South Carolina Restricts Debanking by Large Banks

Gov. Henry McMaster signed the Guarantee Banking Act, which requires covered institutions to explain certain adverse account actions to customers.

Updated on Nov. 1, 2026 in Banking

South Carolina Restricts Debanking by Large Banks

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Should banks be barred from denying services to businesses over their political or religious beliefs?

Gov. Henry McMaster signed the Guarantee Banking Act (Act 257) into law on June 30, 2026, restricting debanking by large financial institutions. The law takes effect December 30, 2026, and applies to banks with over $100 billion in assets and payment companies processing more than $100 billion in annual transactions.

Why it matters

The law aims to prevent discrimination based on protected religious beliefs, political expression, and other nonfinancial factors while preserving sound lending decisions. It was drafted in response to the potential of corporate banking discrimination.

The House approved the bill unanimously, 109 to 0, and median South Carolina banks paid 1.65 percent on savings and money market deposits in Q2 2026 compared with 1.45 percent at median U.S. banks. Jody A. Bedenbaugh stated that discrimination claims are not commonly raised, and the data does not show how often such claims would arise under the new law.

The players

Henry McMaster

Henry McMaster is the Governor of South Carolina who signed the Guarantee Banking Act into law.

Jody A. Bedenbaugh

Jody A. Bedenbaugh is a Columbia attorney who commented on the law's likely effect on discrimination claims.

The details

Covered institutions must respond within 30 days to customer requests for explanation, and must provide specific reasons for certain adverse actions when customers request an explanation within 90 days of a denial or restriction. Violations are considered unfair or deceptive acts, and customers must file complaints with the attorney general to pursue remedies; the law does not change existing underwriting or risk procedures.

June 30, 2026: Gov. Henry McMaster signs the Guarantee Banking Act (Act 257) into law.
December 30, 2026: The Guarantee Banking Act takes effect.

Market Landscape

South Carolina joins Tennessee and Idaho in adopting statutory protections against debanking by large institutions. The law extends a state-level pattern in which lawmakers have moved to regulate how banks deny or restrict customer accounts.

South Carolina customers of covered banks may now request written reasons for certain account denials within 90 days of the action. Covered institutions must respond within 30 days, and customers who believe they were wrongly restricted can file complaints with the attorney general.

The takeaway

Customers who are denied or restricted by a large bank should request a written explanation within 90 days, since covered institutions must provide specific reasons for certain adverse actions. Keeping records of account actions and related communications will help any later complaint to the attorney general.

What happens next

The Guarantee Banking Act takes effect December 30, 2026, when covered institutions must begin meeting the 30-day response and explanation requirements.