The Banking Development District (BDD) Program

• Existing Banking Development Districts
• Banking Development District Application  

What is the BDD Program?

The Banking Development District or BDD program is a program designed to encourage the establishment of banking branches in areas across New York State where there is a demonstrated need for banking services, in recognition of the fact that banking institutions can play an important role in promoting individual wealth, community development, and revitalization. For example:

• Banks and credit unions are a source of capital for local businesses, which promotes job creation;
• Banks and credit unions are a source of capital for mortgages, which increases home ownership and allows home improvement;
• Banks and credit unions provide services that allow individuals to cash checks, pay bills, and transmit money more cheaply than  costly alternative financial service providers; and
• Banks and credit unions help people create wealth through savings programs and other banking services.

In light of this, the BDD Program seeks to:

• Reduce the number of unbanked and underbanked New Yorkers;
• Enhance access to credit for consumers and small businesses;
• Reduce reliance on alternative providers of financial services; and
• Promote an asset building consciousness.

Underserved consumers may reside in urban or rural areas which may have different income levels, demographic characteristics and population densities. Regardless of an area's characteristics, it is anticipated that greater access to banking services will encourage the area's residents, who may have no or limited banking relationships, to become part of the financial mainstream.

While an institution may see the long-term potential of serving an area that is financially underserved – whether by way of a new branch or an existing branch – there is often the short-term concern that it may take a number of years before a branch can attract enough retail deposits to become viable.

To encourage participation in the BDD program, $10 million in subsidized public deposits and other benefits are made available to banks and credit unions that open or maintain a branch in an underserved community. These deposits are intended to lower the financial risk that the banking institution may incur when opening or maintaining a branch in an underserved community.

History & Authority

The New York State Legislature created the BDD program in 1997 by enacting Banking Law §96-d, which became effective January 1, 1998. The program was designed to encourage the establishment of bank branches in areas across New York State with a demonstrated need for banking services.  As of December 12, 2019, §96-d was amended to include credit unions as banking institutions eligible to participate in the BDD program.

Banking Law 96-d and other related amendments (see below) authorized municipalities to deposit funds at below-market rates into bank and credit union branches located in a BDD, including branches of state or federally regulated saving banks, savings and loan institutions, state-chartered credit unions, and federally-chartered credit unions.

Related Laws & Regulations

Authority for the BDD Program can be found in the following related laws and regulations:

• § 96-d. Banking development districts
• General Municipal Law - §10(2)(c) Deposits of public money; security
• State Finance Law §105(6) Deposits in banks
• Real Property Tax Law § 485-F Banking development districts
• Part 8 of the General Regulations of the Banking Board

Eligibility Requirements

Under current Banking Law, banks, trust companies or national banks (which includes savings banks and savings and loan associations), and credit unions, whether state or federally chartered, are eligible to participate in the BDD program.

A bank or credit union must apply in conjunction with a local government (county, town, city or village) for the designation of a BDD area. The application must clearly define the geographical boundaries of the proposed district and must demonstrate not only that the community is in serious need of banking services, but also that this need is not being met by existing nearby financial institutions. The applicant also must show that by establishing or maintaining a new branch in the proposed district, the institution is prepared to meet the specific, identified unmet need and that there is strong community support for the BDD designation. An application may be submitted by a bank or credit union which already has a bank branch within such area.

BDD requirements are in addition to any requirements established by the Department of Taxation and Finance and the New York State Comptroller with respect to the deposit of public funds and the New York State Board of Real Property Tax Services with respect to real property tax exemptions that may be available to banks within a banking development district.

Contact

Yulitza S. Franklin
[email protected]
212-709-1699