Relates to banking development districts; requires renewal of certain branches within banking development districts

BILL NUMBER:S2495A

Title of bill

An act to amend the banking law, in relation to banking development districts

Purpose or general idea of bill

This bill would strengthen the Banking Development District (BDD) program by clarifying the goals of the program and the criteria by which a branch's effectiveness should be measured.

Summary of specific provisions

This bill amends subdivision (2) and adds a new subdivision 3 (a) to Banking Law section 96-d.

Subdivision (2) provides that a designation of a BDD will be effective valid for ten years upon which time, the designation can be renewed for another ten years with the approval of the Superintendent of the Department of Financial Services and new subdivision 3(a), requiring every BDD branch to provide affordable products and services, which includes financial educational services within their community.

Justification

The Banking Development District (BDD) Program was created in 1997 to provide an incentive to banks to promote the establishment of new bank branches in communities with no or few branches and thereby stimulate the opening of bank accounts by community residents. The incentive of public deposits and other benefits provided to those banks that open a BUD branch in underserved communities is to better ensure that the new branch will have sufficient deposits to provide loans and other services.

The Banking Department conducted a study of the, BDD Program that was published in 2010 which identified "next steps" to be taken to improve the program. based on feedback collected from the banks, community groups and other stakeholders involved in the BDD Program. This bill is based on the results of that study as well as on a Roundtable held by the Assembly Banks Committee in October 2011 on the BDD Program. While the BUD Program has been very effective, both the Banking Department study and the Assembly Roundtable identified several features of the Program where legislative clarification would be appropriate. Specifically, the findings included a need to clarify the goals of the program; provide standards by which renewals of deposits could better be measured; and, require branches participating in the program to provide financial education to members of the district in which it is located. This bill seeks to address those findings.

Prior legislative history

A.9296 of 2012: advanced to 3rd reading

Fiscal implications

None

Effective date

This act shall take effect on the one hundredth and eightieth day after it shall have become law.