sec. 701.25(b) is largely redundant of an existing statutory requirement. Moreover, FICU boards are in the best position to determine whether formal approval policies are necessary for such loans, consistent with the number, size, and risks associated with the FICU's lending practices. This final rule follows publication of the December 29, 2025, proposed rule, and takes into consideration the public comments received on the proposal.

\3\ 90 FR 60583 (Dec. 29, 2025). \4\ 12 U.S.C. 1757(5)(C).

The Board is issuing this final rule pursuant to its authority under the FCU Act. Under the FCU Act, NCUA is the chartering and supervisory authority for FCUs and the federal supervisory authority for FICUs.\5\ The FCU Act grants NCUA a broad mandate to issue regulations governing both FCUs and all FICUs. Section 120 of the FCU Act is a general grant of regulatory authority and authorizes the Board to prescribe rules and regulations for the administration of the FCU Act.\6\ Section 207 of the FCU Act is a specific grant of authority over share insurance coverage, conservatorships, and liquidations.\7\ Section 209 of the FCU Act is a plenary grant of regulatory authority to issue rules and regulations necessary or appropriate to carry out its role as share insurer for all FICUs.\8\ Accordingly, the FCU Act grants the Board broad rulemaking authority to ensure that the federally insured credit union industry and the Share Insurance Fund remain safe and sound.

\5\ 12 U.S.C. 1752-1775. \6\ 12 U.S.C. 1766(a). \7\ 12 U.S.C. 1787. \8\ 12 U.S.C. 1789.

This final rule follows publication of the proposed rule and takes into consideration the comments received on the proposal. By the close of the public comment period on February 27, 2026, the Board had received 10 public comments. Comments were submitted by credit union leagues, a national association of state credit union supervisors, trade organizations, and advocacy organizations. After careful consideration of the issue raised by the commenters, the Board has decided to

adopt the proposal without change. The Board emphasizes that while FICU boards will no longer be required to adopt written policies regarding aggregate limits on loans to other credit unions, FICUs remain subject to the limits and other requirements regarding such loans set forth in the other provisions of Sec. 701.25. FISCUs should refer to state law to determine whether their boards must approve loans to other credit unions.