Banks in New York State could receive community reinvestment credit for providing electronic services, under a bill Governor George Pataki is expected to sign.

The legislation would update state community reinvestment rules to reward banks for providing information about, and access to, electronic channels including banking by personal computer, phone, and automated teller machines.

The new rules would not penalize banks that do not offer electronic banking services, according to a spokesman for state Sen. Nellie Santiago.

The bill was introduced by Senate Banks Committee Chairman Hugh Farley and Sen. Santiago, the panel's ranking Democrat.

The bill passed the New York State Senate on June 16 and the House a week earlier. The New York State Banking Department supports the measure, and both government and industry sources said they expect Gov. Pataki to sign it. However, his spokesman would only say that the bill is under review.

The legislation is partly aimed at educating senior citizens about new ways to bank, according to Gary Brody, senior vice president for state and local government affairs for the Community Bankers Association of New York State.

Mr. Brody said senior citizen groups had voiced concern during a meeting at the state banking department this year that older New Yorkers were uncomfortable using the most basic of electronic services, such as ATMs.

"With the cost of computers coming down drastically, for persons that are really homebound, that they can do their banking at home or in their apartment is probably a really good thing" Mr. Brody said.

"I think the general approach of offering more credits to banks that offer more services is a good idea," said Charles V. Wait, chairman, president, and CEO of Adirondack Trust Co. in Saratoga Springs.

However, John Pritchard, executive director of the Independent Bankers Association of New York State, said he is concerned about how the new law might be interpreted, especially by younger examiners who are more likely to think that electronic banking services are necessary.

Banks that do not offer electronic banking-smaller, rural banks that often do not have the demand for such services-may be penalized, he said.

The federal Community Reinvestment Act of 1977 was designed to spur investment in low- and moderate-income communities. The law requires banks to make loans in the communities where they accept deposits.

New York adopted a CRA-like law in 1975. The state rules have not been amended since 1984. Like the federal CRA rules, the state regulations grade banks with four ratings: "outstanding," "satisfactory," "needs improvement," and "substantial noncompliance."

In 1998 more than a quarter of the 70 state banks rated received "outstanding" grades. Another 68% were rated "satisfactory." Only three banks received "needs improvement" grades.

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