Insurance agents and bankers likely will square off again soon following a federal court decision overturning a federal policy allowing banks to sell insurance nationwide from small-town branches.

The U.S. appeals court here ruled Friday in favor of the agents on a 2-1 vote against the U.S. comptroller of the currency's 75-year-old policy giving banks the right to sell insurance in communities with less than 5,000 residents.The agent groups complained that banks used the privilege to sell insurance nationwide.

The nation's bankers are expected to attempt to overturn the decision either through the courts or, if necessary, Congress.

The next move belongs to Robert L. Clarke, comptroller of the currency, who has not indicated whether he will appeal Friday's ruling to the full Court of Appeals here. If an appeal is filed and denied, the comptroller could then ask for a hearing before the U.S. Supreme Court.

In the case, Independent Insurance Agents of America Inc.,, v. Robert L. Clarke, Comptroller of the Currency, the appellate court ruled that the government had been in error when it relied on a section of the National Bank Act of 1916 to regulate national banks. Comptrollers have enforced Section 92 of the act for the past 75 years, even though it had been omitted

from the law ultimately passed by Congress.

The bankers had argued that the deletion was merely the result of ''misplaced quotation marks." The appeals court disagreed and concluded section 92 was not enforceable.

The American Bankers Association reacted by claiming the decision "flies in the face" of congressional intent.

"The decision, in effect, pulls the foundation out from under a law that has served to guide bank regulatory agencies, individual banks, the U.S. Congress and the courts, including the Supreme Court, for the past 75 years," according to a statement from the association. "The result, if upheld, could cause a lack of insurance services in many rural areas."

Groups representing insurance agents scoffed at the suggestion, but acknowledged they received a bonus from the court decision because they had only sought to limit community banks from selling insurance outside small towns.

The agent groups sued the comptroller for an 1986 decision that allowed community banks to sell insurance to anyone regardless of residence.

"What we tried to do was shut down the exporting of insurance from a small town of less than 5,000 people," said Bob Rusbuldt, a lobbyist with the Independent Insurance Agents of America. "The court went one step further and ruled that a small town exemption doesn't exist at all."

In 1990, the U.S. District Court for the District of Columbia ruled that the National Bank Act is silent on the issue of geographic restrictions on the sale of insurance.

"The reversal is a very important decision," said Michael Lovendusky, senior counsel with the American Insurance Association. "The banks had been relying on a loophole that did not even exist in order to sell insurance from a branch office in a small town of less than 5,000 to anyone anywhere in the state who wanted to buy that insurance."

"It's a significant setback for the banks in their efforts to obtain insurance powers," Mr. Lovendusky said.

"If the banks return to Congress to win back the loophole that has just been closed, insurance agents will be there to try to close the other loopholes that exist," Mr. Lovendusky said.

The ruling also could discourage insurers from supplying their products for sale by community banks while legal questions remain unresolved, Mr. Lovendusky said. Under the comptroller's former policy, banks were allowed to sell annuities and other insurance products.

If bankers take the issue to Congress, that could lead to a comprehensive review of bank and insurance barriers that might put everything on the table for negotiation, insurance industry lobbyists said.

A congressional battle also could pit big banks against small banks, the lobbyists said. While small banks might want to avoid congressional action that could lead to interstate banking and additional competition, big banks might favor that proposal and attempt to include it in any legislation to clarify the sale of insurance, they added.

But an official of the American Bankers Association said predicting such a conflict is premature before the comptroller decides whether to appeal Friday's decision.

After a long and bitter battle, Congress failed to pass a broad banking bill last year. Not much appears to have changed since then, said Ed Alwood, a banking association spokesman.