How to achieve Community Reinvestment Act (CRA) compliance
- Corporate social responsibility
- Financial institutions
- Corporate Social Responsibility
For financial institutions, complying with the Community Reinvestment Act (CRA) is an important obligation. However, navigating the complex and ever-changing banking industry can be a challenge, which is why this guide is designed to help institutions of all sizes achieve CRA compliance.
Whether you are a large national bank or a smaller community lender, the information and strategies presented here can help you develop sustainable and effective CRA programs that meet the needs of your community and comply with regulatory expectations.
The Community Reinvestment Act (CRA), a U.S. federal law enacted in 1977, requires banks and other financial institutions to meet the credit needs of the communities they serve, particularly in low and moderate-income areas. It was designed to promote fair lending practices and to encourage institutions to invest in their communities.
Here’s how it works: Regulators conduct periodic examinations of a financial institution’s lending performance and community development efforts, typically every three to five years. They will then assign service credits to the bank, which add up to one of the following ratings: outstanding, satisfactory, needs to improve, or substantial noncompliance.
If your financial institution is looking to open new locations, merge with other banks, and fulfill overall expansion efforts, CRA compliance is key. An outstanding or satisfactory rating will help you instill confidence in key stakeholders, allowing you to pursue your purpose and make more of a positive impact in the communities you serve.
If you're looking for a better way to achieve CRA compliance, follow these tips:
There are several activities that banks must track to meet legal obligations, including:
Manual tracking through physical forms and spreadsheets can be time-consuming and error-prone. To streamline the process, turn to an automated tracking system.
With Bonterra Corporate Social Responsibility (formerly CyberGrants), you can easily track how many hours your employees have worked in low and middle-income communities alongside your company-wide community development programs. And because all of your efforts are tracked within one data warehouse, you can get a holistic view of your CRA activities at any time.
In addition to streamlining the tracking process, Corporate Social Responsibility can help your institution save valuable time when it comes to:
By saving time on administrative tasks associated with CRA compliance, you can redirect more resources toward impactful community investments and services, further strengthening your commitment to meeting the credit needs of your communities.
Federal regulators require financial institutions to report on their performance using information like the dollar amount of CRA-qualifying loans, their geographic distribution, and the percentage of total deposits located in low-and moderate-income areas.
To ensure your reports are complete and up-to-date, use our comprehensive solution to:
By reducing the regulatory burden associated with CRA compliance, your financial institution can focus more on meeting the credit needs of the communities you serve, which is the primary goal of the statute.
Maintaining CRA compliance is an ongoing process that requires close attention to detail and investment in the right tools. To get started, evaluate your lending and investment practices and turn a critical eye toward your tracking and reporting systems. Doing so will help you promote economic equality while meeting regulatory obligations.
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