Special Purpose National Bank Charter

On March 15, 2017, the Office of the Comptroller of the Currency (“OCC”), the regulator and chartering authority for national banks and federal savings associations, issued a draft supplement to the Comptroller’s Licensing Manual entitled Evaluating Charter Applications from Financial Technology Companies (“Manual”).  The Manual describes the process through which financial technology (“fintech”) companies may apply for special purpose national bank (“SPNB”) charters and outlines certain  criteria the OCC will consider when evaluating applications.   Fintech companies seeking SPNB charters will be subject to an application process substantially similar to the process for applicants seeking a full-service national bank charter.  However, a major difference as stated in the Manual is that this charter will not allow for deposits.  Therefore, the cost of funds issue is not really addressed by this new process.

The Manual also outlines a set of  criteria specific to fintech companies that the OCC will use when evaluating applications, including the OCC’s requirement of a financial inclusion plan (“Financial Inclusion Plan”).   A financial inclusion plan should be set forth for each applicant whose business plan includes consumer or small business lending.   The financial inclusion plan will be an “enforceable condition” for any charter granted. Each financial inclusion plan must address the applicant’s proposed “goals, approach, activities and milestones” for meeting the needs of underserved individuals in its “relevant market or community.”

The OCC is seeking public comment on the Manual and the deadline for comment is April 14, 2017.

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