Definition of a Community Development Bank

A community development bank is a financial institution created for the purpose of promoting economic development in regions that generally have low to moderate incomes. These banks offer checking and savings accounts as well as loans, mortgages, credit cards and other retail banking services to those who fall within lower income brackets.

In order for a financial institution to become a community development bank, they must be certified by the U.S. Department of the Treasury's Community Development Financial Institutions Fund. The CDFI certifies loan funds, credit unions, banks, and community development venture capital funds in the interest of improving the economic conditions in demographic groups with fewer earnings.

These banks can be chartered by the state or federal government. If chartered federally, the bank must follow the Office of the Controller of the Currency. The regulations and qualifications for a state charter will vary from state to state.


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