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

1 Co-sponsor

• Leroy Comrie

Title of bill

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

Purpose

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 provisions

This bill amends Section 96-d (6) of the Banking Law by adding a new subdivision 7(a) and (b);

(a) would require BDD branch's to provide affordable products and services, which include financial educational services within their community, and (b), would require participating BDD branch's to meet certain criteria in order to qualify for renewal of their deposit.

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.

Legislative history

2013-14: A6877-A

Fiscal implications

None.

Effective date

This act shall take effect on the ninetieth day after is shall have become law.