3 CRR-NY 76.16NY-CRR
3 CRR-NY 76.16
3 CRR-NY 76.16
76.16 Minority- and women-owned business loan data collection.
(a) Purpose.
The purpose of this section is to facilitate the department’s evaluations of banking institutions’ records of meeting the credit needs of their local communities, in compliance with to section 28-b of the New York Banking Law, including the assessment factors delineated in section 28-b(3)(a).
(b) Information gathering.
Subject to the requirements of this section, in the case of any application for credit by a business to a banking institution which has originated at least 25 credit transactions for businesses in each of the two preceding calendar years, the banking institution shall:
(1) inquire whether the business is a minority- or women-owned business, without regard to whether such application is received in person, by mail, by telephone, by electronic mail or other form of electronic transmission, or by any other means, and whether or not such application is in response to a solicitation by the banking institution;
(2) at the time of application, notify such applicants in writing, or orally for applications made by telephone or another medium that does not involve providing any paper or electronic documents, that:
(i) any applicant for credit may refuse to provide any information requested pursuant to this subdivision in connection with any application for credit; and
(ii) that the banking institution is prohibited from discriminating on the basis of any information provided in response to an inquiry made pursuant to this subdivision or on whether the applicant provides this information; and
(3) maintain a record of the responses to such inquiry, separate from the application and accompanying information.
(c) A banking institution may inform the applicant that New York State law requires it to ask for the principal owners’ ethnicity and race to help ensure that all applicants for credit are treated fairly and that communities’ credit needs are being fulfilled.
(d) A banking institution is neither required nor permitted to verify the minority-owned business status or women-owned business status that the applicant provides, or report any information on an applicant’s principal owners based on visual observation and/or surname of any individual associated with the applicant.
(e) No access by underwriters.
(1) Limitation. Where feasible, no loan underwriter or other officer or employee of a banking institution, or any affiliate of a banking institution, involved in making any determination concerning an application for credit shall have access to any information provided by the applicant pursuant to a request under subdivision (b) of this section in connection with such application.
(2) Limited access. If a banking institution determines that a loan underwriter or other officer or employee of a banking institution, or any affiliate of a banking institution, involved in making any determination concerning an application for credit should have access to any information provided by the applicant pursuant to a request under subdivision (b) of this section, the banking institution shall provide written notice to the applicant, at the time of application or as reasonably practicable thereafter, of the access of the underwriter to such information.
(f) Form and manner of information.
(1) In general. As applicable, each banking institution shall compile and maintain a record of the information provided by any applicant pursuant to a request under subdivision (b) of this section, or a record that an applicant declined to provide such information. The department will issue a sample data collection form that banking institutions may use to collect information provided by applicants pursuant to this section and may update such form from time to time as the department deems necessary.
(2) Itemization. Information compiled and maintained under paragraph (1) of this subdivision shall be itemized in order to clearly and conspicuously disclose:
(i) an alphanumeric identifier, unique within the banking institution to the specific application, which can be used to identify and retrieve the specific files corresponding to the application;
(ii) the date the application was received by the banking institution;
(iii) the means by which the applicant submitted the application to the banking institution;
(iv) the type of loan or other credit being applied for, including:
(a) the credit product; and
(b) the length of the loan term, in months, if applicable;
(v) the purpose of the loan or other credit being applied for;
(vi) the amount of the loan, credit, or credit limit applied for;
(vii) if the application is approved, the amount of the credit transaction or the credit limit approved for such applicant;
(viii) the type of action taken with respect to such application, namely originated, approved but not accepted, denied, withdrawn by the applicant, or incomplete;
(ix) the date the action reported pursuant to subparagraph (viii) of this paragraph was taken;
(x) for denied applications, the principal reason or reasons the banking institution denied the application;
(xi) the census tract in which the principal place of business of the applicant is located;
(xii) the gross annual revenue of the applicant’s business for the last fiscal year preceding the date of the application;
(xiii) the number of non-owners working for the applicant;
(xiv) the time the applicant has been in business, described in whole years, as provided by the applicant, unless the banking institution verifies the information provided, in which case it shall use the verified information;
(xv) pricing information for transactions that were originated or approved but not accepted, including:
(a) the interest rate that is or would be applicable to the loan or other credit applied for;
(b) the total amount of all charges payable directly or indirectly by the applicant and imposed directly or indirectly by the banking institution at or before origination as an incident to or a condition of the extension of credit;
(c) the total amount of all charges included in clause (xi) of this paragraph that are fees paid by the applicant directly to a broker or to the banking institution for delivery to a broker;
(d) the total amount of all non-interest charges that are scheduled to be imposed over the first annual period of the credit transaction;
(e) for a merchant cash advance or other sales-based financing transaction, the difference between the amount advanced and the amount to be repaid; and
(f) whether the terms of the covered credit transaction include a charge imposed for paying all or part of the transaction’s principal before the date on which the principal is due;
(xvi) whether the business is a minority-owned business, a women-owned business, or both, as defined in this part, or whether the business has invoked its right to refuse to provide any information requested pursuant to this section;
(xvii) the race and ethnicity of the applicant’s principal owners, and
(xviii) any additional data that the department determines would aid in fulfilling the purposes of this section.
