By the Division of Banks
  1. APPLICABILITY AND SCOPE

    The purpose of this bulletin is to set forth the Division of Banks’ (Division) minimum requirements for the establishment and operation of activities conducted under the Massachusetts Student Bank programs. There are four available options for school bank programs: (1) A School Branch; (2) An Educational Training Program; (3) A Student Bank; and (4) A School Savings Deposit Program. The requirements for each program are outlined below. Participation in any of these programs by an educational facility or other organization dedicated to the training of youth1 requires the approval of the appropriate educational authority and/or governing Board. With the exception of a School Savings Deposit Program, all applicants for a school bank program must demonstrate that a clearly articulated and defined educational and/or vocational objective will be served by the establishment of the program.

  2. DEFINITIONS

    The following definitions apply to the terms used in this bulletin unless the context otherwise requires:

    Division: The Division of Banks, including the Commissioner of Banks

    Educational Authority: The local school committee or governmental body which governs the affairs of a public educational facility. The term shall also include the Board of Trustees or similar governing body of a private educational institution or youth organization.

    Educational Facility: A public or private primary, secondary, or vocational school located within the Commonwealth.

    Educational Training Program: An association by a group of students and teachers under the sponsorship of a bank to train young people in the basic principles and practices of banking which is established under G.L. c. 167, s. 37B and these guidelines.

    Financial Institution: A state-chartered savings bank, co-operative bank, trust company, or credit union.

    School Branch: A limited purpose branch office located at a secondary or vocational school located within the commonwealth which is established under G.L. c. 167C, s. 3 or G.L. c. 171, s. 8 and these guidelines.

    School Savings Deposit Program: An arrangement between a financial institution and an educational facility which is established under G.L. c. 167D, s. 10 for the collection and deposit of school children's savings.

    Student Bank: A school bank operated by students in grades four through eight which is established under G.L. c. 167, s. 37B.

  3. SCHOOL BANK PROGRAMS
    1. Option 1 - Procedures for the Establishment of Branch Offices Located at Educational Facilities

      All school branch applications shall be reviewed under the same supervisory standards and procedures accorded to ordinary branch applications. Applications for school branch offices shall be eligible for the Notice Process (if applicable) as outlined in Regulatory Bulletin 2.1-104. However, all school branch applications eligible for the Notice Process must also fulfill the requirements of this bulletin. All school branches are subject to state and federal statutory requirements governing state-chartered financial institutions including the posting of all consumer protection and other notices required by law.

      1. Notice

        A financial institution seeking to establish a branch office at an educational facility must give written notice to the Division. Such notice shall contain: a written notification that the deposits of such branch are insured by a federal deposit insurance agency; the prior written approval or vote of the appropriate educational authority; an executed written agreement relative to the operation of the school branch office between the financial institution and the educational authority which meets the requirements of section 2, a written curriculum plan developed with and approved by the educational authority which meets the requirements of section 3; and, such other information as the Division may require from time to time.

      2. Operational Agreement

        A formal written agreement must be entered into between the educational authority and the financial institution governing the operation of the school branch. Such agreements must be reviewed and renewed annually.

        1. Mandatory Provisions

          All agreements shall contain provisions relative to the following matters:

          1. Hours of Operation: The school branch’s days and hours of operation during the academic year, and if applicable, during school vacation periods, must be specified.
          2. Security: The agreement must allocate responsibility for the security of the school branch banking facilities to the financial institution. The agreement must also contain provisions relative to the general security of the areas adjacent to the school branch.
          3. Liability and Fidelity Insurance: The financial institution shall agree to maintain adequate liability insurance for the school facilities under its control. The branch must also be covered by the financial institution’s blanket bond.
          4. Banking Services: The agreement shall specify the number and types of banking services to be offered at the school branch. If the branch is not open to the general public, the agreement shall also specify to whom the branch’s services may be offered.
          5. Staffing: An adult paid employee of the financial institution must be at the school branch during business hours to supervise its operation. All services provided by the branch must be handled by high school students. Students should be selected by a process agreed upon by the financial institution and the educational authority.
          6. Student Training: vi. Student Training: The financial institution shall be responsible for student training done on the financial institution’s premises, outside school time, and on school branch premises at all times when the branch is open. The extent of this training shall be set out in the curriculum plan between the financial institution and educational authority.
          7. Salaries: The agreement shall specify whether participating students will be paid by the financial institution. The payment of students, whether during training or while working in the branch, is a matter to be agreed upon by the financial institution and the educational authority.
          8. Termination of Branch: The agreement shall provide that neither the financial institution nor the educational authority shall close or move the school branch until all necessary regulatory approvals have been obtained.
        2. Optional Provisions

