The D.C. Council Committee on Housing and Economic Development yesterday put a new obstacle in the way of 11 companies seeking to open banks in the city with potentially expanded powers to sell insurance and engage in other activities barred to most banks.

The committee rejected regulations governing D.C. chartered banks that would have permitted the District's superintendent of banking and finance to grant these companies expanded powers on his own authority -- and instead said it should be up to the council to grant the powers.

The committee's chairwoman, Charlene Drew Jarvis (D-Ward 4), portrayed the move as an effort to protect depositors from risky ventures undertaken by financial institutions. The action could help D.C. bankers who have been fighting the 11 new charters. Opponents said it would inhibit banking competition in the city. The full council is expected to follow the committee's recommendation later this year, Jarvis said.

Yesterday's move was the latest development in a showdown between the council and the executive branch over a loophole in District banking law that the 11 companies, including several of the country's largest bank holding firms such as Chase Manhattan Corp. and Chemical New York Corp., have sought to use in opening banks in the District.

Many of these companies already have won preliminary approval from the Comptroller of the Currency to open banks here.

The comptroller's office is the federal agency that charters national banks, and until a new D.C. banking law went into effect in 1986, the comptroller also approved D.C. bank charters.

Many of the 11 companies were attracted to the District in part because the law governing D.C. bank charters suggested they could venture into insurance, the sale of securities and other activities forbidden to most banks.

Edward Irons, the D.C. acting superintendant of banking and finance, had furthermore proposed regulations that would have permitted his office to grant the expanded powers on its own authority.

However, the committee yesterday deleted that authority from the regulations, saying that the regulation exceeded the superintendent's statutory authority.

Instead, Jarvis said the council would move in the next year to consider granting those expanded powers through legislation.

Observers said the effect of the move could be to delay further the entry of new competitors into the D.C. market. Local bankers who have argued against the entry of the 11 outside banks approved of yesterday's action, according to a spokesman for the Greater Washington Financial Institutions Association.

Jarvis said she does not oppose expanded powers in principle but said the regulations don't adequately address the potential risks of allowing banks to engage in such activities.

She said she did not want depositors to approach the council in five years and say, "Why didn't you protect us?"