(3) No personally identifiable information. In compiling and maintaining any record of information under this section, a banking institution may not include in such record the name, specific address (other than the census tract required under subparagraph (2)(v) of this subdivision), telephone number, electronic mail address, or any other personally identifiable information concerning any individual who is connected with the minority- or women-owned business applicant.
(4) Previously collected data. A banking institution is permitted, but not required, to reuse previously collected data to satisfy paragraph (2) of this subdivision, and not required to restate the disclosures otherwise required by paragraph (b)(2) of this section, if:
(i) the data were collected within the same calendar year as the current application; and
(ii) the banking institution has no reason to believe the data are inaccurate.
(5) Race and ethnicity of the applicant’s principal owners.
(i) When asking for a principal owner’s ethnicity and race, a banking institution shall allow the applicant to respond using aggregate and disaggregated ethnicity and race categories and subcategories. The disaggregated subcategories shall include the “other” disaggregated subcategories that provide the option to self-identify using free-form text on a paper or electronic data collection form or using language that informs the applicant of the opportunity to self-identify when taking the application by means other than a paper or electronic data collection form, such as by telephone.
(ii) When asking for a principal owner’s ethnicity and race, a banking institution may, but is not obligated to, use the sample data collection form in Appendix A to Part 76 of this Title.
(iii) A banking institution shall permit an applicant to identify its principal owners as being of the same particular disaggregated race and/or ethnicity subcategories specified in 12 CFR Part 1003 (“Regulation C”) and its appendices.
(iv) A banking institution shall offer the applicant the option of selecting more than one ethnicity and race for each principal owner. If an applicant selects more than one ethnicity or race for a principal owner, the banking institution shall report each selected designation. The banking institution shall also report any additional information that the applicant has provided as free-form text in the appropriate data reporting field.
(v) If an applicant provides ethnicity or race information for one or more principal owners, the banking institution shall report the ethnicity and race as provided by the applicant.
(vi) If the applicant declines to provide a principal owner’s ethnicity or race, the banking institution shall report that the applicant declined to provide this information. The banking institution shall report that the applicant declined to provide information only if the applicant specifically declines to provide that information. If the applicant does not respond to a request about a principal owner’s ethnicity or race, the banking institution shall report that the information was not provided by the applicant. If an applicant provides some but not all of the requested ethnicity and race information, the banking institution shall report the information that was provided by the applicant and shall report that the applicant declined to provide or did not provide (as applicable) the remainder of the information.
(vii) If an applicant provides information in response to the question requesting a given principal owner’s ethnicity or race and also indicates that the applicant does not wish to provide the information, the banking institution shall report the information on ethnicity or race that was provided by the applicant (rather than reporting that the applicant declined to provide the information).
(viii) If a banking institution reports ethnicity or race information based on previously collected data, the banking institution shall also report that it is providing that information based on previously collected data.
(ix) If a banking institution reports one or more principal owner’s ethnicity or race information based on previously collected data, the banking institution does not need to collect any additional ethnicity or race information. However, the banking institution may need to report that the applicant did not provide or declined to provide information when the banking institution previously collected the data, as applicable.
(6) Joint applications from multiple entities. In the event of a single application from multiple entities operating pursuant to a joint venture agreement or other form of business combination, the banking institution shall obtain information pursuant to this section for all entities participating in the application.
(g) Availability of information.
(1) Submission to Department.
(i) The data required to be compiled and maintained under this section by any banking institution shall be submitted to the department upon the department’s request.
(ii) Each banking institution shall submit to the department a copy of each report and document which it is required to prepare and file with the Consumer Financial Protection Bureau and/or another Federal agency by section 704B of the Equal Credit Opportunity Act, codified at 15 USC section 1691c-2, as implemented by regulation, upon the department’s request.
(2) Retention of information. Information compiled and maintained under this section shall be retained by the banking institution for not less than six years after the date of preparation.
(3) Availability of information. The department and banking institutions will maintain any information compiled under this section that could be used to identify any applicant or their associated business as confidential, except as required by Federal law.
(h) Alternative forms of compliance.
(1) The department may, at its discretion, determine that a banking institution’s or group of banking institutions’ compliance with the requirements of section 704B of the Equal Credit Opportunity Act, codified at 15 USC section 1691c-2, as implemented by regulation, shall constitute compliance with the data collection requirements of this section.
(i) Application defined. For the purposes of this section only, the term “application” means an oral or written request by a business for a loan or other extension of credit that is made in accordance with procedures used by a banking institution for the type of credit requested, including such requests received by the banking institution that are incomplete or subsequently withdrawn, and shall not mean:
(a) reevaluation, extension, or renewal requests on an existing business credit account, unless the request seeks additional credit amounts; or
(b) inquiries and prequalification requests.
(j) Compliance date and transitional period.
(1) The compliance date for this section is six months after the date of publication of the Notice of Adoption in the State Register.
(2) Banking institutions shall have an additional transition period of three months from the compliance date of this section to comply with the requirements set forth in paragraph (1) of this section to limit, where feasible, underwriter access to any information provided by the applicant pursuant to a request under subdivision (b) of this section. During this transition period, banking institutions that can feasibly limit access, but need to make technological and process adjustments to do so, may rely on paragraph (2) of this section.
3 CRR-NY 76.16
Current through January 31, 2023
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