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Application for Alternative to Basic Banking Account

UNOFFICIAL COPY: 3 NYCRR - Ch. I Part 9 -- Basic Banking Accounts
(Statutory authority: Banking Law, §§ 14[1], 14-f)

Sec.

9.1 Statement of policy
9.2 Definitions
9.3 Required features
9.4 Conditions for opening or maintaining a basic banking account
9.5 Required disclosures
9.6 Relationship to convenience accounts
9.7 Alternative accounts and banking services
9.8 Cost of the basic banking account

History: Part (§§ 9.1 - 9.3) filed Jan. 22, 1971; repealed, filed May 11, 1982; new (§§ 9.1 - 9.8) filed Oct. 18, 1994 eff. Jan. 31, 1995.

3 NYCRR - § 9.1 -- Statement Of Policy.

In enacting section three of chapter one of the Laws of 1994, the Legislature has found and declared that certain consumers residing in this State may be unable to afford, without undue financial hardship, the cost of maintaining a consumer transaction account at a banking institution located in this State. Consequently, as provided in section 14-f of the Banking Law, it is the policy of this State that, consistent with safe and sound banking practices, banking institutions shall make available lower cost banking services to consumers, provided that no banking institution shall be required to offer lower cost banking services at a cost to account holders which is less than the actual cost to the banking institution to provide such services.

History: Sec. filed Jan. 22, 1971; amds. filed: Feb. 20, 1973; June 15, 1973; Aug. 13, 1973; July 8, 1974; July 31, 1975; May 13, 1977; repealed, filed May 11, 1982; new filed Oct. 18, 1994 eff. Jan. 31, 1995.

3 NYCRR - § 9.2 -- Definitions.

For purposes of this Part:

(a) The term banking institution shall mean any bank, trust company, savings bank, savings and loan association, or credit union, or branch of a foreign banking corporation the deposits of which are insured by the Federal Deposit Insurance Corporation, which institution is incorporated, chartered, organized or licensed under the laws of this State or any other state or the United States, and which, in the ordinary course of its business, offers consumer transaction accounts to the general public or, in the case of a credit union, to its members.

(b) The term consumer transaction account shall mean a demand deposit account, negotiable order of withdrawal account, share draft account or similar account used primarily for personal, family or household purposes.

(c) The term periodic cycle shall mean the period covered by the banking institution's regular consumer transaction account statement, which shall be from 28 to 31 days.

(d) The term withdrawal transaction shall mean a withdrawal from a consumer transaction account by means of a withdrawal slip, check, negotiable order of withdrawal or draft or through the use of an electronic facility operated by the banking institution.

History: Sec. filed Jan. 22, 1971; amds. filed: Jan. 15, 1973; Feb. 20, 1973; Nov. 12, 1973; July 28, 1974; June 12, 1975; July 31, 1975; Nov. 5, 1976; May 13, 1977; July 18, 1977; July 27, 1978; repealed, filed May 11, 1982; new filed Oct. 18, 1994 eff. Jan. 31, 1995.

3 NYCRR - § 9.3 -- Required Features.

(a) Subject to the provisions of section 9.6 of this Part, each banking institution shall offer consumer transaction accounts with the following features:

(1) The account shall be identified as a "basic banking account" or, in the case of credit unions, the term "basic share draft account" shall be used.

(2) The initial deposit amount required to open the account shall not exceed $25.00.

(3) The minimum balance, including any average balance, required to maintain such account shall not exceed $.01.

(4) The charge per periodic cycle for the maintenance of such account shall not exceed $3.00.

(5) The minimum number of withdrawal transactions which may be made during any periodic cycle at no additional charge to the account holder must be at least eight. For purposes of this paragraph, a withdrawal shall be deemed to be made when recorded on the books of the account holder's banking institution.

(6) Except as provided in paragraph (7) below, an account holder shall not be restricted as to the number of deposits which may be made to the account without incurring any additional charge.

(7) The banking institution may charge account holders for transactions at electronic facilities which are not operated by the account holder's banking institution as well as other fees and charges for specific banking services not specified in this Part to the same extent that it charges its regular consumer transaction account holders for such services.

(8) Every periodic statement issued for a basic banking account shall contain, either on the statement or on a separate insert, a conspicuous notice identifying the maximum number of withdrawals which are permitted during each periodic cycle without the imposition of any additional charge, the consequences of exceeding such maximum and the fee, if any, for the use of electronic facilities which are not operated by the account holder's banking institution. Such notice shall in addition indicate that a withdrawal shall be deemed to be made when recorded on the books of the account holder's banking institution which is not necessarily the date that the account holder initiated the transaction.

(b) With regard to those features of the account which are not set forth in subdivision (a) of this section, a basic banking account shall be offered subject to the same rules, conditions and terms which are normally applicable to other consumer transaction accounts offered by the banking institution.

History: Sec. filed Jan. 22, 1971; amds. filed: July 28, 1974; July 31, 1975; Nov. 5, 1976; May 13, 1977; repealed, filed May 11, 1982; new filed Oct. 18, 1994; amd. filed June 13, 1995 eff. June 28, 1995. Amended (a)(8).

