What's happening
This bill expands the banking development district program by allowing credit unions to participate and requires participating banks to offer affordable products and financial education.
Why it matters
Expands access to underserved communities. by allowing credit unions to participate in the Banking Development District (BDD) program, potentially increasing the number and diversity of financial institutions serving areas with limited banking options.
Mandates affordable products and financial education. , requiring participating banks to offer services and education tailored to local community needs—this could help reduce reliance on costly alternative financial services and improve residents’ financial literacy.
Extends BDD designations and potential stability. , setting a standard 14-year designation period for districts (with possible 5- or 10-year renewals), which may incentivize long-term investment by financial institutions in these communities.
Allows municipal funds to be deposited in credit unions within BDDs. , but restricts such deposits to branches within the district and only by the sponsoring municipality—this opens new funding sources for credit unions while maintaining controls to target local impact.
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Who cares
Credit unions and federal credit unions
The bill would authorize their participation in the banking development district program, including limited eligibility to accept public deposits at qualifying branches.
Banks with branches in banking development districts
They would have to offer affordable products and services and financial education tailored to the community’s banking needs.
Local governments sponsoring banking development districts
District designations would last 14 years, with extensions of five or ten years available from the superintendent of financial services.
Residents of banking development districts
They would gain a requirement that participating branches provide affordable banking products and services and locally tailored financial education.
Headline styles
Expand Community Banking Access
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to banks
- Referred to banks
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5308
2017-2018 Regular Sessions
IN SENATE
March 20, 2017
Introduced by Sen. HAMILTON -- (at request of the Department of Financial Services) -- read twice and ordered printed, and when printed to be committed to the Committee on Banks
AN ACT to amend the banking law, in relation to the banking development district program; to amend chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, in relation to the effectiveness thereof; and to repeal certain provisions of such law relating thereto
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The opening paragraph of subdivision 1 of section 96-d of the banking law, as amended by chapter 526 of the laws of 1998 and as further amended by section 104 of part A of chapter 62 of the laws of 2011, is REPEALED.
§ 2. Subdivision 2 of section 96-d of the banking law, as added by chapter 204 of the laws of 1997, is amended to read as follows:
2. A local government, in conjunction with a bank, trust company or national bank, may submit an application to the superintendent for the designation of a banking development district. The superintendent shall issue a determination on such an application within sixty days of receiving such application. If an application is approved, the superintendent shall transmit notification of [such approval] the designation of a banking development district to the local government, the bank, trust company or national bank, the state comptroller, the commissioner of taxation and finance, the commissioner of the department of economic development, the temporary president of the senate and the speaker of the assembly. The designation of a banking development district shall be valid for fourteen years. Prior to the expiration of a banking development district designation, the superintendent may extend the designation for one or more additional five or ten year periods.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10007-02-7
S. 5308 2
§ 3. Section 4 of chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, as amended by chapter 46 of the laws of 2016, is amended to read as follows:
§ 4. This act shall take effect on the first day of January next succeeding the date on which it shall have become a law and section three of this act shall remain in effect until January 1, 2023 when upon such date it shall expire and be deemed repealed; provided however that any branch established prior to the expiration and repeal of this act by a savings bank, savings and loan association, federal savings bank or federal savings and loan association in a banking development district pursuant to this act shall continue to operate in accordance with this act and remain eligible for all the rights and privileges authorized by this act.
§ 4. Section 96-d of the banking law is amended by adding a new subdivision 3-a to read as follows:
3-a. In order to meet the demonstrated need for banking services in a banking development district, any bank, trust company or national bank that has established a branch within a banking development district shall offer affordable products and services and provide financial education tailored to the banking needs of the community in which the branch is located.
§ 5. Subdivision 5 of section 96-d of the banking law, as added by chapter 526 of the laws of 1998, paragraph (a) as amended by chapter 328 of the laws of 1999 and paragraph (b) as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended to read as follows:
5. (a) Notwithstanding the provisions of subdivision two of section two hundred thirty-seven of this chapter; for the purposes of this section, paragraph c of subdivision two of section ten of the general municipal law, subdivision six of section one hundred five of the state finance law and section four hundred eighty-five-f of the real property tax law, any reference to a bank, trust company or national bank shall be deemed to include a savings bank, savings and loan association, federal savings and loan association [or], federal savings bank, credit union, or federal credit union; provided, however, that such provisions of law do not grant a savings bank, savings and loan association, federal savings and loan association [or], federal savings bank, credit union, or federal credit union eligibility to accept municipal or public funds or municipal or public moneys other than for the limited purposes of the establishment of a branch in a banking development district pursuant to this section. Any such municipal or public funds or moneys shall be deposited only at the branch established pursuant to this section, and any municipal funds or moneys may be deposited only by the sponsoring municipality in which the branch and banking development district are located; provided further that any such municipal or public funds or moneys shall be subject to the same requirements which apply to municipal or public funds or moneys deposited in a bank, trust company or national bank and shall also be subject to the provisions of section one hundred five of the state finance law or section ten of the general municipal law relating to such deposits.
(b) Notwithstanding any other provision of law, the superintendent of financial services shall promulgate rules and regulations to authorize the participation of savings banks, savings and loan associations, federal savings banks [and], federal savings and loan associations,
S. 5308 3
credit unions, and federal credit unions in the program established pursuant to this section.
§ 6. This act shall take effect immediately; provided, however, that the amendments to subdivision 5 of section 96-d of the banking law made by section five of this act shall not affect the repeal of such subdivision and shall be deemed repealed therewith.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the banking law, in relation to the banking development district program; to amend chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, in relation to the effectiveness thereof; and to repeal certain provisions of such law relating thereto
Purpose of the bill
This bill would amend the Banking Law to expand access to banking services in communities where there is a demonstrated need for additional products and services.
Summary of provisions
Section 1 of the bill would amend Banking Law § 96-d to increase participation in the Banking Development District program.
Section 2 of the bill would limit the designation of a banking development district to fourteen years, yet allow for additional extensions in 5 or 10 year increments.
Section 4 of the bill would add a new Banking Law § 96-d(3-a) to require any branch participating in the program to offer affordable products and services and provide financial education tailored to the needs of the underserved community in which the branch is located.
Section 5 of the bill would amend Banking Law § 96-d(5) to allow federal and state credit unions to participate in the banking development district program.
Sections 3 and 6 of the bill would set forth the effective dates.
Legislative history
None.
Justification
Many communities in New York State lack consumer banking services. In 1997, the Banking Development District (BDD) program was enacted to incentive banks to locate branches in communities designated as underserved by the Department of Financial Services. Such communities either have no available financial service options, or only offer alternative (and often problematic) financial service options like check cashers and pawn shops.
Under the BDD program, banks that open branches in underserved communities are eligible to receive below market-rate deposits. Such deposits lower the financial risk the branches may incur when opening in an underserved community.
Currently, however, credit unions are currently ineligible to participate in the BDD program. Because banks and other eligible financial institutions have submitted a modest number of applications over the past twenty years, the program should be expanded to include credit unions to encourage additional banking services in underserved communities.
At the same time, it is also appropriate to restrict the unlimited duration of a BDD designation. Once a banking deficit in an underserved community is corrected, the incentives provided under the BDD program are no longer needed. A fourteen year designation limit (with unlimited extensions as necessary) would make the BDD program more efficient and allow for the allocation of resources to other communities.
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.