More than a dozen human rights organizations began a campaign yesterday to boycott Washington's largest commercial bank for what they called its "racist" loan policies both locally and overseas.

The group charged that Riggs National Bank has "redlined" Washington's black neighborhoods while lending millions of dollars to South Africa's aparthied regime and several Latin American military dictatorships, including Chile.

City Council member Hilda Mason said yesterday that she would encourage people to withdraw funds from Riggs on the basis of information gathered by organizers of the boycott over the last year

"The people are not going to allow their hard-earned assets, no matter how small, to be used against their interests," Mason said.

Riggs Senior Vice President Melvin L. Chrisman "absolutely and categorically" denied yesterday that the bank practices racism or any form of "redlining," which would make it more difficult for people in the city's predominantly black neighborhoods to obtain mortgage loans than those in predominantly white areas.

A report by the D.C. Bank Campaign, which organized the boycott, says it has determined that, on the basis of public records, "As the percentage of blacks increases, the amount Riggs lends to the neighborhood decreases. Even if one controls (corrects) for income, a highly significant correlation. . . remains."

As a result, the report says, Riggs has "only 22.3 percent of its city morgages in areas that make up 72.1 percent of the District's population."

Chrisman said that he could not explain why that might be so.

"Our loan officers will bend over backwards to make loans to blacks and women. . . If there's any way to do it, it will get done," Chrisman said.

One cause for the situation reported by the D.C. Bank Campaign, Chrisman said, might be the question of "whom [a borrower] wished to deal with. . . A lot of people have the view that Riggs is the rich man's bank. . . A little guy is not going to a place where he thinks he's going to be uncomfortable."

But Chrisman said he does not think Riggs policies are designed to make "the little guy" feel ill at ease.

The Bank Campaign's report, citing "three independent sources," also says that Riggs has provided a continuing line of credit for between $1 million and $1.5 million to ISCOR, the stateowned corporation that produces over 70 percent of South Africa's iron and steel.

According to Riggs' own documents, obtained by the Bank Campaign and shown to The Washington Post, Riggs has also extended at least $38 million worth of credits to the military missions of the Chilean dictatorship. The campaign's report says that, according to its "sources," the current line of credit may be twice this much.

The Riggs documents, which Chrisman called "probably" authentic, show that the bank also extended $10 million worth of credit to the Argentine dictatorship, nearly $4 million to Libya, $1.37 million to Haiti, and $1 million to Uruguay's military missions.

Chrisman refused to discuss the specifics of any of these accounts. "I can't put myself in the position of saying [a] government. . . is right or wrong. . . This is international commerce," he said. CAPTION: Picture, Members of several groups picket Riggs National Bank, Ninth and P Streets NW in support of a boycott. By Ken Fell - The Washington Post