Banking Interpretations

General Construction Law 24-a

March 24, 2006

[ ]

Re: Banks Closing on Religious Holidays

Dear [ ]

On behalf of your client, [ ] ( the "Bank"), you have inquired whether New York State law permits a bank to be closed to the public on certain religious holidays which are not days on which banks are authorized to close under the General Construction Law ("religious holidays").

You indicate that, to your knowledge, there is nothing in the law that requires a bank to be open other than obligations imposed upon banks by the UCC. Furthermore, you state that your client is not seeking to be excused from any UCC obligations in connection with closing on certain religious holidays. Thus, your client wishes to close on certain religious holidays and understands that it will continue to be obligated under the UCC during the time it is closed for those religious holidays.

The Banking Department has no current objection to the Bank closing on certain religious holidays under the terms described herein and in your letter and the draft plan attached thereto. The Department, however, in its sole and absolute discretion, reserves the right to reexamine its position if facts, circumstances or legal or other developments so warrant, whether on the grounds of safety and soundness, public policy or otherwise.

You cite the Superintendent's letter of September 18, 2003 to "all institutions," which outlines the steps a bank must take should the officers of a banking organization be of the opinion that an emergency exists and that the organization is unable to conduct operations and functions at its principal office or a branch. The Superintendent's letter essentially follows the provisions of General Construction Law Section 24-a, which, in addition to Section 24, establishes that certain days may be treated as public holidays. Section 24-a creates a procedure which banks may utilize, in the event of an emergency, to close their offices and avoid liability for certain UCC and/or other duties that are not performed due to the bank being closed under the authorized procedure. The religious holidays you have identified are not among the holidays designated.

You indicate, however, that the Bank does not want to close its only office because of an emergency and is not seeking, under Section 24-a of the General Construction Law, to be excused by the Department from liability for certain UCC and/or other duties that are not performed due to the Bank being closed. Rather, your client wishes to close for reasons of religious observance on certain holidays. (The days on which Bank desires to close are not described in your letter and the attachments thereto; however, based on the list you provided to us, we understand that these holidays occur several times during the year, are subject to some year-to-year variation and the Bank will be closed for these holidays for no more than two consecutive days, excluding public holidays.)

The General Construction Law outlines the circumstances under which banks may close on certain days, including days for which emergency closings are permitted under the General Construction Law's authorized procedure (and thereby allowing banks to avoid liability for certain UCC and/or other duties). Consequently, when the bank is closed on a religious holiday, it gets no relief under the General Construction Law from its duties under the UCC or otherwise (e.g., meeting certain clearing or payment deadlines for items.)

Notwithstanding the fact that no statutory provision expressly prohibits the closing of a bank on non-public holidays (and that a bank may be willing to accept the potential UCC and/or other liabilities for duties that are not performed due to the bank being closed), the Department, in connection with its duty to protect the public interest and the needs and convenience thereof, may require, as a policy matter, that certain conditions be met before it decides not to object to the closing. These conditions may vary depending upon the particular facts, circumstances and legal or other developments that prevail from time to time and situation to situation, including considerations of safety and soundness, public policy, etc.

The Department, in the past, has conditioned not objecting to bank closings on religious holidays upon a number of things. One major condition the Department has relied upon is the bank making suitable arrangements for the purpose of processing items in conformance with New York Clearing House Rules. For example, personnel could be at the bank on the religious holidays for the purpose of processing and clearing items even though the bank will be closed to the public or, as suggested by the plan enclosed with your letter, the bank could eliminate problems with clearing items by outsourcing that function.

Another major condition is for the bank to give customers adequate notice of closings, which the draft plan enclosed with your letter does in a comprehensive way, e.g., prominent postings two weeks in advance, prominent disclosures and written acceptance in account documentation, website notices and monthly statement inserts.

The Department has required in the past that a bank, prior to closing, obtain an opinion of independent counsel as to the legality of such closing. While your letter may not technically satisfy this requirement, the Department is not specifying that your client meet this requirement because you and your client have obviously given due consideration to this issue and the ramifications of closing the Bank on the religious holidays.

The Department considers the Bank's draft plan to be a significant factor in reaching the decision not to object to a closing of the Bank. The plan calls for various functions to continue on an uninterrupted basis even though the Bank will not be open to the public. In particular, besides the clearing functions mentioned above, ATMs and internet banking will continue to function, as will a 24-hour telephone answering service that will also direct calls to individual Bank employees who will try to assist customers. Also, the notification scheme mentioned above alleviates concerns that customers will be unaware or inconvenienced as a result of the closing of the Bank on the religious holidays.

Subject to the foregoing, the Banking Department has no objection to the Bank closing on religious holidays under the terms described in your letter, including the Bank's draft plan. The Department, however, reserves the right to reexamine its position if it determines that reconsideration is appropriate.


Sara A. Kelsey
Deputy Superintendent and Counsel