Industry Letter
September 26, 2025
To: All New York State-Chartered Banking Institutions, All New York State-Based Community Development Financial Institutions, and Other Interested Stakeholders
Re: Community Reinvestment Act Credit for Investment in and Lending to Community Development Financial Institutions
Introduction
In furtherance of its mission “to build an equitable, transparent, and resilient financial system that benefits individuals and supports business,” the New York State Department of Financial Services (“Department”) consistently seeks ways to encourage New York State-chartered banking institutions, as defined by New York Banking Law (“Banking Law”) Section 28-b and 3 N.Y.C.R.R. § 76.2(d) (“banking institutions”), to grow community development lending and investment. These actions include, among other things, establishing clear and efficient standards for banks to determine when their community engagement activities will result in credit on banking institutions’ New York Community Reinvestment Act (“CRA”) evaluations. The Department understands that some community development financial institutions’ (“CDFIs”) federal CDFI Fund certifications may experience lapses for reasons unrelated to any change in the CDFI’s mission or programs. Consequently, the Department is issuing this guidance to assist banking institutions and CDFIs in ensuring that CRA credit will be awarded for eligible lending to and investments in these institutions, therefore maintaining stability with respect to their critical community development investment and lending activity.
Background
Community Development Financial Institutions
The CDFI Fund is a nationwide program to help promote access to capital and local economic growth in low-income communities through monetary awards and the allocation of tax credits. Among its functions is the certification of financial institutions as CDFIs if these institutions, which may or may not be depository institutions, have the purpose of expanding economic opportunity in low-income communities and meet certain community development finance measures. Once certified, CDFIs are eligible to participate in CDFI Fund programs such as monetary support and training to build organization capacity.
Certified CDFIs must apply for recertification annually, according to a schedule set by the CDFI Fund.
Community Reinvestment Act Credit for Community Development Financial Institutions
Pursuant to Section 28-b of the Banking Law, which is New York State’s CRA, and which is implemented through 3 N.Y.C.R.R. Part 76, the Department evaluates banking institutions on the extent to which those institutions are meeting the credit needs of their entire community, including low- and moderate-income individuals and geographies.
Among other things, the Department’s evaluation reviews a banking institution’s community development lending and investments. Neither the Banking Law nor 3 N.Y.C.R.R. Part 76 requires that a CDFI be certified as such by the CDFI Fund for a banking institution to receive CRA credit for transactions with the CDFI. Although neither the applicable statute nor the regulation specifically mentions certified CDFIs, the Department routinely grants credit on CRA evaluations to banking institutions lending to or making investments in certified CDFIs because, considering the character of certified CDFIs, such activities constitute community development lending and investing. The Department understands that New York communities may lose traditional sources of investment if banking institutions no longer have the confidence to make previously eligible transactions with CDFIs to obtain CRA credit, even when those CDFIs have not changed their mission or programs.
This guidance sets the conditions for which CRA credit will be presumptively granted with respect to eligible transactions with a CDFI that had previously been certified by the CDFI Fund.
Guidance for Banking Institutions Seeking CRA Credit for Transactions with CDFIs
Investment in and lending to previously certified CDFIs presumably constitutes activity that merits CRA credit regardless of their current CDFI Fund certification status. Banking institutions will receive CRA credit for eligible transactions with CDFIs that were recently certified by the CDFI Fund but whose certification has lapsed, if the transaction meets the conditions outlined here.
To obtain such credit during a CRA evaluation, the banking institution should provide the Department an attestation from a senior executive at the CDFI, signed and dated within the 12 months prior to the transaction, confirming that:
- the CDFI had been certified or recertified in 2024 or thereafter;
- the CDFI continues to operate with a primary mission of promoting community development as defined in 3 N.Y.C.R.R. § 76.2; and
- the CDFI has applied for recertification of its CDFI status in the previous 12 months.
The Department will grant CRA credit for an investment in a CDFI that provides the attestation unless there is a reasonable basis to believe that the attestation is false. This guidance does not otherwise change the Department’s existing CRA evaluation process: the Department will continue to award CRA credit for eligible transactions with CDFIs currently certified by the CDFI Fund and to review any other community development transactions submitted by banking institutions for eligibility for credit. As always, the Department may request additional documentation relating to community development investments and loans from banking institutions if it determines there is a need in a particular case.
Please direct questions about this Industry Guidance to Terry McMahon, Senior Assistant Deputy Superintendent, at [email protected].