Insider loan approvals
How do we make sure a loan to an insider gets prior board approval above the threshold, on market terms, with the insider abstaining and the record kept?
Flag the insider at application, not at the audit. Callvu checks every applicant and related interest against the bank's Regulation O list, classifies the extension of credit against the thresholds and the aggregate to the insider, compares the terms with those for comparable non-insider loans, routes the loan to the board for prior approval in the Decision Desk with the insider's abstention recorded, and writes the approval, the vote and the terms comparison to the loan and the board record.
In scopeSimpleCallvu moves: classify, decide, write back
Last updated November 7, 2026.
The problem today
The director's loan was approved by the lending officer, and the board heard about it at the next meeting.
A director, an executive officer or a principal shareholder applies for a loan, or a company they control does. The loan officer treats it like any other, or better. The board ratifies it afterwards, if the loan shows up on the insider report. The examiner finds a loan above the threshold with no prior board approval, or terms more favorable than the bank gives anyone else, and the bank has a Regulation O violation and a potential enforcement action.
Regulation O requires prior approval by a majority of the entire board, with the interested party abstaining, for extensions of credit to an insider or their related interests that exceed the threshold, in aggregate with existing credit; prohibits preferential terms and more than normal risk; sets aggregate lending limits; requires annual reporting; and has specific rules for executive officers. The hard part is knowing who is an insider and which company is a related interest, at the moment of application.
Insiders are few and the loans are rare, which is why the control is forgotten until it fails.
How it runs
From the requestto the system of record.
A credit application or renewal is opened in the loan system. Callvu checks the applicant, the guarantors and the owners of a borrowing entity against the bank's Regulation O list before the application proceeds.
- Insider
- The applicant or the related interest; abstains from the board's vote and provides the related-interest information the rule requires.
- Loan officer
- Processes the loan with the insider classification applied; cannot approve above the threshold.
- Board
- Gives prior approval in the Decision Desk with the terms comparison and the aggregate exposure, with the abstention recorded.
- Callvu
- Checks the list, classifies, compares terms, routes the board approval and records.
Identify the insider
The applicant, co-applicants, guarantors and the owners and control persons of a borrowing entity are matched to the Regulation O list (directors, executive officers, principal shareholders and their related interests), maintained from the annual insider survey. A match classifies the application as an insider extension of credit; a probable match goes to compliance in the Decision Desk.
Classify against the thresholds
The new credit is aggregated with the insider's existing extensions of credit and those of their related interests; the aggregate is tested against the board-approval threshold (the greater of 25,000 dollars and 5 percent of capital and surplus, and any amount over 500,000 dollars) and the individual and aggregate lending limits. Executive officer rules (the purpose limits and the reporting duty) are applied where the insider is an executive officer.
Chase and verify the terms
The proposed terms (rate, fees, collateral, repayment) are compared with the bank's terms for comparable transactions with non-insiders, and the credit is underwritten under the same standards. The insider provides the related-interest information the rule requires. The comparison and the underwriting are attached.
Decide: prior board approval
Where the threshold is met, the application goes to the board in the Decision Desk with the terms comparison, the aggregate exposure and the underwriting, before the credit is extended. The vote of a majority of the entire board is recorded with the insider's abstention. Below the threshold, the loan follows normal authority with the insider flag carried.
Write back and report
The approval, the vote, the abstention, the terms comparison and the insider classification are written to the loan system and the board record; the loan is flagged for the annual insider report and the periodic reviews, and the overdraft rules for executive officers and directors are applied to their deposit accounts.
Where it ends: The insider loan was identified at application, approved by the board in advance where the rule requires, on terms comparable to non-insiders, with the vote and the abstention recorded and the loan flagged for reporting. The Decision Trace shows the match, the aggregation and the comparison; the Audit Trace shows the board step and the writes.
Runtime enforcement
What is enforcedwhile the work runs.
The regulations preloaded in Callvu Studio and the bank's own policies, applied as steps that run, not lines in a binder. A step that breaks a rule does not run, so a completed run was compliant.
The handoff
Between the front doorand the back office.
The front door
The credit application in the loan system. The insider meets the process in the related-interest request and the abstention.
The back office
The loan officer processes under the classification; the board approves in advance in the Decision Desk; compliance sees the flag and the report from the record.
The Decision Desk
- An insider loan above the threshold goes to the board in the Decision Desk with the terms comparison, the aggregate exposure and the underwriting, and the vote and abstention are recorded before closing.
- A probable list match goes to compliance to confirm before the application proceeds.
Proof
In scope.Proof at scale, not one process at a time.
The kind of process Callvu runs in production for customers in this industry. Ask for a reference on this exact process. The results below are the industry's published proof; each claim code links to its record on agents.callvu.com.
Questions
What buyers ask next,answered plainly.
How does the bank know an applicant is an insider?
Every application is checked against the Regulation O list, including guarantors and the owners of a borrowing entity, before it proceeds. A probable match is confirmed by compliance.
When does the board have to approve?
In advance, when the aggregate credit to the insider and their related interests exceeds the threshold, by a majority of the entire board with the insider abstaining. The loan cannot close before the vote is recorded.
How are preferential terms prevented?
The proposed terms are compared with the bank's comparable non-insider loans and the credit is underwritten under the same standards; the comparison is attached to the approval.
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