          Agreements relative to school branches may contain the following optional provisions:

          1. Signage: Any reasonable provision relative to the design, size or placement of the name or logo of the school branch.
          2. Branch Maintenance: Any reasonable provision relative to the construction, remodeling or repair of the school branch facilities.
          3. Other Provisions: An agreement between a financial institution and an educational authority may contain any other provision relative to the establishment and operation of a school branch that the parties may deem necessary.
      3. Curriculum Plan

        A school branch is an educational facility to be used for the training of students, on school premises, in the basic principles and practices of banking by actual participation in a branch operation. A curriculum plan, therefore, should be designed that achieves these objectives in accordance with acceptable educational standards. All such curriculum plans must be drafted and approved by the educational authority prior to the submission of a school branch application.

    2. Option 2 - Application Guidelines to Approve the Establishment and Operation of Educational Training Programs

      All Educational Training Programs must meet the following conditions and restrictions:

      1. Sponsorship of an educational training program is limited to savings banks, co-operative banks, credit unions, trust companies, federal banks, federal credit unions, foreign banks, out-of-state banks and out-of-state federal banks with a branch office in the Commonwealth.
      2. Each proposal for an educational training program under the provisions of G.L. c. 167, s. 37B must be submitted upon the recommendation of the superintendent of schools and the affirmative vote of the school committee in the city or town in which the bank is located. In the case of private or parochial schools, or other organizations dedicated to the training of youth, each such proposal must be submitted upon the affirmative vote of the governing Board.
      3. Each proposal must contain an agreement between the sponsoring bank and the participating school or youth organization that reflects an association for the purpose of operating an educational training program.
      4. The primary purpose for the establishment of an educational training program shall be to train young people in the basic principles and practices of banking by actual participation in pattern or model organizations and operations. To that end, each proposal must outline educational goals and objectives.
      5. The making of loans under this program is prohibited.
      6. The program shall only service deposit and withdrawal transactions.
      7. The program shall not be limited to the use of actual cash and or checks. Imitation currency or checks may be used to conduct simulated transactions.
      8. Each proposal must specify procedures for the handling of cash on the premises, and for depositing funds in a bank account.
      9. Each proposal must include a plan for the activities to be conducted (i.e. taking of deposits, withdrawals, issuing passbooks, selling shares).
      10. Each proposal must contain the name of the person in charge.
      11. The program shall operate only during the school year.
      12. The sponsoring bank shall notify the Division of any changes to the original program. The sponsoring bank shall also notify the Division should the program be discontinued.
    3. Option 3 - Student Savings Deposit Programs

      A financial institution may establish student savings deposit programs in compliance with applicable laws and requirements of the particular school or school system. The approval of the Division is not required.

  4. HISTORICAL NOTES

    This bulletin replaces former Administrative Bulletin 23-1 which was restated in 1992, and former Administrative Bulletin 23-2 issued on October 17, 1988. Changes made to this reissued bulletin were made due to changes made by chapter 461 of the Acts of 2004. The bulletin was revised on October 2, 2012.

  5. AUTHORITY

    c. 167, s. 37B; c. 167C, s. 3; c. 171, s.8.

1 Examples of organizations dedicated to the training of youth include Boys and Girls Clubs, Junior Achievement, YMCA, YWCA, Neighborhood Youth and Teen Centers.