Federal banking regulators issued a proposal Thursday to allow more directors and management officials to serve at more than one bank or depository holding company in an effort to provide relief to community banks.

The current "management interlock rules" prohibit officials at depository organizations with more than $2.5 billion in assets from serving simultaneously at a different institution with more than $1.5 billion in assets, without first seeking an exemption from the regulators.

Under the proposal from the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, both thresholds would be raised to $10 billion in assets.

This would exempt 764 depository institutions from the prohibition as of Dec. 31, 2017, according to the proposal.

The agencies cited the increasing consolidation and growth within the financial services industry as the primary reason behind the proposed increase and argued that the new threshold would help smaller depository organizations find qualified directors while eliminating the need to ask for an exemption from the rule.

Read more in American Banker.