(a) A credit union has the following powers:

1. (1) To issue shares of its capital stock to its members. No commission or compensation shall be paid for securing members or for the sale of shares.
2. (2) To extend credit to officers, directors, or committee members under section 17.2 of this chapter.

3. (3) To invest in any of the following:

   1. (A) Bonds, notes, or certificates that are the direct or indirect obligations of the United States, or of the state, or the direct obligations of a county, township, city, town, or other taxing district or municipality or instrumentality of Indiana and that are not in default.
   2. (B) Bonds or debentures issued by the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449) or the Home Owners' Loan Act (12 U.S.C. 1461 through 1468).
   3. (C) Obligations of national mortgage associations issued under the authority of the National Housing Act.
   4. (D) Mortgages on real estate situated in Indiana which are fully insured under Title 2 of the National Housing Act (12 U.S.C. 1707 through 1715z).
   5. (E) Obligations issued by farm credit banks and banks for cooperatives under the Farm Credit Act of 1971 (12 U.S.C. 2001 through 2279aa-14).
   6. (F) Savings and loan associations, other credit unions that are insured under section 31.5 of this chapter, and certificates of indebtedness or investment of an industrial loan and investment company if the association or company is federally insured. Not more than twenty percent (20%) of the assets of a credit union may be invested in the shares or certificates of an association or company, nor more than forty percent (40%) in all such associations and companies.
   7. (G) Corporate credit unions.
   8. (H) Federal funds or similar types of daily funds transactions with other financial institutions.

   9. (I) Shares or certificates of an open-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 through 15 U.S.C. 80a-3 and 15 U.S.C. 80a-4 through 15 U.S.C. 80a-64), if all of the following conditions are met:

      1. (i) The fund's assets consist of and are limited to securities in which a credit union may invest directly.
      2. (ii) The credit union has an equitable and undivided interest in the underlying assets of the fund.
      3. (iii) The credit union is not liable for acts or obligations of the fund.
      4. (iv) The credit union's investment in any one (1) fund does not exceed fifteen percent (15%) of the amount of the credit union's net worth.

   10. (J) For a credit union that is well capitalized (as defined in Part 702 of the Rules and Regulations of the National Credit Union Administration, 12 CFR 702), investment securities, as may be defined by a statute or a policy or rule of the department and subject to the following:

       1. (i) The department may prescribe, by policy or rule, limitations or restrictions on a credit union's investment in investment securities.
       2. (ii) The total aggregate amount of investment securities purchased or held by a credit union may never exceed at any given time ten percent (10%) of the capital and surplus of the credit union. However, the limitations imposed by this item do not apply to investments in the direct or indirect obligations of the United States or in the direct obligations of a United States territory or insular possession, or in the direct obligations of the state or any municipal corporation or taxing district in Indiana.
       3. (iii) A credit union may not purchase for its own account any bond, note, or other evidence of indebtedness that is commonly designated as a security that is speculative in character or that has speculative characteristics. For the purposes of this item, a security is speculative or has speculative characteristics if at the time of purchase the security is in default, is rated below the first four (4) rating classes by a generally recognized security rating service, or is otherwise considered speculative by the director.
       4. (iv) A credit union may purchase for its own account a security that is not rated by a generally recognized security rating service if the credit union at the time of purchase obtains financial information that is adequate to document the investment quality of the security and if the security is not otherwise considered speculative by the director.
       5. (v) A credit union that purchases a security for its own account shall maintain sufficient records of the security to allow the security to be properly identified by the department for examination purposes.
       6. (vi) Except as otherwise authorized by this title, a credit union may not acquire for its own account, whether by purchase or otherwise, any share of stock of a corporation that is not a subsidiary of that credit union unless the acquisition is considered expedient to prevent loss from a debt previously contracted in good faith. Any shares of stock or other ownership interest in a corporation or another entity thus acquired by a credit union and that would not have been eligible for acquisition shall be sold and disposed of within six (6) months from the date of acquisition unless the director grants an extension of time for the sale and disposition.
       7. (vii) Subject to items (i) through (iv), a credit union may purchase yankee dollar deposits, eurodollar deposits, banker's acceptances, deposit notes, bank notes with original weighted average maturities of less than five (5) years, and investments in obligations of, or issued by, any state or political subdivision (including any agency, corporation, or instrumentality of a state or political subdivision).
   11. (K) Collateralized obligations that are eligible for purchase and sale by federal credit unions. However, a credit union may purchase for its own account and sell the obligations only to the extent that a federal credit union can purchase and sell those obligations.

