This bill reduces barriers for starting new banks by allowing new financial institutions three years to meet capital requirements and letting them request business plan deviations. Rural community banks get a lower 8 percent leverage ratio with phase-in. Federal savings associations can deal in agricultural loans.
Latest Action
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
AI Summary
Plain-English explanation of this bill
This bill reduces barriers for starting new banks by allowing new financial institutions three years to meet capital requirements and letting them request business plan deviations. Rural community banks get a lower 8 percent leverage ratio with phase-in. Federal savings associations can deal in agricultural loans.
Last updated: 1/5/2026
Official Summary
Congressional Research Service summary
<p><strong>Promoting New Bank Formation Act of 2025</strong></p><p>This bill eliminates and reduces certain requirements applicable to new financial institutions, certain rural community banks, and federal savings associations.</p><p>Under the bill, federal banking agencies must issue rules allowing new financial institutions to meet capital requirements within three years. During this period, a financial institution may request to deviate from an approved business plan and the appropriate agency has 30 days to approve or deny the request.</p><p>In addition, the community bank leverage ratio—a way of evaluating debt levels—is reduced for new rural community banks. Specifically, new rural community banks must have a ratio of 8%, with a three-year phase-in of the rate. After this period, the ratio rises to its current level of 9%. </p><p>Finally, the bill removes certain restrictions to allow federal savings associations to invest in, sell, or otherwise deal in agricultural loans.</p>
Key Points
Main provisions of the bill
Allows new banks three years to meet capital requirements
Permits new institutions to deviate from approved business plans
Reduces leverage ratio to 8 percent for new rural community banks
Allows federal savings associations to make agricultural loans
Aims to encourage formation of new community banks
How This Impacts Americans
Potential effects on citizens and communities
Starting a new community bank would become easier with more flexible capital requirements and business planning. Rural areas could see more new banks serving agricultural customers as restrictions are reduced.
Policy Areas
Primary Policy Area
Finance and Financial Sector
Scope & Jurisdiction
Jurisdiction Level
federal
Congressional Session
119th Congress
Citation Reference
113, 119th Congress (2025). "Promoting New Bank Formation Act of 2025". Source: Voter's Right Platform. https://votersright.org/bills/118-s-113
