http://www.aba.com/ABAEF/Pages/StartSchoolBank.aspxSchool Run BanksPage Content
Decide which type of school run bank would work best for your company. An In-school bank can be classified as an authorized bank branch or not, depending on the services provided.
Nonbank Branch Setting: These types of in-school banks are not considered a branch of a bank but a financial literacy program. The school premises or facility is not considered an authorized branch when:
1.The bank does not establish and operate the school premises or facility on which the financial literacy program is conducted.
2.Bank employees work at the site only to participate in the program.
3.No services are provided to the general public. The principal purpose of the financial literacy program is educational
4.If your program does not lend money or cash checks but merely collects deposits and processes them once you have returned to your bank, then the facility is not considered a branch and no branch application is required.
In-School Bank Branch: An in-school bank can be considered a branch depending, in part, on which regulator supervises your bank. Generally speaking, if any of the following functions are performed on site a branch application and prior notice to your state and federal regulator is required.
1.Deposits are received
2.Checks are paid
3.Money is lent
Once you've decided which type of school run bank to establish, notify the proper officials.
Nonbank Branch Setting: Although it's not required, the foundation advises that banks notify their federal and state regulator of plans to establish a school run bank as a courtesy.
Authorized Bank Branch in a School: If your bank chooses to establish an authorized bank branch in a school, you'll need to complete all necessary applications to apply for an additional branch. Banks must follow the branching requirements of both their federal regulatory authorities and of the state where the bank is chartered and where the in-school branch will be located.
Exceptions: Keep in mind that these exceptions apply to notification of federal regulatory authorities. Even if your bank is FDIC or OCC supervised, you still may need to apply for a branch application and be approved by your state banking authorities.
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Who Supervises Your Bank?
FDIC | OCC | OTC | Federal Reserve
FDIC Supervised Banks:
See 12 C.F.R. § 303.46
State nonmember banks may participate or assist in certain financial education programs conducted on school premises where, in connection with the program, deposits are received, checks are paid, or money is lent, without the need to submit a branch application to, and receive prior approval from, the FDIC. However, any state nonmember bank that desires to engage in such financial education programs must satisfy certain conditions in order for the exemption to apply:
The principal purpose of the program must be financial education, and not for the purpose of profit-making.
Any banking services provided in connection with the program must be provided at the discretion of the school.
Services are limited in nature; available only to students, parents, and faculty, and accessible on a part-time basis or designated school days.
The program must be conducted in a safe and sound manner and comply with applicable law.
[73 FR 35338, June 23, 2008]
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OCC Supervised (National) Banks:
See 12 C.F.R. § 7.1021 National bank participation in financial literacy programs
A national bank may participate in a financial literacy program on the premises of, or at a facility used by, a school. The school premises or facility will not be considered a branch of the bank if:
1.The bank does not establish and operate the school premises or facility on which the financial literacy program is conducted; and
2.The principal purpose of the financial literacy program is educational. For personal economics or the benefits of saving for the future, and is not designed for the purpose of profit-making.
NOTE: OCC 's Community Developments Insights: Setting Up a School-based Bank
The report explains how school-based bank savings programs operate and describes the potential risks and benefits, including positive consideration under the Community Reinvestment Act.
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Federal Reserve or Office of Thrift Supervision (OTS) Supervised Banks:
Contact regulator to determine if a branch application is required. Neither of these agencies has issued guidance on this topic.