Despite Governor George E. Pataki's freeze on regulations, New York bankers will still have to comply with a new law requiring them to offer a checking account designed to attract low-income customers.

The state's community banks are taking the law in stride, with most setting up accounts to fulfill the requirement.

At this point, 21 institutions have requested exemptions from the law because it's too expensive or they already offer alternative accounts.

Twelve of the applications have been approved, department spokeswoman Clare E. Sykes said, because the institutions offer a "better deal than that imposed by the regulation."

The law mandates that financial institutions offer a "basic banking" account, with an initial deposit requirement of no more than $25, a maximum monthly fee of $3, and a minimum balance of one cent.

The account includes eight free withdrawals by check or automated teller machine.

The special account, similar to one adopted voluntarily by Massachusetts banks earlier in the year, is designed to draw more low-income customers into banks.

The decision to proceed with the regulation came down from the state banking department last week, following some uncertainty among state officials over what impact the governor's surprise freeze would have.

A regulation implementing the law is scheduled to take effect Jan. 31, but the freeze raised the specter of a delay.

The department had determined that since the regulation was adopted by the banking board late last year "it is (now) the contention of the department that it will go into effect" on schedule, Ms. Sykes said.

"It's the proper decision," said Warren W. Traiger, a bank regulatory attorney in New York. "It was done pursuant to a law passed by the legislature a year ago (and) not really within the discretion of the department. This is the culmination of a lot of work by the department,and it makes sense to get on with it."

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