WASHINGTON - The payday loan industry responded to political pressure on Tuesday and revised its "best practices" to modify its relationship with commercial banks.

Banks that partner with payday loan companies should set their own credit criteria, approve and fund each advance, and permit the payday lender to purchase only a small amount of the loan, according to the standards issued by the Community Financial Services Association of America. The payday lender trade group also recommended that members observe limits on rollovers imposed by the state where a loan is originated.

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