The New York State Legislature officially amended the state Community Reinvestment Act (CRA), Section 28-b of the New York Banking Law, to require the Department of Financial Services to evaluate how banks are serving the credit needs of minority- and women-owned businesses (MWOBs).

The Department issued regulation 3 NYCRR § 76.16 (Section 76.16) to implement this law, which requires state-chartered banking institutions to collect and report data obtained from all business loan applicants to allow the Department to conduct the analyses required by law.

Which institutions are subject to Section 76.16?

NY State-chartered banking institutions currently subject to CRA evaluations by the Department must pay attention to these new requirements. Section 76.16 requires collecting data on any application for credit by a business to a banking institution which has originated at least 25 credit transactions for businesses in their New York State assessment area(s) in each of the two preceding calendar years.

What Section 76.16 compliance capabilities are available in RiskExec?

To help our clients meet these requirements, RiskExec launched additions to its 1071 module that enable institutions to meet the New York State Department of Financial Services’ (NYDFS) requirement to collect and report data for New York State Community Reinvestment Act purposes.

RiskExec’s 1071 SBL module now contains the additional fields and updates required for NYDFS CRA exams, as the data requirements are similar, but not identical to, the Federal 1071 SBL. RiskExec clients who purchase the NYDFS module addition are able to export the data in the format required by the NYDFS as well as for potential Federal 1071. The platform can also now produce the Minority-and-Women-Owned-Business report(s) required by the NYDFS.

Key Differences between Section 76.16 and Section 1071

A few key differences to note between Section 76.16 and Section 1071 appear below, as stated by the NYDFS on their website:

• Section 76.16 applies only to New York State-chartered banking institutions subject to the state CRA who have originated at least 25 business loans (or other extensions of credit) in their CRA assessment area(s) in each of the past two years. The Section 1071 Regulation applies nationally and sets its own lending volume threshold.
• Section 76.16 requires data collection regarding all business loan applicants, regardless of size of the business. The Section 1071 Regulation requires data collection only from small business loan applicants, as defined by that regulation.
• Section 76.16 requires data collection regarding business loan applicants in the banking institution’s CRA assessment area. The Section 1071 Regulation requires data collection for small business loan applicants throughout the United States.
• The Section 1071 Regulation requires the collection of information regarding the sex of principal owners and the LGBTQI+-owned status of small business loan applicants. Section 76.16 does not require this information for any loan applicants and does not authorize institutions to request this information from non-small business loan applicants, even after both regulations take effect.
• Data collected pursuant to Section 76.16 will only need to be submitted to the Department upon request, as part of a CRA evaluation or otherwise, whereas the 1071 Regulation sets an annual reporting schedule.

If your institution is subject to Section 76.16 and you’d like to learn more about RiskExec’s capabilities, please contact us or request a demo of 1071.