N.Y. Banking Law § 173: Rate of interest; effect of usury

§ 173. Rate of interest; effect of usury. 1. No private banker shall

take, receive, reserve or charge on any loan or discount made, or upon

any note, bill of exchange or other evidence of debt, interest as

computed pursuant to this section, at a rate greater than the rate

prescribed by the superintendent of financial services pursuant to

section fourteen-a of this chapter, or, if no rate has been so

prescribed, six per centum per annum, or two dollars if the interest so

computed is less than that amount. Such interest may be taken in

advance, reckoning the days for which the note, bill or evidence of debt

has to run. The knowingly taking, receiving, reserving or charging a

greater rate of interest shall be held and adjudged a forfeiture of the

entire interest which the note, bill of exchange or other evidence of

debt carries with it, or which has been agreed to be paid thereon. If a

greater rate of interest has been paid, the person paying the same or

his legal representatives may recover twice the entire amount of the

interest thus paid from the private banker. The purchase, discount or

sale of a bona fide bill of exchange, note or other evidence of debt

payable at another place than the place of such purchase, discount or

sale at not more than the current rate of exchange for sight draft, or a

reasonable charge for the collection of the same, in addition to the

interest, shall not be considered interest for the purpose of any law

regulating the maximum rate of interest which may be charged, taken or

received.

Anything contained in this subdivision to the contrary

notwithstanding, the charging of interest or discount on a loan or

discount at an office of a private banker located outside of the states

of the United States of America and the District of Columbia at a rate

allowed by the laws of the country, territory, dependency, province,

dominion, insular possession or other political subdivision where such

office is located, or the acquisition by a private banker of a part

interest or the entire interest in any loan or discount heretofore or

hereafter made by a bank or trust company or any other banking

institution at an office located outside of the states of the United

States of America and the District of Columbia, shall not be a violation

of this section.

1-a. Anything contained in this section to the contrary

notwithstanding, any private banker, in purchasing or otherwise

acquiring, any note or other evidence of debt, which has arisen out of

the sale of personal property or the performance of services on credit

and which is repayable in instalments from the payee or holder thereof,

may take, receive, reserve or charge an amount not exceeding twelve per

centum per annum, computed pursuant to this section on unpaid principal

balances, or the sum of ten dollars, whichever is the greater; provided,

however, that nothing contained in this subdivision shall authorize a

private banker to take, receive, reserve or charge upon the purchase or

other acquisition of any two or more notes or other evidences of debt,

arising out of the same transaction, an amount greater than such private

banker would be entitled to take, receive, reserve or charge if all of

such obligations constituted a single obligation. In the event that the

private banker insures, under a group insurance policy, the life of the

person primarily liable on any such obligation, or in the event that the

private banker requires insurance on personal property securing any such

obligation, the actual cost of such insurance may be added to the amount

which such private banker may take, receive, reserve or charge upon the

purchase or other acquisition of such obligation. This subdivision shall

not be in derogation of any powers, rights or privileges possessed by

any private banker prior to the effective date this subdivision.

2. Upon advances of money repayable on demand to an amount not less

than five thousand dollars made upon warehouse receipts, bills of

lading, certificates of stock, certificates of deposit, bills of

exchange, bonds or other negotiable instruments, pledged as collateral

security for such repayment, a private banker may receive or contract to

receive and collect as compensation for making such advances any sum

which may be agreed upon by the parties to such transaction.

3. Upon an advance of money, whether or not repayable on demand, to an

amount not less than five thousand dollars, made upon documents of title

within article seven of the uniform commercial code or negotiable

instruments within article three or article eight of the uniform

commercial code pledged as collateral security for such repayment, any

private banker may receive or contract to receive and collect as

compensation for making such advance any sum which may be agreed upon by

the parties to such transaction; provided that such advance is (a) to or

for any partner of a firm which is a member firm of a national

securities exchange registered with the securities and exchange

commission as a national securities exchange under the federal

securities exchange act of 1934, as amended, to enable such partner to

make a contribution of capital to such firm or to purchase stock of an

affiliated corporation of such firm, provided that such partner is

actively engaged in the business of such firm and devotes the major

portion of his time thereto, or (b) to or for any person who is or will

become a holder of stock of a corporation which is a member corporation

of such a national securities exchange to enable such person to purchase

stock of such corporation or to purchase stock of an affiliated

corporation of such corporation, provided that such person is actively

engaged in the business of such corporation and devotes the major

portion of his time thereto.