77-4

June 7, 1977

Dear Ms. ________:

We regret the delay in responding your letter of January 3, 1917.

In our view, the purpose of the provisions Financial Code § 1224 relating to acceptance of drafts and bills of exchange under the circumstances described in § 1224. A California state commercial bank is authorized to engage in commercial banking business, and the acceptance of drafts and bill of exchange is an incidental part of such business.

Rather, the purpose of the provision of § 1224 relating to acceptance of drafts and bill of exchange is to establish for the acceptance of drafts and bills of exchange under the circumstances described in § 1224 special loan limits which are more liberal than the general limits set forth in § 1221. Accordingly, a California state commercial bank may accept drafts and bills of exchange under circumstances other than those described in § 1224. However, such transactions are subject to the general loan limits set forth in § 1221 unless they fall within an exception to § 1221 as provided in § 1226.

If you have any further questions please feel free to contact us, and we will attempt to respond more promptly than we were able to do in this instance.

Very truly yours,

CARL J. SCHMITT
Superintendent of Banks

By

JAMES F. CARRIG
Counsel

JFC:sig

cc: State Banking Department, L.A.