3 NYCRR - § 9.4 -- Conditions For Opening Or Maintaining A Basic Banking Account.

A banking institution may require the following as conditions for opening or maintaining a basic banking account:

(a) that the applicant provide the same information and identification required as in the case of other consumer transaction accounts at that banking institution;

(b) that the account holder be a resident of this State;

(c) that direct deposit to the banking institution be made of recurring payments such as, but not limited to, social security, wage, or pension payments where direct deposit is available to the account holder; and

(d) that the account holder may not maintain any transaction account other than the basic banking account; provided however, that an account holder may continue to maintain one or more other transaction accounts for a reasonable period of time, which shall not be less than sixty (60) days from the date that the basic banking account is opened. This prohibition shall not apply to any transaction account which is a burial fund account that is separately identifiable and monitored as a burial fund account or where the burial fund account is separately identifiable as a contractual funeral agreement pursuant to the terms and conditions of 42 USC 1382b or article 5 of New York's Social Services Law and any regulations promulgated thereunder.

History: Sec. filed July 26, 1974; repealed, filed May 11, 1982; new filed Oct. 18, 1994; amd. filed June 13, 1995 eff. June 28, 1995. Amended (a).

3 NYCRR - § 9.5 -- Required Disclosures.

Prior to establishing a basic banking account for an account holder, the banking institution shall furnish a written disclosure to each account holder describing the following features of the basic banking account:

(1) The initial deposit amount, if any, required to open the account;

(2) The minimum balance, if any, required to maintain such account;

(3) The charge per periodic cycle for the use of such account, and the length of the periodic cycle;

(4) The maximum number of withdrawal transactions during any periodic cycle which the account holder may make at no additional charge;

(5) That an account holder may make an unlimited number of deposits without incurring any additional charge;

(6) Any charge imposed on transactions made at an electronic facility not operated by the account holder's banking institution;

(7) That a withdrawal shall be deemed to be made when recorded on the books of the account holder's banking institution which is not necessarily the date that the account holder initiated the transaction;

(8) Such other fees and charges as may be imposed on the account, e.g., charges levied for dishonored items, certification of checks and check printing; and

(9) Such other disclosures as are customarily given in connection with the opening of other consumer transaction accounts offered by the banking institution.

History: Sec. filed July 26, 1974; amd. filed May 13, 1977; repealed, filed May 11, 1982; new filed Oct. 18, 1994; amd. filed June 13, 1995 eff. June 28, 1995.

3 NYCRR - § 9.6 -- Relationship To Convenience Accounts.

If a basic banking account is structured as a convenience account pursuant to the terms and conditions set forth in Part 15 of the General Regulations of the Banking Board, then the requirements set forth in section 14-f of the Banking Law shall be applicable only to the owner of the convenience account.

History

Sec. filed July 26, 1974; repealed, filed May 11, 1982; new filed Oct. 18, 1994 eff. Jan. 31, 1995.

3 NYCRR - § 9.7 -- Alternative Accounts And Banking Services.

(a) A banking institution may submit an application to the Superintendent of Financial Services for approval of an alternative account or other banking services which are at least as advantageous to consumers as the basic banking account.

(b) In the case of alternative accounts, each application for approval shall include, as applicable:

(1) The initial deposit amount, if any, necessary to open the account;

(2) The minimum balance, if any, required to maintain the account;

(3) The average daily balance, if any, required to maintain the account;

(4) The charge per periodic cycle to maintain the account;

(5) The number of allowable withdrawals per periodic cycle without additional charge;

(6) The per-transaction charge per month for transactions in excess of those specified above;

(7) The length of the periodic cycle of the account;

(8) Any other fees which may be charged to the account holder; and

(9) Such other information and documentation as shall be required by the Superintendent.

(c) In the case of other alternative banking services, each application for approval shall include a complete description of such other banking service to be offered by the banking institution.

(d) In determining whether to approve an alternative account or service, the Superintendent shall consider whether the account or service meets the stated purpose of Banking Law, section 14-f to make lower cost banking services available to consumers.

(e) Provided that the banking institution has submitted an application pursuant to this section prior to the effective date of this Part, any alternative account or other banking service shall be deemed to be in compliance with section 14-f of the Banking Law and this Part pending a written determination to the contrary by the Department. Any banking institution which receives such a determination shall have sixty (60) days in which to demonstrate compliance with section 14-f of the Banking Law and this Part.

History: Sec. filed March 11, 1980 as emergency measure; May 6, 1980; repealed, filed May 11, 1982; new filed Oct. 18, 1994 eff. Jan. 31, 1995.

3 NYCRR - § 9.8 -- Cost Of The Basic Banking Account.

(a) If a banking institution determines that the cost imposed on basic banking account holders is less than the actual cost to the banking institution to provide such account, it may submit an application to the Superintendent seeking permission to offer an alternative account or service. Such application shall include the information required in section 9.7(b) of this Part as well as data on the actual cost to the banking institution of providing the basic banking account and a description of the methodology utilized by the banking institution in obtaining such cost data.

(b) In reviewing such application, the superintendent shall consider whether the methodology utilized by the banking institution is independently verifiable.

History: Sec. filed Oct. 18, 1994 eff. Jan. 31, 1995.