The D.C. City Council unanimously approved a measure yesterday that would open the city to the nation's largest banks by allowing those outside the region, including New York's Citicorp, to provide full services in Washington by acquiring existing District banks.

A provision that would have allowed banks outside the region to open new banks here after three years was dropped during a 3 1/2-hour council debate on the issue. The measure passed on first reading by a voice vote and will come before the council for a final vote in two weeks.

Yesterday's measure would amend the hotly debated regional interstate banking law passed by the council in September. The earlier law limited interstate banking activities to banks in the District and 11 southeastern states despite an intense Citicorp lobbying effort to win a District banking license in exchange for major financial commitments to the city.

The passage of the first interstate banking bill paved the way for the merger between United Virginia Bankshares Inc. and NS&T Bankshares Inc. of the District, which has been completed. The City Council also has recommended that the Federal Reserve Board approve a merger of D.C. National BanCorp Inc. and Sovran Financial Corp.

Yesterday, Lucius P. Gregg, a Citicorp vice president, said his company had begun an analysis of District banks in conjunction with acquisition plans. Gregg said Citicorp, the nation's largest bank holding company, has a number of options, including acquiring a single bank or developing a plan to acquire and merge several small District banks.

"When you have to acquire rather than start a new bank, it limits your options," said Gregg. "It means the value of existing banks is higher because of it. It will be very lucrative for stockholders of existing District banks."

The amendments to the banking bill were drafted by City Council member Charlene Drew Jarvis (D-Ward 4), chairman of the council's Housing and Economic Development Committee, and offered as a compromise in a dispute over the scope of interstate banking that had pitted the mayor against the City Council and the local banking community against Citicorp.

Mayor Marion Barry vetoed interstate banking legislation last fall when the council rejected his push to allow all banks to do business in the city if they made a substantial financial commitments to the city. The City Council overrode the veto and agreed with local bankers to limit interstate banking to those in the southeastern region. Local bankers had argued that the giant Citicorp's entry would provide unfair competition.

Yesterday, Jarvis emphasized that the banking amendments provided protections for local bankers while expanding interstate banking activities in a way that could result in major economic gains for the District.

The amendments would require Citicorp and any other banks outside the region to make substantial financial commitments to the city, including establishing at least two banking branches in targeted banking development areas within three years, creating up to 200 new jobs based on a bank's assets, and providing between $50 million and $100 million in loans and lines of credit to commercial and industrial development projects in targeted communities.

Regional banks seeking to acquire District banks would be required to meet less stringent community commitments.

A newly created office of banking, headed by a superintendent appointed by the mayor, would regulate all interstate banking activities and have the authority to require divestiture by any institution that failed to meet its commitments.

During yesterday's council debate, City Council member Polly Shackleton (D-Ward 3) succeeded in adding a provision to require a newly acquired District bank to sell food stamps. City Council member H.R. Crawford (D-Ward 7) tried unsucessfully to include language placing a special emphasis on economic development projects in Wards 6, 7 and 8.

The debate became tense when City Council member Betty Ann Kane (D-At Large) offered an amendment to require all applicants to list any outstanding loans to South Africa.

Jarvis immediately objected and characterized Kane's amendment as "disingenuous" and a "smoke screen" that "does not grow out of moral outrage" but out of an attempt to bar Citicorp and other nonregional bank holding companies that do business or have outstanding loans to South Africa. The amendment failed.

Maurice J. Cullinane, executive vice president for the D.C. Bankers Association, which had once raised investments in South Africa as a reason for the council to oppose granting Citicorp a banking license, said his organization had not pushed for the Kane amendment.

Cullinane called the new banking measure "excellent" and said local bankers' concerns had been addressed.

In other action, the City Council gave final approval to a measure creating a commission with the sole authority to regulate the District's taxicab industry. The measure, which now goes to the mayor and the Congress, is aimed at ending fragmented enforcement and improving service.

The council also gave final approval to a bill reforming the licensing and regulation of health occupations and adopted emergency legislation to increase payments to persons receiving public assistance by 7 percent beginning April 1.