4. (4) With the prior approval of the department, and subject to the limitations of this subsection, a credit union may organize, invest in, or loan money to a credit union service organization (as defined in Part 712 of the regulations of the National Credit Union Administration, 12 CFR 712). A credit union may not loan or invest in a credit union service organization if the aggregate amount of all such loans or investments in a particular credit union service organization is greater than ten percent (10%) of the capital, surplus, and unimpaired shares of the credit union without the prior written approval of the department. A credit union may organize, invest in, or loan money to a credit union service organization described in this subdivision only if the following requirements are met:

   1. (A) The credit union service organization is adequately capitalized or has a reasonable plan for adequate capitalization if the credit union service organization is to be formed or is newly formed.
   2. (B) The credit union service organization is structured and operated as a separate legal entity from the credit union.
   3. (C) The credit union obtains a written legal opinion that the credit union service organization is structured and operated in a manner that limits the credit union's potential liability for the debts and liabilities of the credit union service organization to not more than the loss of money invested in or loaned to the credit union service organization by the credit union.
   4. (D) The credit union service organization agrees in writing to prepare financial statements and provide the financial statements to the credit union at least quarterly, and to the department upon request.
   5. (E) The credit union service organization agrees in writing to obtain an audit of the credit union service organization from a certified public accountant at least annually and provide a copy of each audit report to the credit union, and to the department upon request. A wholly owned credit union service organization is not required to obtain a separate annual audit if the credit union service organization is included in the annual consolidated audit of the credit union that is the credit union service organization's parent.
   6. (F) The credit union service organization operates in compliance with all applicable federal and state laws.

5. (5) To deposit its funds into:

   1. (A) depository institutions that are federally insured; or
   2. (B) state chartered credit unions that are privately insured by an insurer approved by the department.
6. (6) To purchase, hold, own, or convey real estate as may be conveyed to the credit union in satisfaction of debts previously contracted or in exchange for real estate conveyed to the credit union.
7. (7) To own, hold, or convey real estate as may be purchased by the credit union upon judgment in its favor or decrees of foreclosure upon mortgages.
8. (8) To issue shares of stock and upon the terms, conditions, limitations, and restrictions and with the relative rights as may be stated in the bylaws of the credit union, but no stock may have preference or priority over the other to share in the assets of the credit union upon liquidation or dissolution or for the payment of dividends except as to the amount of the dividends and the time for the payment of the dividends as provided in the bylaws.
9. (9) To charge the member's share account for the actual cost of a necessary locator service when the member has failed to keep the credit union informed about the member's current address. The charge shall be made only for amounts paid to a person or concern normally engaged in providing such service, and shall be made against the account or accounts of any one (1) member not more than once in any twelve (12) month period.
10. (10) To transfer to an accounts payable account, a dormant account, or a special account share accounts which have been inactive, except for dividend credits, for a period of at least two
11. (2) years. The credit union shall not consider the payment of dividends on the transferred account.
12. (11) To invest in fixed assets with the funds of the credit union. An investment in fixed assets in excess of five percent (5%) of its assets is subject to the approval of the department. A credit union may rent excess space at the credit union's main office or branch as a source of income.

13. (12) To establish branch offices upon:

    1. (A) approval of the department; or

    2. (B) meeting the department's established criteria to be exempt from the department's approval;

       provided that all books of account shall be maintained at the principal office.

14. (13) To pay an interest refund on loans proportionate to the interest paid during the dividend period by borrowers who are members at the end of the dividend period.

15. (14) To purchase life savings and loan protection insurance for the benefit of the credit union and its members, if:

    1. (A) the coverage is placed with an insurance company licensed to do business in Indiana; and
    2. (B) no officer, director, or employee of the credit union personally benefits, directly or indirectly, from the sale or purchase of the coverage.
16. (15) To sell and cash negotiable checks, travelers checks, and money orders for members.
17. (16) To purchase members' notes from any liquidating credit union, with written approval from the department, at prices agreed upon by the boards of directors of both the liquidating and the purchasing credit unions. However, the aggregate of the unpaid balances of all notes of liquidating credit unions purchased by any one (1) credit union shall not exceed ten percent (10%) of the purchasing credit union's capital and surplus unless special written authorization has been granted by the department.
18. (17) To exercise such incidental powers necessary or requisite to enable it to carry on effectively the business for which it is incorporated.
19. (18) To act as a custodian or trustee of any trust created or organized in the United States and forming part of a tax advantaged savings plan which qualifies or qualified for specific tax treatment under Section 223, 401(d), 408, 408A, or 530 of the Internal Revenue Code, if the funds of the trust are invested only in share accounts or insured certificates of the credit union.
20. (19) To issue shares or insured certificates to a trustee or custodian of a pension plan, profit sharing plan, or stock bonus plan which qualifies for specific tax treatment under Sections 401(d) or 408(a) of the Internal Revenue Code.

