Minority Depository Institutions

From promoting economic growth in low-income neighborhoods to supporting underrepresented communities, banks and credit unions led by a diverse set of people play a vital role in our society. 

If you're someone who values community involvement and wants to make a positive impact through your bank, you're in the right place. We’re sharing details about what these banks are, how they differ from other banking options, and what benefits they can offer you when you choose to save with them.

Key takeaways

  • MDI status: “Minority Depository Institution” or “MDI” is a status provided to FDIC-insured commercial banks and savings associations that meet one of two of the FDIC’s definitions listed in its Statement of Policy.

  • MDI definition: An institution where more than half of the ownership comprises Black American, Asian American, Hispanic American, or Native American people.

  • Benefits of MDIs: The main advantages of MDIs are that they help uplift historically marginalized groups and assist in the economic development of communities.

What is a Minority Depository Institution?

A Minority Depository Institution is defined by the FDIC as a financial institution that is majority owned and operated by Black American, Asian American, Hispanic American, or Native American people. These banks serve historically marginalized communities that are underserved by mainstream banks and provide them with financial services like loans, savings accounts, checking accounts, and more.

The FDIC’s Statement of Policy regarding Minority Depository Institutions (MDIs) outlines two definitions of how FDIC-insured commercial banks and savings associations may qualify for MDI status.

While the use of the term “minority” has fallen out of favor, it remains how the FDIC classifies these institutions. 

An MDI may be a federally insured depository institution that meets one of the two conditions:

  1. 51% or more of the voting stock is owned by people of color

  2. A majority of the board of directors is of color and the community that the institution serves is predominantly of color.

The financial institution must be owned by US citizens or permanent legal US residents to be counted in determining MDIs.

What is the history of Minority Depository Institutions in the US?

Minority Depository Institutions have a rich and complex history dating back to the 19th century. During this time, Black Americans were denied access to mainstream banks and financial services. So the nation’s first Black bankers began serving as an important source of credit, training, and jobs for their communities..

In the 1960s and 1970s, the civil rights movement and the push for equal rights led to the creation of several Minority Depository Institutions. These banks were founded by community activists to provide equitable financial services for underbanked communities..

In the 1980s and 1990s, the number of banks led by people of color continued to grow. This was due to government initiatives, such as the Community Reinvestment Act. The act provided incentives for banks to partner with banks and credit unions led by people of color and provide financial services to underserved communities.

Today, there are over a hundred Minority Depository Institutions in the U.S. These institutions continue to play a critical role in promoting equitable economic development and financial access in this country.

Minority Depository Institution spotlight

Ponce Bank is recognized as a Minority Depository Instutiion (MDI) owing to its Hispanic American ownership. It serves as fixture within the Hispanic community in The Bronx, New York.

What are the advantages of banks led by people from underrepresented communities?

Banks led by people from underrepresented communities can offer more than just financial services. They can provide financial access to underserved communities, promote community development, and empower individuals and small businesses to achieve their goals. 

Let’s take a closer look at the benefits that come with MDIs.

  • Access to underserved communities

Minority Depository Institutions aim to serve low-income communities and communities of color that are historically underserved by traditional banks. They provide financial services to individuals and small businesses that may not have access to other mainstream banking options.

  • Aid to community development

Minority Depository Institutions can provide loans and other financial services to support economic growth and development in their communities. Apart from helping create jobs, promoting entrepreneurship, and stimulating local economies, this can go a long way in preserving the cultural heritage of underserved communities.

  • Participation in local decision making

Minority Depository Institutions are typically community-based and locally owned, which allows for more personalized and responsible decision-making. This can help create a more customer-centric and community-focused banking experience.

  • Investment in social initiatives

Minority Depository Institutions can use their assets to invest in socially responsible initiatives that cater to the needs of their communities. This includes supporting local education, affordable housing, and healthcare projects.

  • Promotion of an inclusive culture

Minority Depository Institutions are more likely to have a diverse staff and leadership team that reflects the communities they serve. This can help create a more inclusive and welcoming banking environment for customers of all backgrounds.

Grow your savings while helping people in underrepresented groups

If you're looking to grow your savings with a financial institution that is having a positive impact on an underrepresented community, saving with a Minority Depository Institution could be right for you. The institutions are defined by the FDIC to have the majority of their ownership comprised of Black American, Asian American, Hispanic American, or Native American people. The institutions can have a wide impact on communities, including offering financial access, aid to community development, and investment in social initiatives.

With Raisin's easy-to-use savings marketplace, it's easy to grow your savings with an MDI. Find and compare financial products from institutions that align with your values, open an account in minutes, and start saving at a competitive rate — all with no account opening or maintenance fees.

Begin your savings journey today!

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