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Illinois Banking Development District
The Illinois Banking Development District (BDD) program incentivizes the creation and expansion of banking branches in communities where a significant need exists, to address the gap of underbanked and unbanked Illinoisans. BDD program participants may receive credit toward their Illinois Community Reinvestment Act (CRA) assessment and can participate in the Illinois State Treasurer Office's Invest in Illinois programs to receive impact-driven investments after becoming an approved depository.
What does it mean to be underbanked or unbanked?
The term underbanked refers to individuals who have a bank account but have relied on other services other than those provided by an insured depository institution, such as money orders, check cashing services, or payday loans in the past 12 months. Unbanked individuals refer to those who do not have a checking or savings account at an insured depository institution.
What is the impact of being unbanked or underbanked?
Individuals who are underbanked or unbanked often pay higher fees to access financial services. This creates additional economic barriers, making it harder to buy a home, start a business, build credit, manage finances long-term, or save for emergencies. As a result, entire communities may become dependent on predatory lenders, experience billing problems, and face increased financial risks.
The BDD program’s goals are to:
- Foster Financial Inclusion: Promote the establishment of bank branches in neighborhoods with limited or no access to traditional banking services.
- Expand Access to Financial Services: Reduce the number of underbanked and unbanked Illinoisans.
- Promote Community Revitalization: Provide local businesses and residents with tools to manage money and invest in their communities.
- Reduce Predatory Lending: Provide communities with lower cost alternatives to meet their financial needs.
Eligibility
The governing board of a local government, in conjunction with a depository institution, may submit an application to IDFPR’s Division of Banking (DOB) for the designation of a BDD.
Application Process
To create a BDD, a depository institution must work with a government entity as co-applicants and contact DOB at FPR.BDD@illinois.gov to schedule a pre-application conference with representatives of the municipal corporation, DOB, the Illinois Treasurer’s Office, and any other agreed upon parties. The purpose of the meeting is to promote open communication regarding the specifics of the application.
After the pre-application conference, the parties should submit the Illinois BDD application to DOB. The Secretary of IDFPR in consultation with the State Treasurer will issue a determination within 60 days from receipt of a completed application.
Application & Additional Resources:
Reporting and Enforcement
The local government entity and depository institution shall submit a report of the operations of the banking development district to the Secretary and the Treasurer each year on the anniversary of the BDD approval. If upon review of the banking operations the Secretary finds that services have not been performed, the Secretary may require the applicant to make modifications to meet the banking district’s goals, suspend the applicant’s participation in the program, or terminate their participation.
Contact
DOB at FPR.BDD@illinois.gov to schedule the Pre-Application Conference and/or to discuss any questions.