21. (20) To exercise any rights and privileges that are:

    1. (A) granted to federal credit unions; but

    2. (B) not authorized for credit unions under the Indiana Code (except for this section) or any rule adopted under the Indiana Code;

       if the credit union complies with section 9.2 of this chapter.

22. (21) To sell, pledge, or discount any of its assets. However, a credit union may not pledge any of its assets as security for the safekeeping and prompt payment of any money deposited, except that a credit union may, for the safekeeping and prompt payment of money deposited, give security as authorized by federal law.

23. (22) To purchase assets of a corporation (as defined in IC 28-1-8-0.5 ) and to assume the liabilities of the corporation, or to sell, lease, exchange, or otherwise dispose of all or substantially all of the credit union's property and assets to a corporation, if:

    1. (A) the credit union complies with IC 28-1-8 ; and
    2. (B) the transaction is authorized in accordance with IC 28-1-8-4 .
24. (23) To act as a fiscal agent of the United States and to receive deposits from nonmember units of the federal, state, or county governments, from political subdivisions, and from other credit unions upon which the credit union may pay varying interest rates at varying maturities subject to terms, rates, and conditions that are established by the board of directors. However, the total amount of public funds received from units of state and county governments and political subdivisions that a credit union may have on deposit may not exceed twenty percent (20%) of the total assets of that credit union, excluding those public funds.
25. (24) To join the National Credit Union Administration Central Liquidity Facility.

26. (25) To participate in community investment initiatives under the administration of organizations:

    1. (A) exempt from taxation under Section 501(c)(3) of the Internal Revenue Code; and

    2. (B) located or conducting activities in communities in which the credit union does business.

       Participation may be in the form of either charitable contributions or participation loans. In either case, disbursement of funds through the administering organization is not required to be limited to members of the credit union. Total contributions or participation loans may not exceed one-tenth of one percent (0.1%) of total assets of the credit union. A recipient of a contribution or loan is not considered qualified for credit union membership. A contribution or participation loan made under this subdivision must be approved by the board of directors.

27. (26) To establish and operate an automated teller machine (ATM):

    1. (A) at any location within Indiana; or
    2. (B) as permitted by the laws of the state in which the automated teller machine is to be located.

28. (27) To demand and receive, for the faithful performance and discharge of services performed under the powers vested in the credit union by this article:

    1. (A) reasonable compensation, or compensation as fixed by agreement of the parties;
    2. (B) all advances necessarily paid out and expended in the discharge and performance of its duties; and
    3. (C) unless otherwise agreed upon, interest at the legal rate on the advances referred to in clause (B).
29. (28) Subject to any restrictions the department may impose, to become the owner or lessor of personal property acquired upon the request and for the use of a member and to incur additional obligations as may be incident to becoming an owner or lessor of such property.

(c) Subject to any limitations or restrictions that the department or a federal regulator may impose by regulation, rule, policy, or guidance, a credit union may purchase and hold life insurance as follows:

1. (1) Life insurance purchased or held in connection with employee compensation or benefit plans approved by the credit union's board of directors.
2. (2) Life insurance purchased or held to recover the cost of providing preretirement or postretirement employee benefits approved by the credit union's board of directors.
3. (3) Life insurance on the lives of borrowers.
4. (4) Life insurance held as security for a loan.

5. (5) Life insurance that a federal credit union may purchase or hold under 12 CFR 701.19(c).

   Formerly: Acts 1961, c.182, s.9; Acts 1969, c.133, s.2; Acts 1974, P.L.130, SEC.2; Acts 1975, P.L.44, SEC.6. As amended by Acts 1977, P.L.294, SEC.6; Acts 1979, P.L.267, SEC.1; Acts 1980, P.L.178, SEC.1; Acts 1982, P.L.170, SEC.1; P.L.270-1983, SEC.3; P.L.52-1985, SEC.9; P.L.2-1987, SEC.43; P.L.19-1987, SEC.45; P.L.8-1991, SEC.30; P.L.14-1992, SEC.123; P.L.228-1993, SEC.2; P.L.263-1995, SEC.7; P.L.188-1997, SEC.10; P.L.192-1997, SEC.17; P.L.11-1998, SEC.16; P.L.62-1999, SEC.5; P.L.63-2001, SEC.15, P.L.81-2001, SEC.4 and P.L.134-2001, SEC.17; P.L.258-2003, SEC.10; P.L.73-2004, SEC.36; P.L.141-2005, SEC.13; P.L.213-2007, SEC.66; P.L.217-2007, SEC.64; P.L.90-2008, SEC.41; P.L.35-2010, SEC.148; P.L.89-2011, SEC.47; P.L.6-2012, SEC.196; P.L.27-2012, SEC.92; P.L.137-2014, SEC.27; P.L.159-2017, SEC.35; P.L.69-2018, SEC.53; P.L.129-2020, SEC.12.