Looking south on Grand Concourse at 165th Street in the Bronx. (Jim.henderson/CC)
In an effort to expand banking services to underserved communities, the Department of Financial Services announced the approval of new banking development districts in the Bronx and Brooklyn.
The department on July 13 announced that it had approved two Banking Development Districts (BDDs) in Community District 4— which includes Concourse Village, East Concourse, Highbridge, Mount Eden and West Concourse in the Bronx— as well as in Community Districts 2, 3 and 8, which includes portions of Clinton Hill and Prospect Heights in Brooklyn. Two state-chartered banks, Spring Bank and Ridgewood Savings Bank, will receive financial incentives to offer banking products and services to consumers and small businesses in the Bronx and Brooklyn.
In a statement, financial services department Superintendent Maria Vullo said that expanding banking services to low- and moderate-income communities is a priority.
“I am pleased that these two state-chartered banks have agreed to provide such important services to consumers and small businesses in low- and moderate-income neighborhoods,” said Vullo. “New Yorkers in under-served communities often have no choice but to turn to alternative, and sometimes illegal, financial services providers. such as payday lenders. DFS will continue to protect all New Yorkers, and remains committed to fostering appropriate resources to help them meet their financial services needs.”
The state Legislature created the BDD program, which is administered by the Department of Financial Services, in 1997. It was designed to encourage banks to establish branches in areas that lack them, generally low-income and minority neighborhoods. For instance, Community District 4′s population is 62 percent Hispanic/Latino; 31.6 percent African-American and 1.9 percent white. The area has 0.52 bank and credit union branches per 10,000 people, compared with the national average of 4.4 per 10,000. Two-thirds of the district’s census tracts are low-income, according to U.S. Census Bureau data cited by the DFS.
In an effort to encourage banks to participate in the program, New York has made $10 million in subsidized public deposits available to banks in underserved communities. Banks that receive a BDD designation, according to the department, are eligible to receive below market-rate deposits from the state. With the addition of the two new Banking Development Districts announced by the DFS, there will be more than 40 such districts throughout the state.