The bill, which passed 371-16, would prohibit nonfinancial companies from setting up or owning so-called industrial loan companies, federally insured institutions that can issue credit cards, make loans and take deposits. ILCs have been proliferating in recent years. There are 58 with a total of about $200 billion in assets. Thirty-one are based in Utah, one of only seven states that grant charters for such banks.

Critics say the growth of the industrial banks dangerously blurs the line between banking and commerce, concentrating assets in the hands of a few big companies, stifling competition and hurting consumers.

The application to federal regulators of Wal-Mart Stores Inc., the world's largest retailer, to establish an ILC in Utah stirred a storm of protest from banks, unions, lawmakers, and consumer and community organizations. In January, the Federal Deposit Insurance Corp. extended for one year a moratorium on considering nonfinancial companies' applications to establish or acquire industrial banks, and Wal-Mart withdrew its bid in mid-March.

Proponents of the legislation say it is needed to close a loophole in banking regulation. Current laws prohibit the mixing of banking and commerce, but an exception is made for the ILCs, allowing commercial companies to own a federally insured bank.

Bill sponsor Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, cited a wave of applications for ILCs in recent years by large commercial companies. The bill would restrict the banking charters to companies with at least 85 percent of their business in financial services. Frank has said he would consider allowing some exceptions when the legislation is negotiated with the Senate, a move that could benefit automakers.

Similar legislation also passed the House overwhelmingly last year, but it has stalled in the Senate. It faces opposition from Utah Sen. Bob Bennett, a Republican member of the Senate Banking Committee.

Bennett believes that the banks ''fill a niche in the marketplace and have done so in a safe and sound way,'' his spokeswoman said. Sen. Chris Dodd, D-Conn., the banking panel's chairman, has said he will continue to work with committee members and other Senate colleagues ''in a thoughtful, deliberative manner to address this issue.''

Rep. Paul Gillmor, R-Ohio, who sponsored the House bill with Frank, noted the recent long run of years without a failure of a federally insured bank or thrift. ''I would hate to see the type of hit to the deposit insurance fund . . . should Enron have had an industrial bank prior to [its] collapse,'' he said during Monday's debate.

The Home Depot Inc., whose application for an ILC was put on hold by the FDIC's moratorium, said in a statement Monday that it ''opposes any legislation that would ban commercial firms from owning industrial loan charters.'' If such a bill became law, it said, companies with pending applications should be allowed to have them approved.

In addition to Utah, the states that grant charters for ILCs are California, Colorado, Hawaii, Indiana, Minnesota and Nevada.